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Monthly Archives: April 2020
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The only way to get back to normal this summer is to test everyone in the United States, Nobel Prize-winning economist says
Paul Romer estimates that testing every American would cost $100 billion, a hefty sum but less than the $2 trillion Congress has spent so far.
“I’m on the optimistic end of how quickly we can scale testing up,” said Romer, who won the 2018 Nobel Prize for economics. “I do think there’s a way most people could feel safe returning to what feels like normal life this summer if we do this wide-scale testing.”
So far, the nation has tested about 5 million people — or less than 2 percent of the population. Last week, Congress approved an additional $25 billion for testing as part of the latest funding bill, which Romer calls a good start but not enough.
Restarting the U.S. economy isn’t just about government officials clearing certain businesses to reopen. People have to feel safe enough to venture out. Romer says that will happen only when nearly everyone in the country is getting tested on a regular basis and people who are sick are being quarantined.
“It’s totally in our control to fix this,” Romer said in a phone interview. “We should be spending $100 billion on the testing. We should just get it going. It’s just not that hard.”
He advises starting with screening all health-care and front-line workers in the next month and then scaling up the testing to the rest of the nation this summer by using university labs to process tests.
Romer says massive testing is the only viable option for the nation. Otherwise, the economy will limp along, leaving millions of people unemployed and forcing small businesses to shut forever. It could take years to recover from that kind of pain. On the flip side, reopening much of the nation too soon could cause deaths to skyrocket again.
Top White House officials voiced support for more testing over the weekend. Treasury Secretary Steven Mnuchin said on Fox News Sunday that the Trump administration would “balance” reopening the economy with “more testing” to “monitor this very, very carefully.”
Deborah Birx, the White House’s coronavirus task force coordinator, said Sunday that more testing would be needed and that “social distancing will be with us through the summer.“
As Congress and the White House debate another round of economic relief, it’s unclear how much more money will be allocated for testing. Evidence from China and Germany, which have begun to reopen much of their economies, shows that people remain reluctant to go out and spend again. Subways in China remain half full, big public spaces such as casinos remain nearly empty and economic activity is still way off from normal.
Although some have balked at the cost of testing every American, Romer points out that the United States is losing at least $500 billion a month from the Great Lockdown. His estimate is more modest than some other economists such as St. Louis Federal Reserve President Jim Bullard, who says the nation is losing $25 billion a day right now. Bullard has also endorsed universal testing as the only way to fix the nation’s health — and economic — problems.
“Every month of delay makes the recovery slower — and take longer,” Romer said.
Romer won the Nobel Prize for modeling the U.S. and global economies. A former chief economist at the World Bank, he has built a career thinking through big international problems and what to do about them. But the coronavirus fight is also personal for him. He has a daughter who is an intensive care physician in Philadelphia.
In worst-case scenario, COVID-19 coronavirus could cost the U.S. billions in medical expenses
If 20% of the US population were to become infected with COVID-19, it would result in an average of $163.4 billion in direct medical costs.
One of the major concerns about the COVID-19 coronavirus pandemic has been the burden that cases will place on the healthcare system. A new study published April 23 in the journal Health Affairs found that the spread of the virus could cost hundreds of billions of dollars in direct medical expenses alone and require resources such as hospital beds and ventilators that may exceed what is currently available.
The findings demonstrate how these costs and resources can be cut substantially if the spread of COVID-19 coronavirus can be reduced to different degrees.
The study was led by the Public Health Informatics, Computational and Operations Research team at the City University of New York Graduate School of Public Health and Health Policy, along with the Infectious Disease Clinical Outcomes Research Unit at the Los Angeles Biomedical Research Institute, Harbor-UCLA Medical Center and Torrance Memorial Medical Center.
The team developed a computer simulation model of the entire U.S. that could then simulate what would happen if different proportions of the population end up getting infected with the COVID-19 coronavirus. In the model, each infected person would develop different symptoms over time and, depending upon the severity of those symptoms, visit clinics, emergency departments or hospitals.
