Warning: this article is cold and heartless. Cost analysis is used to break down Oregon deaths into monetary values. Think that’s cruel? It might be. Is it necessary? In a world of finite resources, yes. Is it being done now? Not by the people responsible for using this data. It’s being done by people in their mother’s basements, eating Cheetos, playing Fortnite, with access to whatever scraps of data the Oregon Health Authority decides is relevant for the public to consume.
Mortality Costs
As of July 21st, 2020, deaths from COVID-19 have cost the state of Oregon $359,471,400.
Or $225,492,000. Or $57,663,000. It depends on how you count, and what you want to compare it too, but there are a couple assumptions we need to make first.
Assumption #1: Life expectancy
Most everyone wants to live to be 100, but at some point in time, when you are “x” amount of years old, and pass away, people will say “John Doe led a long full life”. Grandmother passing away at 100 is sad, but everyone knows her time on this world was coming to an end sooner rather then later. For the point of this analysis, we are going to assume everyone that passes after a normal life expectancy is NOT valued. I hear you now, “My grandmothers life has value!”. It’s true, it does. Just not now, for this exercise. But to compromise, we won’t use the life expectancy of Oregon (77.3 for males, 82 for females in 2017, the latest year available), we will use Japan, which has the second longest in the world (82.69 for males, 89.54 for females).
Assumption #2: Value of one year of a human life
This one is very controversial. We could look at wrongful death lawsuits and see what the average is. Another option is to look what the EPA values a life at ($9.1 million), FDA ($7.9) or the Department of Transportation ($9.6). All of these are U.S. agencies which have some of the highest values in the world. In Australia the value is $4.2 million, in Russia it’s between $40,000 and $2 million. However, there is another standard that we could (and will) use, the dialysis standard. It’s set at $129,000 per year of quality life. If you would like to learn more, it’s a fascinating subject and worth a read. If we use this standard, combined with the life expectancy of Japan, then the value of a human life is $10.667 million for a male and $11.550 million for a female. Sorry guys, you’re just not worth as much. This number is greater than any previous valuation, so to keep our cost estimates as high as we can, we will use this. We will not be factoring in what a quality year is or isn’t. We will just assume every year is quality.
Cost Analysis
Now that we have our assumptions, let’s look at the data. As of July 21st, there have been 269 people that have lost their lives due to COVID-19. We are going to take OHA’s word that every single death was exclusively due to COVID. The argument that they are not all COVID related will be saved for another day. 185 of those 269 deaths were before their expected life expectancy; they died “young”. If we would calculate how many years each person lost due to COVID (2786.6), and then multiply that by the cost of a year of quality life ($129k), we get a total loss of $359,471,400 as of July 21st.
If we were to use Oregon life expectancy values, the number drops to $225,492,000. Because some patients are losing less years of life or have lived past the average life expectancy in Oregon, the “cost” of COVID would have gone down by over $130 million dollars. There is another number that we can use as well when calculating and comparing costs. The state of Oregon uses a number called “Years of Potential Life Lost before Age 75” (YPLL75). They calculate this number for many different mortality reasons. For instance, the YPLL75 for suicide (2017) was 22,602. If we were wanting to compare our COVID numbers to this standard, the current YPLL75 for COVID, as of July 21st would be 447. Multiplying that by our value of a year of life and we get a cost of $57,663,000, which is over $300 million less then our first calculation.
Additional Costs – Hospitalizations
“It’s not just deaths, though, it’s hospitalizations too!” My apologies for reading your mind without your consent, but I think this point is important too. There ARE costs associated with going to the hospital. Let’s factor those in as well, with some conservative cost assumptions.
According to a review of hospital costs across the nation, Oregon’s average cost of one day in a hospital is $3,206. For a day in the ICU, we will use $10,794. If you are in the ICU, we will take the higher ICU number, not stack these two figures. These might be high, they might be low. I don’t know, I’m just a guy living in his mom’s basement with Google as my trusty steed.
The Oregon Heath Authority has put out (near) daily numbers of COVID cases, deaths and patients in hospitals. They haven’t been perfect; there are gaps in the data, and they rely on individual hospitals reporting to them in a timely manner. Because of these gaps, I have made some generous assumptions on the data. The first record of hospitalizations was on March 26th, where there were 91 patients in hospitals. The first recorded case of COVID in Oregon was February 28th. To keep the estimates conservative, we will assume there were 91 patients in the hospital from March 1st through March 25th. Also, for days we do not have data, we will look at the data for the first day before or the day after the missing day and use that to fill in the missing data.
ICU visits started being tracked on April 7th. The average ratio of hospitalizations that result in ICU visits is around 30%, so we’ve filled in missing ICU bed occupancy with those projections, from March 1st to April 6th. Like hospitalizations, for days we do not have ICU data, we will look at the data for the first day before or the day after the missing day and use that to fill in the missing data.
Adding the number of days a patient has been in the hospital with the average cost of a day in the hospital, we get $80,199,420 for hospital stays and $59,756,634 for ICU visits, as of July 21st.
The total cost of loss of life and hospital charges now equals $499,427,454. However, for the rest of this article, I will round that up to $500 million for current costs, and say that we are half way through this years COVID outbreak, so $1 billion for costs for these two items.
