COVID-19: Tackling a dual economic and health crisis

Never in modern times has the world seen such a simultaneous global health and economic crisis. The economic crisis results not from the direct impact of the disease, but rather the extreme measures needed to get it under control. The greatest economic risk is an open-ended suspension of a large part of the economy. A change in strategy is radically needed in the US. And it needs to start immediately with a national stay at home (SAH) policy, for a maximum three-month period with weekly reviews based on forward looking data and stretch goals to begin relaxing restrictions within 3-4 weeks, if the data permit. The combination of aggressive building of capacity at the back end and slowing and tracking (i.e. contact tracing and testing) the growth on the front end should allow restrictions to be lifted far sooner than some of the more dire predictions and even sooner than my proposed maximum three months. In this article I discuss the need for a dual, integrated crisis strategy as well as a number of specific suggestions – some of which are being considered, while others are my own ideas coupled with what has worked in other contexts. 

The virus, at its core, thrives on population density (think: NYC, Wuhan, Lombardy) and population movement (the Wuhan exodus, Spaniards fleeing to the beach, soccer games in Italy, political rallies, Spring Break, Cherry Blossom festivals and Mardi Gras in the US). The disease knows no borders. Covid19’s ingenious design takes advantage of our very nature as humans – our desire to have fun, to ignore risks that don’t immediate impact us, our desire to move, travel and to socialize. And yes, our occasional lapse into selfishness.

The president was right – there needs to be an endgame for the lockdown. A deadline must be set, and a moonshot effort needs to ensure the health crisis is under control by then. It is better to risk more short-term pain with a national policy than have an indefinite, open-ended cascading dual health and economic crisis. Three months should be enough to ramp up the capacity to deal with those who fall seriously ill. Any talk of a 6 month or 12-month lockdown should be taken off the table –with the right immediate measures it won’t be necessary. And an economic lockdown more than three months will impose economic risks that the country may take years to recover from. These risks aren’t theoretical – they are already happening.  

While we are learning more and more about the disease threat and how to manage it, the government replacing a large part of the economy indefinitely is stepping into a dangerous and unknown void without precedent.

Goldman and others were forced to bailout their money market funds and others may follow. The commercial mortgage market is on the bring of collapse and a large part of the consumer debt market is facing a massive sudden stop. When money market funds are at risk, the entire economy is at risk as it implies even the healthiest companies are having trouble raising funding. Though the Fed, Treasury and the stimulus package will help, this can only go so far. While we are learning more and more about the disease threat and how to manage it, the government replacing a large part of the economy indefinitely is stepping into a dangerous and unknown void without precedent.

I believe I have a unique perspective on Covid19. During my two careers I worked directly on both a financial and an epidemic crisis. During the financial crisis I was the lead subprime RMBS analyst for Credit Suisse and lead asset expert for PIMCO Advisory which was established to provide services during the financial crisis. While working for the US affiliate of BRAC, a Bangladeshi NGO, I had responsibility for Liberia and Sierra Leone during the Ebola outbreak. I attended conferences on Ebola, managed grants addressing the Ebola crisis, coauthored a paper on the economic impact of Ebola on BRAC’s microfinance operations and visited both countries during the waning days of the outbreak. I am not an infectious disease expert but had the opportunity to learn about the disease and potential effective responses. In 2014, the CDC issued a stark warning – over 1 million people could catch the Ebola virus worldwide. In the event, only 20K became infected with total fatalities of 13K. One can hope that such is the case with Covid19 – but only an effective response today will ensure that similar worst case scenarios don’t come to pass. 

Immediate Stay at Home Order Needed

The President needs to immediately expand stay at home policies nationwide while at the same time put a definitive maximum 1 to 3-month end-point on lockdowns with rolling weekly evaluation periods where restrictions can be lifted or relaxed as success of the strategy is evaluated based on established, clear, transparent metrics. The reality is that the virus is still increasing exponentially throughout the country. As the above chart shows the daily growth rate is over 20% for most states and a large number of counties (see map image below) have infections. A porous containment strategy is nearly as ineffective as no strategy. 

