The Effects of COVID-19 on the Australian Health System and PHI

From our improving understanding of how the SARS-COV-2 virus is spread and how it emerges in different segments of the population as the COVID-19 disease, this article explores the likely effect on different sectors of the health system.

The collective response of government, institutions and individuals will determine the ultimate impact of the virus and how long it will take to bring under control. The public hospital system will do the heavy lifting. Depending on how involved the private hospital sector becomes, there could be mixed outcomes for Private Health Insurance.

Infectiousness of SARS-COV-2

A person infected with SARS-COV-2 may become infectious in as little as 12 to 24 hours after contracting the virus. Although the “average” time between infection and symptoms of COVID-19 is 5.7 days[1] the range is two days to 27 days with many studies giving quite different results. A person who is “cured” of COVID-19 may also remain infectious for up to two weeks[2]. Also, some infected children can be asymptomatic for the full course of the disease and most have only mild or moderate symptoms that could be mistaken for being a cold[3]. Therefore SAR-COV-2 may spread through communities relatively undetected until patients get very sick. Unfortunately, patients who get very sick, usually with pneumonia, are often elderly, and/or have co-morbidities. These patients require hospital treatment and in about 2.5% of total COVID-19 cases they need intensive care treatment for a week or two.

The earliest calculation of the rate of reproduction R0 (the number of persons an infected person will infect) of this virus was 4.1[4]. But later studies suggest lesser figures. It can be manipulated by infection control measures such as social isolation, locking down sections of the community, border controls, immunisation, etc. All these measures, except for immunisation, which will not be available until towards the end of 2020, are being used by various governments to control this virus. Therefore, recent measurements of its rate of reproduction suggest lower values. When governments talk about flattening the curve, they mean they are endeavouring to reduce the R0 significantly – even to below 1. The reason why governments are desperate to reduce R0 is that on any reasonable calculations, if left unchecked, COVID-19 patients will quickly swamp hospital facilities, fill every intensive care bed and exhaust available oxygen supplies. The Chinese government recognised this problem and built several large hospitals very quickly. They also set up temporary hospitals to meet the demand in Hubei province. Italy is also using temporary tent hospitals to treat its overflow COVID-19 patients. Australia may have to do the same if its measures to reduce R0 do not work.

Planning for COVID-19

Fortunately, Australia has had more time to plan for this virus than China had and hopefully the stress on the Australian hospital system will not be as great as it was in China or as it is currently in Italy. One of Italy’s main problems in Lombardi province is that many grandparents care for their grandchildren and the Italian government was initially unaware of the difficulty of detecting the virus in children when they closed schools. So many asymptomatic, or low symptom, infected children passed on the infection to their grandparents. A high proportion of those infected grandparents then required hospital treatment. As at March 19 Italy reported that the average age of the 2,978 deaths was 79.5. Over three-quarters of them had high blood pressure while about a third had diabetes.

There is some conjecture in medical circles whether certain drugs such as angiotensin converting enzyme (ACE) inhibitors and angiotensin receptor blockers, commonly taken by patients with hypertension, heart failure and diabetes might increase susceptibility to corona virus infection. But this is only speculation and it will be some time before there is factual evidence. The reasoning is that SARS-COV-2 invades a respiratory cell by attaching a protein on its surface to a receptor called angiotensin-converting enzyme 2, or ACE2. Other animals that have this receptor are bats, palm civets, monkeys, pigs, domestic cats and pangolins.

The gold standard test for SARS-COV-2 is the reverse-transcription polymerase chain reaction (RT-PCR) test and this is the test being used in Australia. The test takes about 6 hours once the swab sample is at the laboratory and the tests are done in batches. So, there can be some wait from the time the swab is taken, delivered to the laboratory, batched, tested and results delivered back to the physician. Chinese scientists have indicated that this test is far from ideal with an approximate 31% false negative[5]. As a result, the Chinese started using CAT scans to determine whether a patient had COVID-19. The first day Chinese data included patients identified by a CAT scan their total numbers of COVID-19 cases increased by 50%.

