Coronavirus in Context: Financial Impact and Consumer Trends of COVID-19

[MUSIC PLAYING]

You're watching "Coronavirus in Context." I'm Dr. John Whyte, Chief Medical Officer at WebMD. Today, I want to spend a few minutes talking about the financial impact of COVID, specifically on household incomes. To provide insights, I've asked my good friend Jane Sarasohn-Kahn, she is a health economist, an author, and trend weaver.

Jane, thanks for joining me.

My pleasure, John. Happy to be with you.

Let's start off with, you've always been referred to with that moniker trend weaver. What is a trend weaver?

It's a kind of a forecaster, which is my-- my background, looking at the future of-- of health care. But increasingly, as I've been looking at the consumer at the center of health care, I've been borrowing trends from other places, from popular culture, and, uh, politics, and even food.

Good.

And so we look at the trends and bring them into the health care forecasting that other people do. So it's my differentiator.

Yeah. And you've always been great helping us understand those trends for consumers. Let's start off at the top with the economic trends. What are you seeing?

So I think, uh, in the COVID-19 era, which clearly is on all of our minds right now, we're looking at this great lockdown and what it has done to the big economy in the US, the "macro economy." And so we've seen immediate job losses week after week after week. And then we look at that big macro economy and translate it to the person's micro economy in the household. And so, um, that has tremendous impact on what people are buying, what people are not buying, and how much people are spending on health care or avoiding health care. So those are sort of the big initial impacts--

Sure.

JANE SARASOHN-KAHN: --on big economics and small.

So break it down. You've been talking about, um, you know, change in GDP, loss of jobs. What-- what are the numbers?

Yeah. Well, we've lost over 20 million jobs just in the US. And I work globally as well, particularly in Europe. So of course, this started to happen in, uh, my beloved Italy, and then France, and then-- and later in the UK. Uh, and so we are then following them, although our curve--

Mm-hmm.

JANE SARASOHN-KAHN: --of COVID cases and mortality is higher. But in terms of the economy, the great lockdown has happened all over the world. So this has been a global phenomenon bigger than anything we've seen, certainly bigger than 2008's great recession and bigger than 9/11 as well, because it has the impact of both the virus, the physical impact on clinical health, and the fiscal, money impact--

Sure.

--on our-- on our wellness.

You've talked about a survey, um, by Kaiser Family Foundation that said nearly three out of four people think the worst is yet to come. How is that impacting their pocketbook?

So that gets into our mindset of consumer confidence, which is something you hear about on the 6:00 news--

Mm-hmm.

JANE SARASOHN-KAHN: --and in The Wall Street Journal, and may-- it's now hit Main Street. So when I think about that-- speaking of Main Street, I got my Economist magazine this week.

Mm-hmm.

And what's important about this is they have this gap between Wall Street and Main Street. So how it's affected Main Street, which is most Americans-- who are not, by the way, invested in the stock market--

Mm-hmm.

--most people don't have enough cash to put away living paycheck to paycheck-- uh, but it's impacted our confidence in that if we don't think we have a positive long-term future case-wise, looking 3, 6, 9 months down the road, we aren't going to spend as much. And in the US particularly versus the rest of the world, we have a consumer-led economy. When we get out of a recession or a soft period in the economy, people, consumers, get us out of it. And if we're not spending, we're going to-- we're going to be in the economy-- the economic depths for a longer period of--

Yeah.

--time.

What are people not spending on?

So it's interesting. Uh, there's a-- a chart showing, um, the 10 items we're spending mo-- more money on and the 10-- 10 least spent items. The least spent items are things like luggage because we're not traveling.

Mm-hmm.

JANE SARASOHN-KAHN: Bathing suits because we're not going to the beach, although in Florida perhaps we are. Briefcases because we're not going to work.

Mm-hmm.

We are spending money on things like bread machines. We're spending money on office furniture for the home--

Yeah.

--because of telework. And we're spending lots of money on hygiene products, which I have at my desk and, um, dressing above the waist.

Sure.

So for, uh, health, and beauty, and grooming, HBW, Health, Beauty, Well in the drugstore-- Mm-hmm.

--we're not spending-- women aren't spending as much on makeup, but they are on skin care and oral care to whiten the face and dressing above the waist. So we're buying tops, but there are all these memes about pants now, of course. Uh, not-- not spending a lot of money below.

So it's very interesting. Um, and we're spending a lot on over-the-counter meds and vitamins to, um, boost our immunity.

Yeah.

And of course, food for what Nielsen calls the "pandemic pantry"--

Yeah.

--shelf staple foods.

Well, there's a challenge, you know, with over counter drugs and the availability of some of them. How is this impacting the economy when we see this shift in spending to different types of products?