Economic Cost of Shutdown
Oregon shut down many of its businesses with executive orders in mid-March. Not all jobs were lost because of actions Oregon government took, some were lost because of nationwide or worldwide conditions, however it’s hard to calculate a specific number. Since mid-March, over 300,000 jobs have been lost. While many jobs are coming back, the economic cost will be with us for years.
Let’s look at a few costs.
Lost Wages – Unemployment
Initial unemployment claims started in earnest the week starting March 15th, with 76,500 claims (as opposed to 4,900 the week before). By the end of April the initial claims had reached over 300,000 and the unemployment rate in Oregon had hit 14.9%. May’s unemployment was 14.3%, and June looks to be 11.2%. In comparison, March, before the pandemic hit, Oregon’s unemployment rate was 3.5%.
For our purposes, lost wages will assume a 40 hour week at minimum wage for only those people who were out of work for April, May and June (12 weeks). The Oregon Employment Department says that 252,800 jobs were lost in April, 26,100 were added in May, and 56,600 were added in June. That leaves us with 170,100 Oregonians that lost there jobs that still do not have work. If we take 12 weeks, multiply that by 40 hours per week, at a 2019 minimum wage of $11.25 an hour, we get a total for lost wages of $918,540,000 as of July 1st.
Loss of Tax Revenue
“Surely your numbers are wrong, there has to be some way to verify them!” Sorry, I read your mind again without consent. But hear me out on this one. What if there WAS a way to verify the numbers? There is! Taxes! Oregon needs that tax revenue from your income tax to pay for services. If the money isn’t going to you, then you can’t pay the tax man, and the tax man can’t pay the teachers. Let’s look at the Oregon budget.
“The Coronavirus Will Blow An Enormous Hole In Oregon’s Budget, Economists Say”
According to an article from Oregon Public Broadcasting, the state is expecting income tax revenue to go down by $1.6 billion this biennium, or $800 million per year ($4.4 billion for 21-23, $3.3 billion for 23-25). The total hit to the budget this biennium due to COVID is going to be $2.7 billion, but let’s just look at loss of tax income. Not everyone pays 100% of their earnings to the state. There are tax brackets, and the top tax bracket in Oregon is 9.9%, but for the sake of math, I’m rounding up to 10%. Also, I’m going to use that tax bracket for ALL taxes, just to be conservative. If Oregon is losing $800 million this year in income taxes, and individuals and businesses pay 10% of their income in taxes, the lost revenue to individuals and businesses comes out to $8,000,000,000.
Federal CARES Act Money
Because of the CARES act, many people received an extra $600 a week in unemployment aid, on top of normal unemployment benefits. $600 a week doesn’t just magically come from nowhere, so we will factor that in as well. 170,100 unemployed, for 12 weeks is $1,224,720,000.
Flu & Pneumonia
Let’s switch gears and do one last analysis, let’s compare apples to oranges. In this instance, apples are COVID and oranges is the flu and pneumonia. Before you think to yourself “Those aren’t comparable!”, just stop. If we convert everything to a common denominator – in this case, dollars – then anything is comparable. COVID might cause greater individual suffering then the flu, but this analysis is just dollars and cents.
In 2017 Oregon recorded 573 deaths to flu and pneumonia (last year detailed data was available). The Years of Potential Life Lost before age 75 in 2017 for flu and pneumonia was 2,381. Using just this number and multiplying it by the value of one quality year of life, the 2017 mortality cost of the flu and pneumonia was $307,149,000. The Oregon Health Authority does not give out the specific ages of each death, but they do break it down by age range. If we took the upper limit for each age range and assigned everyone in that bracket to that age (so in the 1-4 age bracket, each individual is 4) and then used our Japanese Life Expectancy calculation on those 573 deaths, the 2017 mortality cost of the flu and pneumonia would jump to $501,822,900. Since we don’t know the exact age of each person who passed away, this estimate will be more conservative then the years of potential life lost at 75 number. In fact, when we do this calculation, we only end up with 1,730 years lost, as opposed to the official 2,381.
Summary
As someone who is sitting in their mom’s basement, looking at online research, I’ve gone about as far in my research as I can go, but let’s do a quick summary.
Using the most conservative tools and assumptions we have available to us, and assuming that the yearly COVID disaster is only half way done, we have come up with a cost of $1 billion dollars. This accounts for people dying young and hospital bills.
The economic cost of shutting the economy down has been $1-$8 billion in lost wages (which leads to lost tax revenue which results in lost services) and $1.2 in federal payouts for additional unemployment benefits (that will have to be paid back at some point in the future). There are other associated social costs with the shutdown that we have not looked at (loss of academic growth with schools closing, increase in depression with churches closed, increase in anxiety, loss of public services, etc.) but for this purpose, we will stop here.
Did the shut down work? If it did, was it worth it? Did it save lives? Will it cost lives? Only time, or accurate data from the government will tell. If we didn’t shut down, maybe we’d have the same death rate as Sweden (which would mean 2,062 additional deaths and $2.7 billion in years of life lost). Maybe we would have been as bad as New York (6,782 deaths, $9 billion in years of life lost).
There are many unanswered questions, but hopefully, this analysis puts the cost of death in context with the economic cost of the shutdown in Oregon, as well as comparisons to the flu and pneumonia, which have been around for a hundred years, and other causes that may be more important to focus on (such as suicide at nearly $3 billion in lives lost impact).
The Moose goes Moo 