A new challenge to the healthcare system

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A coronavirus outbreak that apparently originated in Wuhan, China last December has spread to the United States and numerous other countries. It was designated as a pandemic (global epidemic) last week by the World Health Organization (UN).

In taking this step, WHO officials implicitly slammed national officials (including those in the US) for failing to recognize the seriousness of this illness and take action to combat it. Coronavirus has been declared a pandemic, Joel Shannon, usatoday.com,
3/11/20.

"WHO has been assessing this outbreak around the clock and we are deeply concerned both by the alarming levels of spread and severity, and by the alarming levels of inaction," [Tedros Adhanom Ghebreyesus, director-general of WHO] said in a statement. "We have therefore made the assessment that #COVID19 can be characterized as a pandemic."

Notice, however, that this is a recently mutated virus. No vaccines or treatments of proven efficacy have been developed yet. Until they are, the main response will be defensive measures to slow the spread of the disease among the general population. People who contract COVID-19 will be kept isolated and cared for in hopes of aiding their recovery. Some 1% of COVID-19 patients, typically elderly people with other health issues, are expected to die instead of recovering.

Even before the WHO announcement, and certainly since it was made, there has been a great deal of activity aimed at containing the coronavirus or at least slowing its spread. Here’s an illustrative sampling from a US standpoint:

Declarations of an emergency by the US president and numerous state governors - cancellation of public meetings (conventions, trade shows, NCAA and NBA basketball, NASCAR races, St. Patrick’s Day parades, Broadway shows, all Apple stores except in China) – accelerating spring break at numerous colleges, with on-line instruction to follow until further notice – secondary school closings in many areas (including Delaware for at least two weeks) - extension of travel restrictions (such as a ban on visitors from Europe, which the president announced in his address to the nation on March 11) – employers telling workers to stay home if they don’t feel well and urging them to work remotely if feasible - Democratic primary debate 11 (March 15) moved from Phoenix, AZ to Washington, DC – announcements designed to encourage voters to submit absentee ballots versus going to the polls (LA postponed an upcoming primary) – Congress remaining open, but banning visitors - Delaware General Assembly suspending legislative sessions subject to weekly evaluation.

Do some of
these moves represent overreaction? Sure, but a decision has effectively been made to “err on the side of caution.” Face it: Coronavirus is about to shut down your daily lives, Tim Carney, Washington Examiner, 3/11/20.

The tipping point in closures has been hit. The elites--their alma maters, their kids' schools, their employers--are all hunkering down. The tone is set. Time to steal away and stay away. Your life is about to be shut down. For a while.

Robust containment of the coronavirus should reduce the cumulative number of people who come down with COVID-19, but the primary payoff will be avoidance of a surge in cases sufficient to overwhelm the healthcare system and prevent seriously ill people from being effectively cared for. (See Part A, infra., for a real life example from the archives.) This coronavirus chart shows why social distancing is necessary, Philip Klein, Washington Examiner,
3/12/20.

The important thing to keep in mind is that it isn't just the overall number of cases over time that's important, but making sure that as few people as possible are sick at the peak of the outbreak. The reason is that the medical system can handle a steady flow of patients. But once the system exceeds capacity, running out of beds and life-saving medical equipment, those with severe symptoms are at much higher risk because they cannot get the care they need. That's when the fatality rate spiked in China and Italy.

With the foregoing background in mind, let’s consider what lies ahead: (A) Duration of the “shutdown” phase; (B) Economic effects; and (C) The 2020 elections that are coming up in 233 days (or less for those who vote early).

A. Duration of the “shutdown” phase – While a containment mindset is currently in ascendancy, that doesn’t mean people will not find reasons to venture outside their homes. One way or another, there will continue to be shopping expeditions, meals eaten in public restaurants, gainful employment in workplaces, medical appointments, some travel (at bargain rates), etc.

Recent cancellation announcements have been vague about how long the shutdown phase will last or what developments may warrant swinging back towards normalcy. So long as the reported number of US cases and deaths is increasing rapidly, a shift in the current public sentiment seems unlikely. COVID-19 global cases [click US on left side of screen] for current US statistics], arcgis.com, accessed 3/15/20.

