Colorado experts on the economic repercussions of 2020

Losing vulnerable rural health providers could cause Colorado to lose 137,000 community jobs, 99,00 health care jobs, and 11.7 million patient encounters within one year, according to Josh Neff. The Corporate Vice President of Integration and Rural Health for Centura added that the state’s GDP could decrease by $277B within 10 years.

 

 

Neff made these remarks at State of Reform’s Colorado Health Conference on Nov. 17th, speaking at a panel with three other Colorado health experts. The panelists discussed the impacts COVID-19 has had on the state’s economy in 2020.

Gov. Jared Polis’s COVID-19 Advisor Kacey Wulff stated Colorado’s current economy cannot be discussed without simultaneously considering COVID-19’s effects on the state.

“To talk about the economic impacts, I think it’s important to ground ourselves in what our epidemiological trends are and what we expect them to be in the next few weeks and months,” she said.

According to Wulff, COVID-19 case levels recently hit an all-time high and the first two weeks of November saw a significant upward trend. Hospitalization rates also recently reached a record high. Although death rates were worst in April and May, they started to rise again in early October and are still high. A record of over 50,000 tests were administered in early November.

“The single best thing we can do for our economy is getting the virus under control. This is for a few different reasons,” she said. “One is because that is how we get to less restrictive measures that can start getting us back to normal. We also have more tools than we have ever had before, we are more prepared than we ever have been before, and we have a vaccine on the horizon.”

She added that Colorado needs federal stimulus money to support its residents. The state is doing everything it can to provide things like rent support, but Coloradans need more than the $375 stimulus check recently administered by the state. According to a model used by Wulff, 8,500 Coloradans could die from COVID-19 by the end of the year if cases remain at current levels.

According to Neff, 106 rural U.S. hospitals had closed since 2010 and 673 hospitals were vulnerable to closure before COVID-19. Potential hospital closures could increase 25-30% due to COVID-19.

“Rural is not a refuge,” he said, refuting the belief that rural areas are more sheltered from COVID-19. “Just because it is a sparsely-populated region doesn’t mean that we’re not going to have widespread COVID issues, and we’re starting to see that.”

Many rural counties have the highest infection rates in the country, he said. This is partly due to clusters formed from rural food processing plants and micro-tech providers. Rural areas also tend to wear masks less.

“Typically, the critical access hospitals are the number one or number two employer in the county,” Neff said. “If something shifts with the health of the hospital, it can cripple a region. These critical access hospitals have much lower profit if any profit at all, and part of that is driven by the fact that the majority of the population is aging. They’re 65 and up, they’re on Medicare, and it’s a challenge to be able to support a hospital with Medicare. We also know that those patients are far more vulnerable to disease in general, but specifically to COVID.”

Solutions offered by Neff center around increased funding and support for rural health care facilities. The changing HHS guidelines and confusion over how to spend their funds have raised issues across rural critical access hospitals, he added. He also emphasized that legislators and government agencies need to prioritize telemedicine and broadband access, which is critical to increasing health care access for rural communities.

Phyllis Resnick, Executive Director and Lead Economist for the Colorado’s Future Center, agreed with Wulff about the necessity of taking COVID-19 into account when assessing the state’s economy.

“Not only do you have to be an economist, but you kind of have to be an epidemiologist as well,” she said. “So I totally agree that everything I’m going to show you is entirely dependent upon the assumptions we make about what happens with this virus. The longer this persists, the more we are likely to see business failures and have a longer economic malaise as it relates to the economic situation we’re in right now.”

The Future Center’s model suggests Colorado’s General Fund might not return to pre-COVID levels until 2023 or 2024, she said. The state’s economic recovery could take a couple of years even with an imminent vaccine. 

State unemployment remains elevated, according to Resnick. Continued unemployment claims reached their peak in the Spring at over 200,000, but have recently increased again and are currently over 100,000. She does not foresee full employment recovery until 2024.

Before COVID-19, almost 654,000 households were already cost-burdened. These households contain almost 809,000 workers from industries like service, office and administrative supports, and management.

60% of these workers are women and the majority do not have a college degree, according to Resnick. She emphasized that social determinants of health are positively related to health outcomes.

“I think we’re going to need to keep our eye on the long-term economic circumstances coming out of this recession and health event for more than just the years it takes for either the pandemic to resolve or the state budget to recover,” she said.

Rich Wobbekind, Dean and Senior Economist at the Leeds School of Business, listed some of the short-term economic impacts of COVID-19 in Colorado.

These include slower migration into the state, smaller workforces, and shorter lifespans, he said. The accommodations and food services industries are seeing a tremendous budget decrease due to COVID-19. State and local governments are also experiencing significant fiscal impacts. 

According to Wobbekind, the bottom end of the wage scale has faced particularly high rates of job loss. Workers in these industries account for 25.6% of employment and 13.1% of total wages in the state. There are high numbers of continuing jobless claims in industries like retail trade, information, construction, and manufacturing.

“This [industries classified as low-income] is the place where the jobs are going to come back in the slowest path, and many national forecasters are suggesting that we won’t see the growth in those industries to get back to previous peaks until 2025 or 2026,” he said. “That behooves us to think about re-training this segment of the workforce and trying to get them into higher-paying jobs.”