The daily growth rate is over 20% for most states

Two weeks – the incubation period of the virus – should allow enough time for the current cases to be cured naturally or progress to more serious cases. As part of the national SAH policies, while local governments may have some flexibility in implementing it, the combination of loose interpretation in one area and interstate travel means it will be very hard to get it under control unless the entire nation is on the same page. You already have interstate (governor to governor) and intrastate (mayor to governor) finger pointing and policy schisms. Failure to have a reasonably consistent national policy, means the country will be playing whack-a-mole as outbreaks pop up based on varying interpretation, population movements and execution of SAH policies. The large gatherings and movement of people present the most risk and which most urgently needs to be contained. Somebody out for a jog or two people walking side by side are unlikely to be large contributors to the outbreak.

The question for policy makers will be whether the country can achieve 90% of the benefits of a full lockdown, with a well-executed and followed guidance on SAH coupled with social distancing for shopping, exercise, dog walking, etc. while leaving in tact the most critical human needs. Further, the country is large enough to allow tightly controlled experiments to ensure that the policy optimizes the tradeoffs between personal and economic control and epidemic control. As the chart below shows, Florida has a large number of counties with cases and the daily growth rate exceeds 30% for a number of counties and most have daily growth rates over 15%. Florida is one of the states that have resisted more stringent stay at home policies. 

Why it’s important to set a fixed target to restart the economy

While a national Stay at Home policy is important, the global economy cannot afford an indefinite lockdown without risk of total economic collapse and/or government balance sheet implosion. President Trump is right on this, but his failure to institute a national SAH policy could render both the health crisis and economic crisis far more severe. The massive increase in leverage in recent years has already left the economy vulnerable to a recession. I recently published an article on the growing systemic risk of the leveraged economy. Even a normal recession would likely have triggered a wave of defaults. The type of collapse we’re facing today, will have far greater long-term damage on healthcare than the Covid19 crisis itself through the destruction of economic infrastructure, balance sheets and funding capacity of federal and local governments. 

The massive increase in leverage in recent years has already left the economy vulnerable to a recession.

Having the government step into the economy for an indefinite period-of-time, is virtually unprecedented. In addition to the stimulus packages already approved, the Fed resurrected several financial crisis era interventions. The rescue is not only about the US. During the financial crisis, one of the less well-known interventions were massive swap lines provided to global central banks by the US Fed. This is happening again. The dollar is the world’s reserve currency and the recent strength of the dollar reflects the result of acute worldwide shortage of dollars. The US needs to get this right for our own sake, but also for the rest of the world. 

The dollar is the world’s reserve currency and the recent strength of the dollar reflects the result of acute worldwide shortage of dollars. The US needs to get this right for our own sake, but also for the rest of the world. 

Dual Crisis Task Force

The health and economic response need to be coordinated with a joint taskforce established. The task force should be run by leading business figures that ideally have public health and private sector experience. The task force would help provide advice to both the Fed and Treasury on their various bailout programs as well as evaluate the appropriate vehicle to support companies (equity, debt, guarantees, etc). The taskforce would also provide input into the lifting of restrictions that would appropriately balance health and economic concerns. There are many decisions that cross over between the two crises (e.g. bailout of hospitals, compelling corporations to make ventilators, etc). This taskforce can be empowered to make certain decisions and to provide input into other decision-makers in the administration.  

Overall strategy: Testing, Isolation, Contact tracing, Protection and Capacity (TICPC) 

Expand tests dramatically including self-testing and home testing where possible, isolate at the national level, develop an app that includes all known and suspected cases and direct contacts, ensure availability of personal protective equipment (PPE) for front line health workers, and rapidly scale capacity in terms of beds, healthcare workers and equipment such as ventilators. 

Produce leading indicators of virus infection rate

There are several models that have been released that attempt to look at the expected growth rate of the virus. The government should produce key metric forecasts using experts across a range of disciplines and (economics, data science, epidemiologists). The forecast can be used to improve transparency and certainty for the population and businesses and a general view whether containment is off track or on track. 

Minimize hospital infections and protect healthcare workers

Hospitals are one of the biggest sources of contagion even during a lock down but as Singapore and other countries have shown this risk can be minimized. This is critical for three reasons. First, and most obvious we need our healthcare workers to be healthy. Second, it reduces stress on the healthcare worker knowing that that their health is protected. Third, and critically important it reduces the risk that healthcare workers spread the disease themselves – both to non-positive patients as well as their family. How to achieve this: Social distancing within hospital, handwashing (obvious but not routine in all US hospitals), ensure top priority of barrier masks and gowns and consider using schools where at-risk health workers can stay in order to avoid infecting their families and the community. Finally, consider establishing green, yellow, red zones within facilities. These zones, as was done with Ebola, would establish degree of risk and hence degree of PPE needed as well as restrictions for personnel and minimize contamination within facilities. 