Estimation of Case Numbers

The rate of spread of this virus is logarithmic. It is useful to look at it on this basis. Outside China the total number of cases seemed initially to be increasing by around 10 times every 14 days. In the early days in China it was around 20 times in 14 days but the Chinese government’s measures to reduce R0 quickly got that down to two times in 14 days and eventually to zero times. In Italy it was also initially around 20 times in 14 days. If the total numbers of COVID-19 cases in Australia grows only 10 times in the next 14 days, then by Easter we will have around 8,000 cases. This will indicate that the measures the Australian government have taken to “flatten the curve” are working and the growth rate in numbers should then taper off over the next month or two with total cases by mid-year peaking at around 25,000 to 30,000. If the Australian population does not follow the government’s social isolation policies, then the numbers by mid-year will be much higher. Of course, the real numbers infected in China, Italy and the rest of the world may be significantly under-reported but the only data that can be relied upon is that published by WHO (and John Hopkins University).

We must also consider the expected demographics of Australians with COVID-19. If older age Australians get this disease in large numbers, then our public hospital systems will be swamped with patients even by Easter. The Government’s policy of keeping schools open is designed to reduce the numbers of older people getting this virus. Children with COVID-19 seldom need hospital treatment and many will never even be diagnosed with it. Assuming that other cases of the virus are spread fairly evenly across the working age population and above and patients with mild forms of the disease are told to remain at home and self-isolate then there should only be between 800 and 1000 cases in hospitals at Easter and maybe 2,000-2,500 cases at the peak in June. Australia should then be congratulating itself on the outcome although the public will not necessarily see it that way at that time.

Effects on the Hospital System and Private Health Insurers:

  • All elective surgery in public hospitals will be suspended. This has already been announced. Insured patients will only be able to obtain elective surgery in private hospitals. Some urgent public patients will be also treated in private hospitals and funded by State Governments. So private hospitals will initially do quite well – except some elective surgery patients will postpone due to lack of capacity or because of concerns about catching the virus whilst in hospital. Doctors and hospitals will have to double down on infection controls to minimise these concerns. Private health insurers will take a financial hit because elective surgery patients are treated far more cheaply in public hospitals than private patients. Private patients who have postponed elective treatment, will generally get their required treatment later although some may have illnesses that become more expensive to treat while others may die.
  • Because operating theatres have at least all the equipment of intensive care units, public hospitals will convert their operating theatres into temporary intensive care wards. This has already been done in Italy and some other countries. This will help to alleviate the expected shortage of public hospital intensive care unit beds in Australia – probably only about 1,500 or so are normally operational (the exact numbers are not recorded by AIHW).
  • Some wards in public hospitals will be designated COVID-19 wards. Staff in the intensive care units and these wards will become very stressed because the protective suits they will wear are not designed for use over many hours and, for example, have to be totally removed and disposed of for comfort stops. In some countries this protective clothing has become in such short supply that hospitals are trying to sterilise them for second or more usage. It is to be hoped that this does not occur in Australia. Better protective gear that have zips or fasteners to allow the wearer to have comfort stops is urgently needed.
  • If the “flattening the curve” measures announced by the Government do not work then instead of only being some 2,000-2,500 COVID-19 cases in Australian hospitals by June 2020 there will be far more and private hospitals will have to be co-opted to take some of the load. This will be disastrous for the whole hospital sector and the private health insurance industry as, in the short-term, the main purpose for private health insurance will have been usurped.
  • Assuming the Government has got measures to reduce the R0 of SARS-COV-2 correct, then the private health insurance industry will have a very good sales message. If they prosecute the message well, as the economy gets back to normal around the end of 2020, then I would expect the number of Australians privately insured to start increasing.


[1] Early Transmission Dynamics in Wuhan, China, of Novel Coronavirus–Infected Pneumonia, Qun Li et al., New England Journal of Medicine, Jan. 29, 2020

[2] Positive RT-PCR Test Results in Patients Recovered From COVID-19. Lan Lan et al., JAMA. Published online February 27, 2020

[3] Epidemiological Characteristics of 2143 Pediatric Patients With 2019 Coronavirus Disease in China, Yuanyuan Dong, American Academy of Pediatrics (pre-publication release). February 7, 2020

[4]   “Estimating the effective reproduction number of the 2019-nCoV in China”, Zhidong Cao1 , Qingpeng Zhang1 , Xin Lu, Dirk Pfeiffer, Zhongwei Jia, Hongbing 8 Song, Daniel Dajun Zeng. (not peer reviewed – released January 29, 2020).

[5] “Correlation of Chest CT and RT-PCR Testing in Coronavirus Disease 2019 (COVID-19) in China: A Report of 1014 Cases”,

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