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What are the options for a pandemic exit strategy?

Co-authored with Alun Stevens and Michael Berg, Senior Consultants at actuarial firm, Rice Warner.

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 Gates 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, Singapore (noting that Singapore has had a relapse from the virus breaking out amongst its migrant workers), 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 common 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 Worldometers, 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 problem. 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.

Death rate

Age group

Death rate (%)

Above age 80

14.80

70-79

8.00

60-69

3.60

50-59

1.30

40-49

0.40

20-39

0.20

Under 20

Minimal

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.

Second, in New York 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 vaccinations. 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 breakouts.
  • 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. 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 sometime late in 2021 but possibly earlier given the resources working on it.

 

Michael Rice AO is Executive Director, Michael Berg is Senior Consultant, and Alun Stevens is Senior Consultant at independent actuarial firm Rice Warner.

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 is a member of that group.

This article is general information and does not consider the circumstances of any person.

 

15 Comments
ET
April 26, 2020

I think we should test everyone for the virus, and antibodies (if possible). If we haven’t enough testing kits or it is not practical to test younger kids (imagine jamming a swab up a 6 year old’s nose), we can test an adult in the family. It is reasonable to assume that if one person in the family has the virus the whole family has it? The government should do this before opening the school.

Bruce Gregor
April 24, 2020

A good discussion and well described multi dimensions of exit straegies. I have just looked at the latest week of UK death stats by age for week ending 10 April and they are shocking. The extra deaths from covid stay a high percentage of normal right down to ages in the 20s. This suggests inability to treat the level of cases. Younger people would normally be expected to survive if they can get to best health care. In other words it is not rational to expect that only old people die from covid when hospitals cant cope. The reason I as a 70 year old am happy to stay isolated longer is that my son, daughter and grandchildren have a better chance of survival if I am not blocking their way in an ICU.

Mark Hayden
April 24, 2020

Thanks. That is an excellent overview. It covers the two main aspects - health and the economy. The long-term investing aspects will be determined by both the next 12-18 months and then the following 9 or so years. Government strategies now and later are crucial.

Dr Garry Glazebrook
April 24, 2020

Thank you Michael for a relatively simple but very useful explanation of strategies and options. I would offer the following comments.

Asymptomatic Cases, Herd Immunity etc

You note the data from the US Aircraft carrier where everyone was tested and that they found 60% of those found positive were asymptomatic - and accordingly if this was true in Australia there could be two and a half times as many people carrying the disease than have so far reported positive (6600 people as of today).

In contrast, other articles I have seen recently have claimed the real rate in the community, at least in some countries, could be 30-50 times higher than that reported. Personally I think such high estimates are based on a number of misconceptions and do not make statistical sense.

A further article in today’s Herald suggests we are still at serious risk of lots of outbreaks in prisons, nursing homes etc
https://www.smh.com.au/national/prison-nursing-home-outbreaks-and-re-importations-the-greatest-risk-to-eradicating-coronavirus-experts-20200424-p54mst.html

However, latest testing in NSW of 7,200 people found 7 cases of CV19 - less than 1 in a thousand. https://www.smh.com.au/national/nsw/nsw-records-seven-new-coronavirus-cases-aims-to-carry-out-8000-tests-per-day-20200424-p54mt6.html. This includes people who were most likely to have the disease.

So there is much confusion about the possible level of herd immunity etc in the community. I believe this is because no-one seems to have developed a proper multi-factor model. This would need to separate out pre-symptomatic, symptomatic and asymptomatic carriers, the specific transmission probabilities from each of these groups into those same groups and into the wider community, and the ways in which these probabilities are impacted by various social distancing etc strategies.

Strategies for Opening up the Economies

Your article also provided some useful data on how the death rates are for different groups in the community vary, and also proposed an option for opening up the economy. This is somewhat similar to a proposal I suggested called "Option 3" However it didn’t go into the detail of how to effectively deal with the combination of individual susceptibility and situational risk, as suggested in my "Option 3". As I see it,

- Risks are very low for significant numbers of people, especially younger people, many of whom are in the workforce. It is therefore unreasonable to kill the whole economy in order to control the virus.
- On the other hand, the risk of death is very high indeed for highly vulnerable groups if they catch the disease. It is therefore unreasonable to open up the economy without effective measures for protecting those most vulnerable.

