Nearly six months have passed since Health and Human Services Secretary Alex Azar declared the coronavirus a public health emergency. Yet we still face the some of the most difficult economic headwinds in generations.
For the first time in decades, the health care sector shed jobs this year.
Expanded federal unemployment benefits will expire in 18 days, and soon after that so will the federal Paycheck Protection Program. State and local governments face severe budget shortfalls. All the while, the virus continues to spread.
Despite the central role that health care providers have played in treating patients with the virus, the industry continues to face significant financial pressure. Without some kind of relief from the coming fiscal cliff, those providers could be in even more dire financial circumstances
For the first time in decades, the sector shed jobs. The decline was most acute in the ambulatory space, which lost 1.3 million jobs. But even hospitals, which are at the forefront of our COVID-19 defense, lost more than 100,000 jobs in April, which represents their largest single-month decline since the Bureau of Labor Statistics began collecting the data in August 1990.
After years of gains, health care jobs have declined…
All of this is likely to worsen should the additional $600 of weekly federal Pandemic Unemployment Assistance expire at the end of the month. Since the pandemic began, more than 50 million Americans have filed for unemployment benefits. As many states continue relaxing prohibitions on elective procedures, this assistance supports the affordability of those primary and urgent care visits, outpatient surgeries and other important medical procedures.
Senate Majority Leader Mitch McConnell, Republican of Kentucky, has said that he would like the next round of stimulus passed before the August recess, which begins on Aug. 8. It is unclear whether a new bill would extend these benefits.
The deliberations come as states are scrambling to plug budget shortfalls caused by the pandemic. Businesses closures have reduced state revenues because of lower excise, state and payroll taxes, and have increased expenses related to unemployment benefits and other costs.
Most states require balanced budgets and all states lack the Federal Reserve’s ability to issue Treasuries to finance deficits – which leaves them with little alternative than to raise revenues or cut costs.
The Center on Budget and Policy Priorities estimated that states will experience an aggregated shortfall of 15% this fiscal year and 25% next fiscal year. Undoubtedly, states harder hit by the virus, like California, Florida, New York and Texas, will experience greater shortfalls.
It all leaves hospitals and health care providers will dwindling options, despite the federal assistance many of them received under the CARES Act.
Almost one in six hospitals is financed through state and local governments, and these facilities often provide care to rural and underserved communities. As states grapple with historic budget shortfalls, funding for such hospitals has rarely been less certain or more important.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