It's so interesting. Um, so for health care, we've actually seen the loss of jobs in health care because, of course, we have the COVID health care economy, in the ICU, in the ER, and COVID beds, um, the ventilator economy, the intubation economy. But then elective surgery and sort of primary care, vanilla stuff, which is really the profitability of US health-- US hospitals and doctor's offices, that's really been in decline. So for the first time in over 10 years, we've lost jobs in health care. I haven't seen that--

[INTERPOSING VOICES]

It's unheard of, right, that's been a growth. Yeah.

And so yes, health care jobs have been a growing part of the economy, which is very concerning to me, uh, in a lot-- in a-- in a lot of ways. How it's affecting the economy at large is we are spending less. All-- if you have a credit card, you're either maxing it out for these hygiene and food products, or wealthier people are spending less money.

Yeah.

So they're not traveling. They're not buying luxury goods. So we're going to see a huge hit on things like automobiles.

Mm-hmm.

I saw financing, um, in an ad on TV the other day, 84 months, 0%.

Wow. 84 months. Yeah.

That's [INAUDIBLE].

We talk-- we talked to Suze Orman the other day, and she said we shouldn't be making, uh, big purchases right now. You have a very popular blog that you've been running for 13 years.

Hard to believe.

Blogs are popular, but you were doing it since 2007 called Health Populate.

Right.

And you had a very interesting point the other day that I want to raise because we've always said that COVID care is supposed to be free, right? Testing's supposed to be free, any associated. But you referred to a study by the Commonwealth Fund, where you say "cost is an important factor in decisions to speak-- to seek coronavirus-related care." Why is that? Why are consumers making cost a factor in something that's so important?

You know, um, my book Health Consuming, the whole premise of it at the beginning is that the patient has become the payer. So we used to talk about the payer as the-- you know, the insurance company, the employer, the union. But the patient taking on high deductibles and more out-of-pocket costs, particularly for specialty drugs, coinsurance--

Yeah.

--more skin in the game. So we've been conditioned now, as US patients, to be payers. So before we seek care, increasingly we ask, how much is it going to cost me? And there hasn't been a lot of transparency in COVID care.

So people have been conditioned in the US to ask, what is the price going to be? And in fact, we've already seen, by the way, surprise medical bills for patients, uh, saying they got charged lots of money for either tests and/or in patient care. And that's to the tune of thousands of dollars that people--

[INTERPOSING VOICES]

That's a big concern we need to address. You've also talked about-- and this is an interesting point-- that people are more fearful of the impact of COVID-19 on their financial health, their household income and expenses, than they are on their physical health. So what impact does this have on consumer behavior?

JANE SARASOHN-KAHN: The-- the COVID era has really raised a sense of risk and safety. And so it's prevented a lot of people to seek care based on the fact that they're afraid of catching the virus in the doctor's office or ER. Uh, there have been many studies about this.

So Kaiser Family Foundation has done a study on this. And-- and yesterday, I-- I quoted another study from NRC Health, a pollster, looking at this question. So we're seeing people not seeking care for chronic conditions that must be managed now. Cancer, what if-- what happens when we delay cancer treatment?

Yeah.

It's not good for anybody.

No.

So we actually not only, uh, see decreased health and wellness and potential mormet-- mortality, but higher costs, of course, downstream.

Well, Jane, let's end on a good note. Tell me what you're optimistic about.

Well, I'm so optimistic about how Americans, in particular, have really hunkered down and are listening to the advice of the doctors, Dr. Fauci, Dr. Birx, uh, you, Dr. Whyte, who've been conducting terrific podcasts. I'm really encouraged that people have, for the most part, stayed home, uh, to "flatten the curve." We've done a good job in the Northeast, where-- where I live and you live. Um, and so, in fact, that New York curve, in particular, is coming down, which the great Governor Cuomo, I think, has been a brilliant communicator as well.

I'm optimistic that we can, uh, work together and hunker down. I'm optimistic that so many good deeds and good acts are coming out of this. And, um, my hope to move from health consumers to health citizens, where we own our health and are responsible in these ways to work together as a-- a family of people in the US, and also hopefully persist after that to be good health citizens for ourselves, the people we love, and for each other. So I'm hoping these new workflows in our life, our life loads, will persist over time and bring us to more civility, uh, in-- in the US, in particular, in and beyond our health and health care.

Jane, I want to thank you for sharing those trends. You are a trend weaver. Your book From Health Consumer to the Health Citizen-- Health Consuming, uh, is really a staple to understand some of these trends. Thank you, Jane.

Thanks, John.

And thank you for watching "Coronavirus in Context." I'm Dr. John Whyte.

[MUSIC PLAYING]