As the coronavirus pandemic continues to sweep the nation, those whom once thought their jobs were secure, are losing them in droves. This may be attributable to the fall of health care spending by about 18% during the first three months of 2020 or perhaps because emergency room visits are down and non-urgent surgical procedures have largely been put on hold. About 42,000 health care workers lost their jobs in March and a whooping 1.4 million lost their jobs in April! If this alludes to anything, it is the amount of money we spend in non-urgent surgical procedures. The astronomical cost for such procedures helps drive employment in our nation. After all, the American Hospital Association predicted that the U.S. hospitals and health systems would end up taking a $200 billion hit over a four-month period through June and most of that money – ~$160 billion – is from lost revenue from more lucrative elective procedures.
Even though $10 billion of the $100 billion from the CARES Act has been allocated to rural hospitals and pandemic hot spots, it’s too early to know whether those funds will help hospitals retain workers. However, other hospitals that do not fall into this category must fend for themselves and figure out ways to keep the system afloat, and can you fault them, if they must make decisions to “furlough” their employees?
The cost to the economy is just starting to be seen. We won’t truly see the effects of the economic harm the quarantine has caused until a few months from now. Over 33 million people have filed for unemployment as of this month, but for how long can they stay unemployed and obtain benefits? Would people go back to work, when businesses start opening up? Due to the CARES Act, many of those unemployed are earning more each week from unemployment than they would from working. So why should they be incentivized to go back? Perhaps, this is the start of an economy Ayn Rand writes about in her book Atlas Shrugged. It couldn’t be. Too farfetched.