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As the exponential spread of COVID-19 in the US slows, perhaps due in part to a step-up in testing for the disease that will reduce an initial lag between actual and confirmed cases, attitudes will begin to shift. But it’s hard to predict when the tipping point will come, and reversal of the shutdown mindset will begin.

For perspective, let’s compare what is happening currently in the US to the handling of a similar (but probably more serious) situation 63 years ago. This was the Asian flu outbreak of 1957, which like COVID-19 was officially classed as a pandemic (one of three in the 20th Century, albeit far less deadly than the Spanish flu of 1918 that killed some 20-50 million people.) Influenza, history.com, updated
2/5/20.

The 20th century saw two other flu pandemics: the 1957 Asian flu (caused by H2N2), which killed 1.1 million people worldwide, and the Hong Kong flu of 1968 (H3N2), which killed 1 million people worldwide. Both of these flu strains arose from a genetic reassortment between a human and an avian virus.

Here's some more information re the 1957 Asian flu. Britannica.com, accessed
3/13/20.

In the first months of the 1957 Asian flu pandemic, the virus spread throughout China and surrounding regions. By midsummer it had reached the United States, where it appears to have initially infected relatively few people. Several months later, however, numerous cases of infection were reported, especially in young children, the elderly, and pregnant women. This upsurge in cases was the result of a second pandemic wave of illness that struck the Northern Hemisphere in November 1957. At that time the pandemic was also already widespread in the United Kingdom. By December a total of some 3,550 deaths had been reported in England and Wales. The second wave was particularly devastating, and by March 1958 an estimated 69,800 deaths had occurred in the United States.

Getting specific, your faithful scribe recalls contracting the disease while he was attending Princeton University. He and a classmate had wangled an invitation to be on a TV show (“Youth wants to know”) that was to be broadcast from New York. We took the train north on October 13, 1957, and then proceeded to the studio. I was OK when we started off, but began developing flu-like symptoms on the way.

I was feeling awful by the time the broadcast began and felt sure that my problem must be the Asian flu that had been sweeping the campus. Afterwards, we took the next train back to Princeton, where (for the first and only time in four years) I made my way to the infirmary. The staff confirmed my self-diagnosis, and if memory serves determined that my temperature was 102 degrees. There weren’t enough beds to admit such a relatively mild case, however, so I was sent back to my dorm room. There I recuperated over the next several days.

Contemporaneous coverage from the Daily Princetonian (a campus newspaper that sold for 10¢ a copy) confirm that Asian flu was trending at the time, and that university healthcare facilities were stretched to the limit.

•Student center set to become flu ward if epidemic strikes; Influenza cases up to 83; Weekend outbreak feared. October 11, 1957.

•University cancels weekend social events as campus flue epidemic keeps spreading; York cites need of student center but lacks added nurses for staff, October 16, 1957.

There was a flu vaccine available, but it was in very short supply – only the football team and some members of the administration had been inoculated. The initial plan of putting beds in the student center was abandoned due to the shortage of nurses in favor of putting beds in the infirmary corridors, etc. And “the number of cases allowed outside the infirmary [was] almost double the 25 originally set as a safe figure.”

There was apparently no thought of suspending classes, let alone shutting down the campus. Scheduled football games were played, but a weekend dance and several musical concerts were canceled.


Compare this experience to a wave of college closings, including Harvard, Princeton, and some 25 others, at a time when there had been 734 confirmed cases of COVID-19 in the entire country. Spring break forever, Zachary Halaschak, Washington Examiner,
3/10/20.

The University of Delaware wasted no time in following suit after the first COVID-19 case in Delaware (an unidentified 50+ male on the UD faculty) surfaced. 4 coronary virus cases in Del., UD campus empties out, Brandon Holveck et al., News Journal,
3/13/20.

If the reaction to the 1957 pandemic struck me as inadequate, the current reaction seems excessive. Will lives really be saved by dispersing college students, thereby bringing them in contact with older people who are more susceptible to the disease?

