What are the options for a smooth pandemic exit strategy?

Most Australians are now paying close attention to the pandemic sweeping the world.  As it is affecting every one of us, there is much discussion on death rates, flattening the curve, and the source and spread of new cases of COVID-19.  Actuaries are among those using existing skills and training to interpret the data and its implications for decision making.  Both erudite technical and forthright public discussions (now mainly on social media or Zoom) show frustration with the apparent lack of any cohesive plan to exit the population’s imprisonment – and the confusing and often contradictory messages being sent out by our governments.  This is to be expected though, give the range of different expert opinions being espoused and with governments having to deal with today’s issues while trying at the same time to make policies for the future on the run, with very little data or historical evidence to support it.

Governments everywhere have embraced a variety of strategies to eliminate this scourge.  The tactics can broadly be grouped as:

• Do nothing much – the USA and UK did this initially, and it continues to be the stance of Brazil and Iran – and the virus has spread much further into their populations as a result. This could be the least bad option for countries with young (less vulnerable) populations that lack the economic resources to sustain protracted lockdowns.
• Herd immunity while flattening the curve– Sweden is systematically allowing some spreading of the virus while encouraging older and other high-risk people to self-isolate, but this is now under stress as the older groups have not been protected and death rates are rising. The UK’s herd immunity strategy had to be abandoned when it became clear that it would not achieve sufficient reduction in caseloads for the National Health Service to provide proper treatment.
• Hard and late – Italy, Spain and France were quickly overwhelmed. They ran out of medical resources and many people have died through lack of treatment or survived with serious long-term health damage. The UK is now at risk of joining this group.  In hindsight, adequate medical resources seems to be one of the most critical items to reducing the death rate – having enough respirators and intensive care units to cope.
• Whack-a-mole – the current situation in the US, with different states taking different steps at different times. Bill Gates¹ describes this as “a recipe for disaster”. He views the top priority as having a consistent approach in strategy across different states, otherwise the infection will keep travelling backwards and forwards. He argues the position should be that “Shutdown anywhere means shutdown everywhere.  Until the case numbers start to go down across America—which could take 10 weeks or more—no one can continue business as usual or relax the shutdown. Any confusion about this point will only extend the economic pain, raise the odds that the virus will return, and cause more deaths.”
• Hard and early – South Korea, Taiwan, Singapore², NZ and Ireland have tried to quarantine those carrying the virus hoping to eliminate it while enforcing significant social distancing. The more successful strategies have been characterised by extensive testing – and use of test results to implement targeted quarantines and inform policy decisions.  Australia actually went Hard and Late – we were not testing sufficiently and were poor on quarantining; however, our isolation and subsequent actions have protected us from similar fates to other countries.

Most governments have a policy of containing the disease, but all are grappling with an exit strategy.  No one will be entirely safe until there is a vaccine, but this could be 12 to 18 months away – and no coronavirus has had a successful vaccine developed before.

Clearly, governments need to restart their economies as soon as possible, but all want to make sure they don’t then create a further outbreak that exceed their medical resources.  However, an early start is essential to reboot the economy.  We all know about the huge debt burden of the Commonwealth, but the States will also have huge deficits – they are maintaining most services including retaining all public servants, so their costs remain largely unchanged.  However, they have lost much of their revenue – property stamp duties, gambling taxes, and significant reductions in payroll taxes, public transport fares and GST (noting that the items people are buying now, food and health goods, are exempt from this tax).

Mortality Rate

Plagues all have their own characteristics.  The Black Death of the fourteenth century was particularly virulent and devastated Asia, the Middle East and Europe.  It killed about 20 million Europeans in five years, which was nearly one-third of the total population at that time.  In the days before modern science and medicine, such outbreaks were common³ and the so-called Spanish Flu of 1918-20 killed an estimated 50-100 million people.  Thanks to strong quarantining and social distancing, a relatively small number of Australians (about 10,000) were killed.

More recent cases of Ebola, MERS, Zika and SARS have been deadly, but they were quickly contained, partly because these viruses often kill their hosts quicker than the hosts can spread the virus.  None of these broke out globally.

Conversely, COVID-19 is fast spreading.  Fortunately, it is not as lethal as the other viruses just mentioned, but it is dangerous for four key groups:

• The elderly – statistics show that the death rate is much higher for those over age 70, and particularly those over age 85.
• Those in confined places – the epidemic has spread in cruise ships, aged care facilities and now in US and French aircraft carriers.
• Health workers – fit and healthy people have died, suggesting that extensive exposure to the virus has a cumulative adverse effect. More than 100 doctors have died in Italy and several NHS medical staff have died in the UK.
• Those with existing respiratory ailments or other severe co-morbidities such as diabetes, cancer or heart problems.

It also appears that young healthy people are generally not severely affected.  The incidence of death under age 20 is very low, and children appear largely unaffected – which is why many are asking for schools to be re-opened.

The actual death rate is difficult to calculate. While there is a league table of cases and deaths produced by Worldometers⁴, both the exposed-to-risk and death statistics are understated.

The level of exposed-to-risk relies both on testing – which is sporadic everywhere – and the rate of community infection.  The latter is estimated by epidemiologists but the rapid spread of the virus in the community and the large number of carriers who are asymptomatic or have mild symptoms means the estimates have statistically significant, but unknown errors.  Results just released regarding the incidence of corona virus amongst the crew of the US aircraft carrier, Theodore Roosevelt, show the extent of the problem⁵.  The entire crew of 4,800 was tested and revealed 600 cases with 60% of these entirely asymptomatic.  If testing had been confined to symptomatic cases, 360 infected sailors would have been free to infect others. If this level of asymptomatic infectiveness is applied to Australia, the actual number of infected people would be at least 2.5 times the reported number.  The difficulty in pinning down these numbers is one reason for the lockdown – to prevent the unknown carriers spreading it further.

