Colorado Experts on the Economic Impact of 2020 – State of Reform

According to Josh Neff, the loss of vulnerable rural healthcare providers could result in Colorado losing 137,000 community jobs, 99,000 healthcare jobs and 11.7 million patient contacts within a year. Centura’s corporate vice president of integration and rural health added that the state’s GDP could fall by $277 billion over 10 years.

Neff made the comments at the State of Reform health conference in Colorado on Nov. 17, while speaking on a panel with three other Colorado health experts. Panelists discussed the impact of COVID-19 on the state’s economy in 2020.

Gov. Jared Polis’ COVID-19 Advisor, Kacey Wulff, stated that Colorado’s current economy cannot be discussed without also considering the impact of COVID-19 on the state.

“In order to talk about the economic impact, I think it’s important to focus on our epidemiological trends and our expectations over the next few weeks and months,” she said.

According to Wulff, COVID-19 case numbers recently hit an all-time high and there has been a clear upward trend in the first two weeks of November. Hospitalization rates also recently hit record highs. Although death rates were at their worst in April and May, they started rising again in early October and are still high. A record 50,000+ tests were conducted in early November.

“The best thing we can do for our economy is to get the virus under control. It’s for a variety of reasons,” she said. “One is because it gets us to less restrictive measures that can get us back to normal. We also have more tools than ever, we are better prepared than ever 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 subsidies, but Coloradans need more than that $375 stimulus check recently managed 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 US hospitals have closed since 2010, and 673 hospitals were vulnerable to closures before COVID-19. Potential hospital closures could increase by 25-30% due to COVID-19.

“The countryside is not a haven,” he said, debunking the belief that rural areas are better protected from COVID-19. “Just because it’s a sparsely populated region doesn’t mean we won’t have widespread COVID problems, and we’re beginning to see that.”

Many rural counties have the highest infection rates in the country, he said. This is partly due to clusters that have formed between rural food processors and microtechnology providers. Rural areas also tend to wear fewer masks.

“Typically, critical-access hospitals are the number one or two employers in the county,” Neff said. “If there is a change in the health of the hospital, it can paralyze a region. These critical access hospitals have much lower profits, if any, and part of that is due to the fact that the majority of the population is aging. They’re 65 and older, they’re on Medicare, and supporting a hospital with Medicare is a challenge. We also know that these patients are much more susceptible to disease in general, but to COVID in particular.”

The solutions offered by Neff focus on increased funding and support for rural healthcare facilities. Changing HHS policies and confusion over how their funds should be spent have raised issues in rural critical-access hospitals, he added. He also stressed that legislators and government agencies must prioritize telemedicine and broadband access, which are critical to improving access to healthcare for rural communities.

Phyllis Resnick, executive director and lead economist at Colorado’s Future Center, agreed with Wulff on the need to consider COVID-19 when evaluating the state’s economy.

“You don’t just have to be an economist, you also have to be an epidemiologist,” she said. “So I totally agree that everything I’m going to show you depends entirely on the assumptions we make about what’s happening with this virus. The longer this goes on, the more likely we will see business outages and have a prolonged economic malaise related to the economic situation we are in right now.”

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

According to Resnick, state unemployment remains high. Continued jobless claims peaked in the spring at over 200,000 but have recently risen again and are now over 100,000. It does not expect full employment to recover before 2024.

Before COVID-19, almost 654,000 households were already burdened with costs. These households are home to nearly 809,000 workers from industries such as service, clerical and administrative support, and management.

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

“I think we need to keep a longer eye on the long-term economic circumstances arising from this recession and health event than just the years it will take for either the pandemic to resolve or the state budget to be restored,” she said.

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

These include slower migration into the state, a smaller workforce and shorter life expectancies, he said. The accommodation and catering industry is experiencing a huge budget decrease due to COVID-19. State and local governments also face significant fiscal implications.

According to Wobbekind, the lower end of the pay scale faces particularly high rates of loss. Workers in these industries account for 25.6% of employment and 13.1% of total wages in the state. Sectors such as retail, information, construction and manufacturing have high levels of persistent unemployment claims.

“This [industries classified as low-income] is where jobs will return the slowest, and many national forecasters are suggesting we won’t see growth in these industries until 2025 or 2026 to return to previous highs,” he said. “So we should think about reskilling that segment of the workforce and trying to get them into higher-paying jobs.”

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