A Framework for Estimating Health Spending in Response to COVID-19

IMF Working Papers, July 24, 2020

Source details

Canonical URL: A Framework for Estimating Health Spending in Response to COVID-19

Objective: Estimate the additional health spending necessary to treat COVID-19 patients.
Approach: Expand a Susceptible Infected Recovered model to project the number of people requiring hospitalization; combine projected demand with information about healthcare costs by country and assumptions about capacity constraints in the health sector.
Core comparative scenarios:
- No social distancing and lockdowns.
- Capacity-constrained health systems with effective social distancing and quarantine.

Epidemiological model: Extended Susceptible Infected Recovered framework to project hospitalizations.
Costing: Use country-level information about healthcare costs to translate projected hospitalizations into spending needs.
Capacity constraints: Explicit assumptions about health sector capacity determine whether systems must expand to meet demand or whether unmet demand affects outcomes (fatalities and spending).

Health system expansion requirement (no social distancing/lockdowns):
- "Countries would need to expand health systems ten-fold, on average, to assist all COVID-19 patients in need of hospitalization."
Global additional health spending estimates:
- Without effective distancing: additional spending range of $0.6–1 trillion globally.
- With capacity constraints and effective social distancing and quarantine: additional spending reduced to $130–231 billion globally.
Fatality rate estimates (average):
- Without distancing: fatality rate of 1.2 percent, on average.
- With capacity constraints plus effective social distancing and quarantine: fatality rate of 0.2 percent, on average.

Social distancing and quarantine substantially reduce both additional health spending and average fatality rates:
- Spending impact: from $0.6–1 trillion down to $130–231 billion.
- Fatality impact: from 1.2 percent down to 0.2 percent.
Capacity planning: Without mitigation measures, health systems would face an average ten-fold increase in required capacity to meet hospitalization needs, implying large-scale, rapid expansion of infrastructure, personnel, and resources would be necessary.