Task shifting, use of medical volunteers and creating a new cadre of community health workers

Taking many of the newly unemployed and providing training as nurse’s aides or community health workers would help alleviate the staffing backlog. This newly trained health workforce would engage in simple tasks like temperature checks, patient intake, blood pressure, etc. A cadre of newly trained health system support workers would help reduce the employment shock as well as the healthcare system resource gap. It’s critical that these workers operate in the lower risk zones of the facility and/or in Covid19 clinic schools. Task shifting down from doctors to nurses and nurses to community health workers/nurses’ assistants can help alleviate bottlenecks. 

Obviously extensive training is needed, but given critical shortfall in healthcare workers, and massive spike in unemployment the government can focus on recruiting people who may have adaptable skills. BRAC, my former employer, trained 100,000 community health promoters. BRAC’s health promoters taught mothers and families how to prepare homemade oral re-hydration solutions (ORS) to treat diarrhoeal disease at home. Previously it was thought that such treatment could only be given in a hospital. BRAC’s ORS program became an exemplary public health model throughout the world and such lessons need to be considered during this crisis. 

Covid19 Social Distancing Compliance Officer (CCOs)

The government should use community surveillance to ensure compliance with COVID19 Health and Hygiene guidelines, such as social distancing, proper use of masks, etc. Regardless of how the lockdown works, people will go out for shopping, exercise, etc. Taking the army of newly unemployed as new orange vested civic officers who may have the ability to issue fines (similar to parking meter maids). But primarily they would provide a gentle nudge to the community as well as an alert system for material breaches. Establishing such a corps of workers now ensure that the restrictions can be gradually eased without massively ramping up the risk. CCOs can be used by communities only practising social distancing with no closures, those in full lockdown and those just emerging from stricter lockdown/SAH policies. Such workers can be hired directly or seconded from companies that continue to maintain inactive staff on payroll. 

The government should establish community surveillance officers to ensure compliance with COVID19 Health and Hygiene guidelines. This will allow restrictions to be eased safely while employing a large number of those sidelined due to COVID19.

Testing scale-up and innovation

The US needs to leverage mobile, home and rapid diagnostic testing as well as apps that track everyone who has been tested as well as those who believe they may be infected and/or in contact with a known case. As the chart below shows, aside from Washington and NY the testing rate per million remains low. By way of reference, South Korea tested nationwide 4000 per million, while only NY and WA have achieved this level and most states are well below this. Setting a nationwide goal of 4000 tests per million will ensure that early outbreak states and counties can catch and isolate the majority of infected thereby reducing the need for harshest lock-down rules.

Potentially working with Uber and other app-based transport companies the government can deploy vehicles to bring mobile testing services to neighbourhoods which would allow more rapid scaleup of testing. This would allow more people to be tested and avoid the crowding of hospitals and need for transport. The mobile testing lab can be set up via a new app where those who have suspected cases can register with the app and a score can be provided to the testing management in the area who can then prioritize those most in need of testing. Uber and other transport company’s app can potentially be extended to have a testing request feature. The test could be conducted in the vehicle, the home our outside the home as appropriate.

Drive through testing sites have been used effectively in the US, and testing booths have been successful in South Korea (see picture below). Abbott Labs recent announcement of a portable 5-minute testing device should help deploy tests both via mobile testing as well as bespoke testing labs.

Step up contact tracing using GPS and mobile data: The government needs to more aggressively track contacts. Everyone has a digital footprint and that digital footprint needs to be used to alert individuals about their potential risk. South Korea used extensive tracking of potential contacts (famously even reporting which love motel was used at which time with said suspected Covid19 victim) using technology and therefore were able to alert people if they had come in contact with at risk patients. Using cell phone data, the government can track where people have been and identify hotspots. While this smacks of infringing on civil liberties it is far less onerous than forced home detention. Given the recent spring break activities and fears of potential new outbreaks from that, the government should work with hotels and airlines to gather data match it to actual positive tests. The airline data and hotel data collectively should capture most participants.

Rapid evaluation and certification of home testing kits should be conducted, with results shared centrally The FDA should rapidly evaluate and approve those start-ups that meet specified criteria including accuracy, turnaround time, ease of administering and scalability in production and lab-work. Testing in home or self-swabbing tests permits testing of a larger percent of the population and keeps healthcare workers safe. Further, as Bill Gates recently noted there is the development of self-swabs, which require less intrusive penetration into the nasal cavity and hence easier for patients to self-administer and importantly keeps healthcare workers further the patient.