The level of deaths is distorted by under-reporting.  It appears that Chinese and Iranian deaths are much higher than the reported figures (deliberate misrepresentation by their governments, not scientists), much of the third world does not have the skills or equipment to measure it properly, and even in Europe and the UK where they try to give accurate data, deaths outside hospitals have not been captured well.  Australia is also only reporting deaths of previously diagnosed patients.

From the Worldometers site, there are crude death rates related to age and gender.  First, about two-thirds of deaths are of males.  Then, the virus is virulent at advanced ages as shown in Table 1.

Table 1.              Death rate
The low death rate under age 40 is one reason why many people are confident we can get parts of the economy back to work without any major health risks.  However, as the young meet with vulnerable people, they will continue to spread it.  Therefore, we would need to devise a strict quarantine structure for those at risk – and recognise there would be lapses due to some failures by people to adhere to strict standards.

Sweden is trying this strategy, but their curve is still rising, so the quarantining of the vulnerable has not been effective.

Co-morbidities

Most analysis to date has been based on age and gender, but there are some signs that having a serious ailment, a co-morbidity, might be the most important risk factor:

• Significantly more males than females have died in Italy and China, both countries where male smoking has been and is high, suggesting more males than females have weakened respiratory systems.
• Healthy older people often survive.  This week, a 105 year old female and males of 99 and 101 fully recovered in England.
• African-Americans in NYC have higher levels of mortality from the virus.  This could be related to high levels of diabetes and obesity amongst this ethnic group and generally poor standards of health due to poverty.  Note the large number of people being buried in mass graves in NYC includes many lacking family contacts indicating they are likely to be poor, perhaps homeless (and therefore were in poor health).
• The death rate appears to vary by country, suggesting there are factors other than age and gender – although a lot of this difference could be due to differences in testing and reporting.

There are two sets of statistics published specifically relating to co-morbidities.  First, the Italians released some data on the first 6,800 deaths (as at 27 March).  Although most were elderly, it showed that only 2% had no co-morbidity (cancer in last 5 years, hypertension, diabetes, etc).  21% had one illness, 26% had two and 51% had 3 or more.  In NY State, some 10,277 of the first 11,586 deaths (88.7%) had one or more comorbidities.

If these figures were representative of the whole population, it might be possible to isolate a relatively small number of people and let everyone else go back to work!  Hence, if we could show that those without a significant co-morbidity are at little risk of serious illness or death, we could start the economy moving quickly.

We could potentially isolate those at risk which might be 15% of those over age 60, all of those over 70, and younger people with a history of major illness (diabetes, heart disease, respiratory problems and cancers).  We would also isolate people living with these high-risk people. The problem is ensuring the isolation is enforced and sustaining the people so isolated for the six to twelve months of isolation that would be required.

Exit Strategy

What is the path for an exit strategy from lockdowns given the likely timeframe (12-18 months) for a vaccine?  There may be early results with research looking at proxies including previous BCG vaccinations⁶.  However, we need to assume that we will have to come out of the lockdown long before a vaccine is available.

Australia has an advantage being an island in that it can test anyone arriving into the country and keep out any future transmissions.  We are in a position that the number of infected people is at a relatively low number.  From this, we should be able to triage the population and get back to normal.

We need to trust the hypothesis that healthy lives will recover without hospital treatment.  Therefore, we must try to isolate riskier lives (and those living with them).  We allow the safer lives to return to the economy but, accepting the risk of a major outbreak, we need:

• Recognition that there are no risk-free options, and that one-dimensional strategies which fight the virus without reference to the economic implications will kill more people from poverty and mental health issues than they save from the virus. The approach needs a careful balance between expanding economic activity and preventing the virus spreading exponentially.
• Phased introduction – perhaps by geographical region; starting with schools due to the low levels of health risk to younger people and the double-whammy of disrupted education for children and disrupted work for parents if schools are closed or only notionally open.
• A plan to deal rapidly with localised outbreaks by identifying, quarantining and testing people who may have been exposed to infection.
• A plan to lockdown again (perhaps by region) if the strategy does not work. Acknowledgement that some people will not follow the rules – so some high-risk people will be exposed by having contact with (say) family members.
• Acknowledgement that mild or asymptomatic cases could lead to further break-outs.
• Full testing within regions to ensure local elimination – as done in the North Italian town of Vo. While this could be viewed as intrusive, it is far less intrusive than requiring people to give up their livelihoods.
• Recognition that frequent heavy exposure kills healthy people – so we need to minimise people needing hospital care.

We will maintain:

• Closed borders – we could have travel between cleared countries in time, perhaps starting with NZ.
• Limited travel between regions until they are all clear or reliable tests can be carried out before travel and at points of entry.

The risk of going early is still large but it could be managed progressively – but the risk of staying out longer will be crippling for the economy. The further risk of staying out longer once community transmitted cases have reduced to very low levels is that the community will simply stop complying.

We can expect a slow relaxation of restrictions and a slow restarting of the economy with an ultimate return to whatever the new normal is, once a vaccine is freely available – likely to be available sometime late in 2021, but possibly earlier given the resources working on it.

The Actuaries Institute has set up a COVID-19 Working Group to consider the financial and health impact of the coronavirus on Australia.  Michael Rice AO is a member of that group.

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