Perhaps there is some intermediate policy, which would represent the proverbial “happy medium. And even if the solution isn’t immediately apparent, Americans may perceive in due course that it’s time to begin a return to normalcy.

When? No one can say with certainty, but our guess is that the shutdown mindset won’t last for more than two or three months. Here’s how Dr. Scott Gottlieb, former head of the Federal Drug Administration, put it in a recent interview. Corona virus is past containment, USA Today,
3/9/20.

Q. How long is this going to last?

A. We're looking at changing American life for a couple of months. … I think that March and April are really going to be the months that are going to be very difficult. And, hopefully, if we've done the right things, we'll be coming down the epidemic curve toward the end of April. The summer should look different. I think there's still going to be outbreaks, and we're still going to need to be very vigilant about stepped-up hygiene and about taking reactive measures when there is a case identified, so this isn't going to go away.


B. Economic effects – The coronavirus epidemic has had a series of adverse economic consequences. One of the initial problems was disruption of international supply chains, notably in China, which slowed the pace of manufacturing and transport of various products.

These developments in turn contributed to declining oil demand, which has driven down oil prices and cut into the profits of oil producers. Saudi Arabia proposed OPEC oil production cuts, which Russia was not prepared to accept, and a price war has broken out between the two countries that could jeopardize the economic viability of North American “fracking” operations. Saudi Arabia launches all-out oil [price] war, Tyler Durden, zerohedge.com,
3/8/20.

The coronavirus situation in China is now reportedly improving, but the ramping up of containment efforts in the US (as already described) and elsewhere is stopping a lot of normal economic activity. Cruises canceled - reduced number of airline flights and planes flying with many empty seats - depressed hotel and restaurant business – service workers losing pay and tips – etc.

Hard data re the downturn are not yet available, but analysts are hastily trimming their economic projections and calling for government stimulus programs to ease the blow. As recession looms, priority is lessening severity, easing financial stress, Greg Ip, Wall Street Journal,
3/12/20.

The hard reality is that as governments take ever more forceful steps to limit the spread of the virus, that will amplify the near-term hits to their economies. A global recession now looms because “the necessary measures to contain the spread of the virus make that unavoidable,” Vitor Constâncio, a former vice president of the European Central Bank, said Thursday.

Stock prices have fallen sharply in recent sessions, hitting the 20% loss that is considered to represent the onset of a “bear market” (the first since 2009). See, e.g., Dow 30 closing prices, selected dates, 2020.

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In sum, the containment measures that are intended to slow and blunt the health effects of the pandemic will inevitably involve an economic cost – converting what might otherwise be a “v-shaped” slowdown into a “u-shaped” slowdown of longer duration. The virus aftermath won’t be like a hurricane, Justin Lahart, Wall Street Journal,
3/7/20.

. . . there will be no sudden booking of vacations and no immediate resumption of major business conventions. No V, in other words. The coronavirus epidemic will weaken the economy, and that weakness is likely to last an uncomfortably long time.

C. 2020 elections – Politicization of the pandemic has inevitably occurred. Early on the president was criticized for overreacting by imposing a travel ban on visitors from China and appointing a task force headed by Vice President Mike Pence (a non-scientist) to lead the administration response. More recently, the complaints have been along the lines that Trump is understating the gravity of this situation and not acting with sufficient vigor to address it. For his part the president has fired back at critics, giving as good as he got.

On March 11 (Wed.), an address to the nation from the oval office was intended to reassure Americans and call for national unity. It lasted 9 minutes and didn’t go well. The president does far better when he is speaking to an audience, and he seemed to be stumbling over the words as he read them from the teleprompter.

For all the rhetoric about this being a time for national unity, there was no apparent improvement in the political climate after the address. The president went back on the Twitter warpath about various issues the next morning. Meanwhile, both principal candidates for the Democratic presidential nomination publicly attacked his alleged mishandling of the coronavirus pandemic, albeit failing to convincingly explain how they could have done a better job.

Joe Biden’s argument was that the testing for the coronavirus had been woefully inadequate, plus which the president had glossed over the situation. Coronavirus: Joe Biden blasts Trump administration for colossal failure, Jim Hayek, americantruthtoday.com,
3/12/20.

