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Opinion: The COVID-19 pandemic and the economic and policy challenges facing Missouri

  

Since February the state of Missouri has confronted the monumental health challenges of a pandemic, the COVID-19 virus. But it is now clear that the nation and the state face a triple threat, — a challenge not only to our health but an economic threat as well as a social threat. 

As of May 16, Missouri had recorded almost a cumulative 11,000 COVD-19 positive cases and about 600 deaths. Although this has been a significant challenge for the state, to date Missouri ranks below the national average in cases per capita (1.7 per 1000 population in Missouri, compared to the national average of 4.5/1000) and deaths from COVID-19 (96 per million population in Missouri, compared to 270 per million in the U.S.).

Comparatively, the dimensions of the economic challenges facing Missouri and the nation are only beginning to be understood but are immense. The national unemployment rate reported for April was 14.7 percent, but this was measured using data through April 18 and millions more filed for unemployment since then. 

Over the eight-week period ending May 2, 36.5 million people in the U.S. filed an initial claim for unemployment and 543,029 in Missouri. These are the highest ever recorded and exceed unemployment claims filed during the Great Recession of 2008-10, by an order of magnitude of 5-6 times.  Before the COVID virus hit, Missouri had a historic low unemployment rate of 3.5 percent and only about 109,000 recorded as unemployed. But if another 500,000 are added to unemployment rolls, it is quite likely that the true unemployment rate now is above 20 percent. Economists are predicting the unemployment rate may rise over the summer to as high as 25 percent nationally and locally.

The last time the U.S. saw unemployment levels this high was before World War II.

This unprecedented rise in unemployment is a concern in itself, of course, as families are facing strains to pay bills, and there is a documented rise in food security. Early evidence suggests that those losing their jobs are much more likely to be lower-income individuals, concentrated in industries such as restaurants, retail trade, leisure (hotels), transportation, and health care. To the extent that low wage workers have lost their jobs, the COVID-19 recession will increase income inequality and poverty rates. 

The longer-term impacts of these brutal economic impacts will depend on how long the recession lasts. Some economists predict the recession will be short, lasting just a few months if “stay at home orders” are lifted and businesses can return to pre-COVID levels. There are reasons to be concerned this will not happen, however. First, the lifting of social distancing restrictions will be slow and gradual under Gov. Mike Parson’s plans and that of local governments. Second, and probably more important, many people are trepidatious about returning to pre-COVID consumption and behavioral patterns, even if government policies will allow it. How many people will quickly jump back on a plane, for example? Third, some businesses permanently have shut their doors during the last few months. All this leads many economists to predict the recovery from this recession will take at least a year, if not longer, if measured by when we can return to pre-COVID levels.

The large increase in unemployment will certainly lead to a significant increase in both the number of people who lose their employer health coverage and thus become uninsured. Some who lose their jobs may seek Medicaid coverage, while some people seek coverage through Obamacare marketplaces. But the challenge facing Missourians will be more difficult because our state decided not to expand Medicaid. Most of those losing their employer coverage will not be eligible for Medicaid coverage, which is generally available only for single parents with very low incomes (roughly less than 20 percent of the poverty line) and children. This means it is likely that most of the unemployed will become uninsured. 

Nevertheless, early evidence suggests the increase in Medicaid coverage may already be happening, since the Medicaid rolls grew by 43,000 in April 2020 alone and over 57,000 from December 2019 to April 2020. Part of this increase is due to the suspension of the “annual renewal” process that led to over 130,000 people losing their Medicaid coverage over the 2018-19 period, but certainly, some of the increase is due to the recession. 

Any increase in Medicaid coverage will put some strains on the state’s budget. The State of Missouri is required to balance its budget, but in a recession, we will face huge drops in revenues due to a loss of income, sales, and payroll taxes while also facing increases in spending on Medicaid and other safety net programs. This has already led the governor to initiate some spending cuts to education and other programs, which may paradoxically exacerbate the recession as it may lead to layoffs.

The COVID-19 recession is creating very unusual strains on our medical care systems. Not only are medical care systems facing an unprecedented challenge to provide medical care for thousands of people with COVID-19, paradoxically these same systems have generally shut down most, if not all, elective procedures, severely impacting their revenues. Economic estimates for the first quarter show that maybe half of the drop in GDP occurred because of drops in the health care sector, an unprecedented event since previously the health care sector was largely recession-proof.

The pandemic and recession are creating huge challenges for the already-beleaguered rural health care system. In Missouri, 15 rural hospitals have recently closed, and many others are at financial risk. To the extent that the recession strains fragile rural health systems, certainly, an additional number of rural hospitals will close.

The COVID-19 pandemic has pointed out the importance of our public health system. Yet, Missouri ranks No. 44 in the country as measured by public health spending per capita. While the state and local governments have been working heroically to deal with the COVID-19 pandemic, this crisis has identified major challenges we face as a region, especially health disparities, workforce challenges, data infrastructure gaps, and policy gaps.

The challenges the COVID-19 pandemic raises are focused almost exclusively on the most vulnerable populations in our state — low-income workers, African Americans, people with chronic conditions, older adults, and the disabled. Data has emerged to show that the COVID-19 pandemic in the U.S. is disproportionately impacting African Americans, further exacerbating equity issues that have persisted for years. 

As the triple challenges that stem from the COVID-19 crisis unfold — and creates challenges for our safety net programs, nonprofit organizations, and government budgets — we also must remember that those who will suffer the most will be those who can least afford to sustain the burden of the challenge. 


EDITOR’S NOTE: For up-to-date information on coronavirus, check with the CDC and DHSS.