Leverage digital health and innovation hackathons and challenge grants

The government should establish a taskforce of Covid19 innovation in order to standardize and quickly approve med-tech innovations. There are many opportunities for apps to help contain the virus. Seoul uses an app to register travellers, track and report hotzones of the virus and send frequent text messages providing updates on the virus. Ventilators are one of the critical pieces of equipment most frequently cited as being in short supply. Low resource ventilators have been developed in the US and India among other places. Such low-cost ventilators can be used at home or in the case that more advanced ventilators are in short supply. Telemedicine, already beginning to be used, can be scaled up and evaluated for most effective and best practices. 

Repurpose schools as medical or quarantine facilities

While much of the focus has been on hospital beds, as in Ebola the response should include development of lower care and quarantine facilities. Schools can be used for testing and treatment not requiring hospital care as well as quarantine zones for front-line health workers to protect them from infecting their families. Each school could be connected to a hospital in a hub and spoke model.

Use the Defence Production Act and centralize procurement at the national level

Enacted in 1950 at the start of the North Korean war the DPA empowers the president to order the private sector to produce goods needed in the wake of a national emergency. The President has invoked it but has only used it with GM and instead is largely relying on volunteer efforts. The situation is too urgent to wait for the voluntary efforts. The federal government needs to coordinate procurement. States are competing for critical equipment and manufacturers of equipment such as ventilators don’t know who to prioritize when they are receive multiple orders from many states. Finally, only at the federal level can the government track and punish price gouging and hoarding. 

Introduce “Covid-Safe” Café and Restaurant guidelines

As a former café manager I know how challenging meeting food safety and hygiene standards can be. Restaurant and cafe openings don’t need to be a binary open/close decision. Rules can be established that require restaurants and cafes satisfy Covid19 safety standards. These standards can include table spacing, limits per table, expansion of outdoor seating, sanitization of table after each seating, maximum 2 hours per sitting, etc. During the several weeks while the world is shut down, policy makers need to think about easing the foot off the break rather than deciding between full stop and full speed. There is a middle way that allows commerce to continue in a safe, compliant way. The same orange vested, Covid Compliance Officers can be used to police restaurant hygiene standards. 

Restaurant and cafe openings don’t need to be a binary open/close decision. Rules can be established that require restaurants and cafes satisfy Covid19 safety standards. 

Clarify use of Masks

Given that that primary risk in the pandemic is that there may be millions infected who are asymptomatic but contagious, it’s important to clarify the scientific consensus around wearing of masks. It’s routine in Asia and they believe it is necessary and Asia has done a much better job tackling the disease. Proper mask etiquette and materials needs to be taught and maintained; social media, digital tools and community Covid19 workers can help. The science should determine whether universal use of masks help reduce transmission of the disease sufficient to relax social distancing policies. Should masks be effective and universally used it may allow quicker relaxation of the more onerous restrictions. 

Community disinfectant spraying

Covid19 can live in the air, so it’s important for the government to coordinate spraying in areas where people are more likely to gather. Even under lockdown people are allowed to shop which means they should spray entrances and surrounding areas for each shop. This was done successfully in South Korea.  

Relaxing flight restrictions and reopening airports

While it’s a bit early for this, the government needs to establish a plan to re-establish international travel. Today in South Korea they test 100% of all international visitors. The US government needs to establish conditions precedent to reopening, which countries, the type of testing that will be done, etc. Ideally, the early stages of mobile testing, rapid diagnostic tests, etc will create conditions that allow some testing at the airport. However, short of waiting until the risk is reduced to zero, it’s likely that international travel will resume in the waning days while there is still some risk. Planning now will ensure we avoid the chaotic scenes witnessed when the President first locked down airports as well as a resurgence of the virus. At the early stages of resumption, there will likely need to be a combination of restricted capacity on planes with appropriate spacing, specific aircraft hygiene standards, criteria on which countries will be open first and the ability to track all incoming passengers (as South Korea currently does via an app, which requires 2x daily reporting by all international visitors.) 

Resources

Article on Medical Volunteers

Home Covid19 tests

Cellphones and contact tracing

Korean apps used to track Covid19

How Spain's Covid19 outbreak got out of control

Covid19 data