While supplies last: the shifting of COVID-19 costs and resources

A deal for $10 billion in additional funding to combat the COVID-19 pandemic was approved by Congress on April 4, 2022. The new budget, reduced from the Biden Administration’s requested $22.5 billion, signals a shift in the government’s approach to combating COVID-19: from preemptively securing funds and supplies to reactively addressing the need for resources like testing kits, treatments, and vaccine doses. The change in approach creates new complexities for individuals, employers, and health payers as resources diminish without the runway of existing congressional funding.

The first group affected by budget reductions are the uninsured. On March 16, 2022, the Health Resources and Services Administration (HSRA) announced the discontinuation of its Uninsured Program which reimbursed providers for tests, treatments, and vaccines for the uninsured. The program’s dissolution, fully effective April 5, 2022, means services remain though claim reimbursements are subject to “the availability of funds.”

Privately insured individuals should maintain access to no-cost COVID-19 services while supplies last and the federal Public Health Emergency* (PHE) remains in effect. However, when the PHE ends and supplies diminish, the cost of COVID-19 services for insured Americans is expected to rise. The KFF notes in an extensive brief:

[I]f the costs of treatment medications and vaccines are shifted to private insurers, the insurers will need to establish new contracts and negotiate prices to purchase these supplies, which will take time and may lead to higher costs that could translate into higher premiums for employers and individuals.

In discussing reactionary funding and maintaining supplies, one question looms large: what happens if a new wave of COVID-19 hits? When the national stockpile of resources wanes and the need for tests and vaccines slows in the coming months, the U.S will begin to walk a supply-and-demand tightrope. Americans became well versed in the realities of supply chain issues during the pandemic. The supply chain of COVID-19 tests and vaccines was previously supported by the government pre-purchasing orders from manufacturers, thus guaranteeing payment along the pipeline. As pre-purchasing ends, the issue becomes whether manufacturers will continue to produce COVID-19 resources at a significant rate. If the stockpile of resources diminishes, and the supply chain ramps down, the country increases its vulnerability to a new wave of COVID-19, should it occur.

If a new wave of the pandemic hits, it could create a spike in demand, skyrocketing the cost of treating and preventing COVID for individuals and employers. For now, the cushion of a new budget, a continued PHE, and existing supplies to combat COVID-19 indicate a relatively stable transition away from billions in government spending on pandemic relief and resources.

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* The current PHE is extended through October 15, 2022

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