By Vivian Ho, Ph.D.
James A. Baker III Institute Chair in Health Economics
Like many of you, we completed our third full week in self-quarantine. We have gotten used to the routine of videoconferencing for meetings near and far. Our families, along with many we have spoken to, have had a mix of good and bad experiences with online instruction and keeping our kids occupied. We continue our commentary on sources we read this week that shape our thoughts on how long the pandemic will last and what policy actions seem most promising.
Everyone is wondering when the pandemic will end in the U.S. so that life can return to normal. Scientists from around the world have created multiple predictive models to estimate how the pandemic will play out. The coordinator of Trump’s coronavirus task force, Deborah Birx, said the White House’s projections were based on results of five or six modelers. One model that appears to figure prominently in the White House’s projections is the Institute for Health Metrics and Evaluation’s (IHME) model, which projects the U.S. pandemic to peak on April 15. This model predicts 2,644 deaths on April 16, when the nation will have a shortage of 87,674 beds. The builders of this model predict that the first wave of the pandemic will end by early June, when the country is predicted to suffer fewer than 200 deaths per day. The modelers took into account the social distancing measures ordered in every state, but multiple different factors for which we lack data could make their predictions inaccurate. Therefore, the results are presented along with “confidence bounds” which delineate lower and higher bounds to their estimate.
One can download an Excel spreadsheet from the IHME website to examine predictions of the pandemic’s spread in each state. The IHME predicts that the pandemic will peak later in Texas on May 6. On this data the model predicts that Texas will have 17,221 hospital beds filled with Covid-19 patients and 160 deaths. By mid-June, the state is expected to have just under five new deaths per day and roughly 500 patients hospitalized with Covid-19, which would be manageable for our health care system.
Factors that contribute to the difficulty in predicting the consequences of the pandemic are the lack of sufficient tests for the disease, as well as differences across countries in counting deaths attributable to the pandemic. This article reports that France only records Covid-19 fatalities in hospitals, Spain does not include unconfirmed cases in senior homes, and the Netherlands only tests hospitalized patients.
Two articles highlight the devastating effects of crowds in allowing the coronavirus to spread. The Los Angeles Times describes a choir practice in Washington state in early March, where 60 members gathered for 2.5 hours. Three weeks later, 45 of them tested positive for the disease, and two were dead. The Wall Street Journal describes how an unusually popular soccer match attracting 40,000 fans was a catalyst in turning the Lombardy region in Italy into one of the worst-hit areas on the planet. The crowded public transportation to and from the game, as well as fans gathering in venues to eat and drink, along with the crowded stadium led the reporter to label the event a “perfect amplifier” of the virus.
The ability of the country to re-open for business depends critically on when there will be sufficient supplies to test both symptomatic and asymptomatic people for the coronavirus. Multiple articles have explained why the country currently lacks sufficient test kits, but we have not seen reliable information on when this deficiency will be addressed. A plentiful supply of tests will facilitate the identification of asymptomatic individuals carrying the virus, so that they can self-isolate rather than spreading the disease to others.
This week the FDA approved the first antibody test in the U.S. to detect the coronavirus. We still do not know when this test will become widely available. The test can identify people who have effectively recovered from the disease, with antibodies that fight off the virus circulating in their blood. It is believed that there are many people, including health care providers, who contracted the coronavirus but only had mild symptoms and never were tested when they were infected. Health care providers with antibodies may be able to treat Covid-19 patients with fewer concerns of falling ill again. Scientists have not been able to confirm that recovering from Covid-19 confers immunity, but if so, recovered workers would not need to self-quarantine and could serve many effective roles until the nationwide lockdown ends.
Many policymakers and experts have questioned whether the health benefits of closing large sectors of the economy are worth the economic losses imposed on many Americans. The New York Times reported on an analysis by Anna Scherbina that attempts to answer this question. Her cost-benefit analysis concludes that the optimal health policy would involve closure measures similar to ongoing policies for seven weeks, but likely longer. The benefits of shuttering the economy to fight the pandemic include the avoided medical costs of treating Covid-19 patients, productivity losses due to worker illnesses, and the value of lives saved due to social distancing. The costs of the economic closure to fight the pandemic are estimated by summing the losses to sectors such as entertainment, hotels, restaurants, retail, and transportation, which are estimated to amount to $35.7 billion per week. The marginal benefits of closure gradually decrease by week, assuming that closure successfully reduces the number of newly infected workers. Scherbina warns that her calculations assume that the economy moves to a less aggressive mitigation strategy after the shutdown ends, where actions such as social isolation of the elderly and home isolation of suspected cases continues.
Meanwhile the significant health care costs of treating Covid-19 are becoming more evident. We wrote a blog last week noting that the $100 billion included in the federal CARES Act to compensate health care providers for the expenses associated with the pandemic and lost revenues is likely woefully inadequate. Hospitals are estimated to lose $2,800 per Covid-19 patient admitted, and providers have been forced to cancel all elective procedures and treatments to reduce the spread of the virus. On the patient side, a news article reports that the costs of Covid-19 treatment for an uninsured patient is estimated to be $73,000. On the bright side, many insurers have announced that they will waive copayments, deductibles and other costs associated with treatment of Covid-19 for beneficiaries, although the details on what will and won’t be covered are unclear.
Much attention has been paid to President Trump invoking the Defense Production Act to require GM to make ventilators. However, other sources note that GM may not be able to begin producing ventilators until May at the earliest, which is well past the estimated peak of the crisis. An opinion piece in The Dispatch notes that firms like Medtronic and GE Healthcare are our best bet for ramping up supply to meet the current shortage. Nevertheless, experts argue that the actions of a mass-production firm such as GM are important, because the company could help build a stockpile of equipment for future outbreaks.
As 6.6 million Americans filed for unemployment benefits this week, states that expanded Medicaid to low-income adults under the Affordable Care Act will be better positioned financially to meet the health care needs of their residents. Workers who have lost their jobs due to the economic shutdown have also lost heavily subsidized employer-provided insurance. These individuals will be seeking health care coverage through Medicaid if they quality. Some states objected to the Medicaid expansion, because they were concerned that states would be required to pay 10% of the costs, which they could not afford. However, a piece in last week’s New England Journal of Medicine notes that states that have expanded Medicaid did not experience an increase in Medicaid expenditures. We will spare you the details, but a combination of health care spending and taxes at the state level leads to this outcome.
In the coming week, we will be closely watching the number of deaths at the national and state level for Texas to see whether the IHME predictive model is painting an accurate picture of where the pandemic is headed. We do not value the number of reported cases of coronavirus as a helpful statistic, because the number of tests is in such short supply. Like you, we will be wondering when the nation will have enough tests to allow us consider other options besides a complete lockdown of the economy.