This is where a strategy like my Option 3 is needed. In other words, what we need is an effective “firewall” between the low vulnerability groups and the high vulnerability groups. The firewall also needs to take into account situational risk of transmission and how this varies between different industries etc.

Conclusions

I would again argue on statistical grounds that:

- In Australia, there are actually very few asymptomatic CV19 cases in the community, for the simple reason that if there were, then the virus would still be spreading much more rapidly, given that other research from China found 44% of potential infections likely came from pre-symptomatic or asymptomatic people.

- Consequently if the most vulnerable groups can be effectively isolated and protected, there is actually relatively low risk from reopening the economy in Australia provided enough ongoing testing is done, we have the capability of follow up etc, and we keep our borders very tightly locked down.

- We should be in a position to do this in a few weeks, with mass temperature and rapid antibody testing, backed by large scale swab tests which can get results within 24 hours at worst.

- A few other places, like Taiwan and New Zealand, might be in a similarly lucky position.

- However, because testing has been way lower in many other countries (like the US and UK for example) than here, and because the growth rates of recorded cases are still well above 1% per day, its far too early in most other countries to consider relaxing restrictions, and secondary outbreaks are very likely if they try.

Garry Glazebrook

RST
May 01, 2020

Thank you for the Article and thank you for your comments Dr Glazebrook. I'm hearing conflicting reports about the efficacy of the test. I also understand that coronavirus has been with us since the 1960s and many of us have been carriers for years. So does the test simply show that we have the coronavirus or does it go deeper than that? I'd appreciate your insight.

Gary M
April 23, 2020

I can't see how we avoid a second and third waive of pandemics.

We are not focussing enough on the most important pandemic statistic. Most people talk about 'flattening the curve', then report the number of infections and deaths.

Since most people who die are older or have a pre-existing condition, we don't know how many deaths are really due to COVID-19. And most people are asymptomatic, we don't know how many infections we have. The numbers depend on the number of tests taken.

So in the US and UK, the % of people who test positive is very high, 18% and 32% respectively, because only people who are sick are being tested. In Australia, the percentage is less than 1% because we are testing more. We have no idea how many people in the US and UK have coronavirus, which is why relaxing lockdowns will be a problem.

The US needs to test a million people a day (currently 150,000) and its % of people who test positive should be closer to 1%.

Anyway, great to be on an island like Australia.

David Bell
April 23, 2020

Thanks for sharing your research on the coronavirus crisis. The Grattan Institute has also been sharing its research. It seems to be suggesting nearly binary outcomes (eradication or 'otherwise') but what you seem to be outlining is that there are a lot of nuanced choices and policy tools within the 'otherwise'. Is that a fair comparison? Additionally, do you consider eradication a realistic objective given our limited understanding of asymptomatic cases?
Cheers, David

Michael Berg
April 23, 2020

Thanks very much, David. Yes exactly right - we are not seeing the choice of solutions as binary. The problem is multi-dimensional, so we should not limit ourselves to one dimension in choosing what strategies to pursue.

At this stage we don't know whether eradication is a realistic objective for Australia - as you say, there is limited information on asymptomatic cases - undetected mild cases and reintroduction from elsewhere are further risks. This is why we need to be able to protect against rebounds in infection in a scenario of getting to prevalence being low but not necessarily zero.

The potential circuit-breaker is testing - it can inform both overall policy and later the ability to address local outbreaks rapidly without general lockdowns. South Korea is showing that this can be done, with the help of fast and continuing improvement in testing technology and capacity. Realistically I expect we need some further reduction in overall prevalence before remaining pockets are within the capacity for intense targeted interventions. If eradication occurs without catastrophic economic and resulting health costs then great, but we shouldn't make ourselves dependent on that being a possibility.

Martin Mulcare
April 23, 2020

David and Gary M have both correctly identified the question of the extent of asymptomatic infection as a key unknown in assessing the risk of an exit strategy. What is frustrating is that this doesn't have to remain unknown. We could, like several other countries, undertake a random testing project to explore the facts. If that is too hard, why can't we analyse the contact tracing evidence that we do have? There should be data for over 6,000 known infected cases to provide a confident estimate of the proportion of those cases that were infected by an asymptomatic carrier. Let's use the data and stop guessing...

Michael Berg
April 23, 2020

I agree. This is where we can and should take a different approach to the initial UK approach. They were only doing tests when the result might affect treatment - much better to be testing more widely and using the results to inform decisions on quarantines and overall policy.