Biden said that the deadly illness revealed “severe shortcomings” of the Trump administration and accused the president of stoking fears nationwide. He also suggested that the president was racist in calling the illness a “foreign virus,” despite the fact that it originated from Wuhan, China.

Effectively equating COVID-19 with the Spanish flu of 1918 that killed some 20 to 50 million people worldwide (including some 675,000 Americans), Bernie Sanders provided a dire warning of its likely impact. Bernie says coronavirus could kill more Americans than troops in World War II, John Salvatore, flagandcross.com,
3/12/20.

To even imply that more people will die from Coronavirus does nothing but get lefties riled up. But that was the point, wasn’t it? To make President Trump look like a fool for mishandling the “pandemic,” right?

As for reassuring Americans, the stock market reaction wasn’t encouraging. Specifically, the Dow 30 index fell by 2,353 points (10.0%) in Thursday trading. Trump’s coronavirus speech fails to unify or reassure a nation on edge, dnyus.com,
3/12/20.

A press conference in the Rose Garden on March 13 (Friday) went considerably better. The president was accompanied by VP Mike Pence, the scientific and health experts on the task force, and a bevy of business executives, many of which players were invited to speak. Various new steps were announced, including declaration of a national emergency and an all hands on deck effort to speed up the COVID-19 testing effort.

The press conference lasted about 90 minutes, including an extended Q & A session with the journalists in attendance. While it was being aired, a sidebar on the TV screen showed that the Dow 30 index – already up substantially from the opening bell - was still rising. It closed for the day at 23,185 – up 1,985 points (9.4%).

One can readily see why Democrats hope to make hay from the coronavirus situation. First, it’s a complicated problem with many moving parts, and missteps are bound to occur. Second, any recent missteps have happened on Trump’s watch so he can be blamed for them. Third, efforts to contain COVID-19 may neutralize his best arguments for reelection, namely a robust economy and soaring stock market. (You don’t have to love me, just check your 401K.)

If the current action was playing out in October, the outcome of the 2020 elections would seem like a foregone conclusion. We’re reminded of the point in 2008 when it became clear that John McCain’s presidential run was doomed. October surprise: financial turmoil,
10/15/08.

While SAFE has been rattling on about smaller, better-focused, less costly government – and other advocates of fiscal responsibility in government have been pushing the idea of a bipartisan commission with government spending, taxes, and entitlements all on the table – events have been moving in a different direction. Forget “it’s the long-term economy, folks,” that is not what this election will be out. Do not expect a reasoned discussion of the candidates’ proposals for healthcare, energy, taxes, etc., because most Americans are no longer paying attention.

It’s only March, however, so there may still be time for the pendulum to swing back in the other direction. Don’t forget, moreover, that the president bowed to public pressure, got tested for the coronavirus, and the results came back negative.

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One more thought, lest this entry close on an unduly optimistic note. The response to the COVID-19 pandemic is bound to have painful economic consequences, and the two political parties will be vying to offer Americans the most relief. Some combination of fiscal stimulus and monetary ease will be approved, thereby deepening the hole that the government was already digging for itself. COVID-19 can’t spread if you stay home, Holman Jenkins, Wall Street Journal,
3/13/20.

Refamiliarize yourself with the acronym MMT, for modern monetary theory. This is the idea, popular with economists on the left, that the U.S. lends itself right now to government printing and spending large amounts of money without inflation. *** Whatever their differences, President Trump and his eventual Democratic rival will be of one mind on spending unlimited sums to cover Americans’ health-care bills, make up for lost income, prop up small businesses, etc.

Details remain to be determined, but we doubt either side will offer plans likely to benefit the US economy over the longer term, i.e., the choice in November will boil down to which of the economic/fiscal plans on offer is the “least worst.” Stay tuned for discussion of the specific ideas, e.g., payroll tax holiday, business subsidies, replenishment of the Strategic Petroleum Reserve, paid leave benefits to encourage sick workers to stay home, extreme monetary ease from the Federal Reserve, etc.

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