Martin Mulcare
April 26, 2020

In the interests of balance I should share a recent report which does pursue contact tracing in NSW schools. Very good news, in my opinion, that there is no evidence of any teachers being infected by a student in any NSW school:
http://ncirs.org.au/sites/default/files/2020-04/NCIRS%20NSW%20Schools%20COVID_Summary_FINAL%20public_26%20April%202020.pdf

Stephen
April 23, 2020

A good article and well researched - for actuaries with no clinical expertise. Well done.

We should not assume that we will ever have an effective vaccine. Virus structures, the tissues they affect and immune responses are different. It is not as simple as polio, measles or influenza vaccination. There is ample commentary to date in the scientific literature that we may not achieve an effective vaccine against the coronaviridae which is safe to administer and provides lasting immunity.

Hence be prepared for a world where the virus remains prevalent. Populations such as Australia with good suppression locally will remain at risk from imported cases and local flare ups.

Border closures or strict testing and quarantine measures for incoming travellers, and internal travel restrictions will remain. Large gatherings of people will need to be carefully managed.

If the measures of continuing surveillance, case identification, rapid contact tracing and isolation are put in place, we may be able to almost live normally and safely inside our protected society. The proposed contact tracking app should be supported. It is not a location tracking app and stores proximity data on your phone, not sent to big brother. Most people readily provide Uber, Google and even retail sites access to their location, so this is far less sinister.

If you get sick, it will enable public health to determine your proximity to others - essential in tracking who you got it from, and who you might have given it to.

If we want to continue to live the way we have previously, go to restaurants, the theatre or the footy, we should be strongly supporting the initiative.

Michael Berg
April 23, 2020

While this is from a US newsletter, and hence reflects an environment with much higher rates of COVID-19 infection, there are many common themes within Australia.

This reinforces the importance of continuing to get on top of the health situation. It also reinforces the need to take available opportunities for phased and targeted winding back of restrictions, so that lives saved from COVID-19 are not outweighed by lives lost to the consequences of declines in living standards and mental health.

Ramani
April 23, 2020

Plausible scenarios given the unknowns about COVID-19 incubation, dormancy, immunity to the infected and propensity to flare up. As a community we should be prepared for stability to be followed by sudden upticks and post-facto finger pointing.
The rare bipartisanship the crisis forced on us will likely be short-lived. At least on national concerns (environment, energy, inequality, relieving the budget burden through improved productivity, structural infirmities in fiscal and retirement regimes conducive to gaming by the well-heeled), it would be nice to have a consensus, but the cooperation effect of the crisis may dissipate.
Financially the share of the better off should be higher, but they have the lobby power.

Graham
April 23, 2020

Here's a good summary of consequences we don't consider:

"Things you did not think about. Lawyers and accountants have big receivables they may not fully collect. My accountant is a very good mid-sized firm. I got a call last week to pay my bill. First time in 20+ years they ever called to collect a bill, and it was not really past due. They will not be able to charge the same high fees as before. Venture capital firms will not be doing new deals. They need to try to keep their money losing investments alive. No new deals, no accountants and lawyers needed at big fees. Real estate brokers in places like NYC are toast now. No sales happening , no commissions, no big restaurant charges. Conference hotels are done until next year possibly. They stay closed, No services from food vendors and other contractors and suppliers. Small liberal arts colleges are already closing. Often they are the main thing in small towns. They close, so does the local bar, the nearby apartments have lost student tenants, and the local stores suffer. Some fast food outlets near big schools have no business, and will close. Other small companies like restaurants and similar are not going to reopen if the closure orders remain in place another several weeks. Thus the protests in Michigan. Grad students with acceptances are not sure what to do if they are told class will be remote for a semester- they are paying $80,000 per yr for the networking as much as for the classes. No networking, no $80,000 tuition. They may choose to take a year off and wait for real class to recommence. (real life stories). People who thought they had a good retirement nest egg, no longer have what they had, and are going to keep working. Friends and family investors in the small company just lost their investment at the same time the stock market tanked. A lot more people I ever imagined felt they had a secure job and good salary, now have neither, and they were spending all they earned going to dinner and wherever. Now they have no savings. Young people are going back to their parent’s basement from We Work spaces. We Work goes out of business maybe. When you really start to think thru all the things that will not be the same and the ramifications, it is pretty astounding." This is from a US newsletter called 'Ross Rant'.

 

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