The resources each patient would require – such as healthcare personnel time, medication, hospital beds and ventilators – would then be based on the health status of each patient. The model then tracks the resources involved, the associated costs and the outcomes for each patient.
For example, if 20% of the U.S. population were to become infected with the COVID-19 coronavirus, there would be an average of 11.2 million hospitalizations and 1.6 million ventilators used, costing an average of $163.4 billion in direct medical costs during the course of the infection.
The study shows the factors that could push this amount up to 13.4 million hospitalizations and 2.3 million ventilators used, costing an average of $214.5 billion. If 50% of the U.S. population were to get infected with COVID-19, there would be 27.9 million hospitalizations, 4.1 million ventilators used and 156.2 million hospital bed days accrued, costing an average of $408.8 billion in direct medical costs during the course of the infection.
This increases to 44.6 million hospitalizations, 6.5 million ventilators used and 249.5 million hospital bed days (general ward plus ICU bed days) incurred, costing an average of $654 billion during the course of the infection if 80% of the U.S. population were to get infected. The significant difference in medical costs when various proportions of the population get infected show the value of any strategies that could reduce infections and, conversely, the potential cost of simply letting the virus run its course – the “herd immunity” approach.
Simply put, allowing people to get infected until herd immunity thresholds are met would come at a tremendous cost, and even if social-distancing measures were relaxed and the country “opened up” too early, the healthcare system, as well as the broader economy, would come close to buckling under the weight of the additional costs.
WHAT’S THE IMPACT?
The study shows how costly the coronavirus is compared to other common infectious diseases. For example, a single symptomatic COVID-19 infection costs an average of $3,045 in direct medical costs during the course of the infection alone. This is four times higher than a symptomatic influenza case and 5.5 times higher than a symptomatic pertussis case. Factoring in the costs from longer lasting effects of the infection such as lung damage and other organ damage increased the average cost to $3,994.
Importantly, for a sizable proportion of those who get infected, healthcare costs don’t end when the active infection ends, and costs will likely stay high even after the bulk of the pandemic has passed.
A continuing concern is that the U.S. healthcare system will become overloaded with the surge of COVID-19 coronavirus cases and will subsequently not have enough person-power, ventilators and hospital beds to accommodate the influx of patients. The study shows that even when only 20% of the population gets infected, the current number of available ventilators and ICU beds will not be sufficient.
According to the Society of Critical Care Medicine, there are approximately 96,596 ICU beds and 62,000 full-featured mechanical ventilators in the U.S., substantially lower than what would be needed when only 20% of the population gets infected.
THE LARGER TREND
Data released this week by Kaufman Hall illustrates the extent to which U.S. hospitals are already suffering financially due to the coronavirus.
Looking at earnings before interest, taxes, depreciation and amortization, hospitals’ operating margins fell more than 100% in March, dropping a full 13 percentage points relative to last year. Compared to most months, that’s a much greater change. Operating EBITDA margin was up just 1% in March 2019, for example, and down 1% in February of this year.
These margins likely fell even further across broader health systems, which often include substantial physician and ambulatory operations outside of the hospital, Kaufman Hall found. Overall, operating margins fell 170% below budget for the month.
Large, Troubled Companies Got Bailout Money in Small-Business Loan Program
Companies with accounting problems or in trouble with the government received millions in federal loans.
A company in Georgia paid $6.5 million to resolve a Justice Department investigation — and, two weeks later, received a $10 million federally backed loan to help it survive the coronavirus crisis.
Another company, AutoWeb, disclosed last week that it had paid its chief executive $1.7 million in 2019 — a week after it received $1.4 million from the same loan program.
And Intellinetics, a software company in Ohio, got $838,700 from the government program — and then agreed, the following week, to spend at least $300,000 to purchase a rival firm.
The vast economic rescue package that President Trump signed into law last month included $349 billion in low-interest loans for small businesses. The so-called Paycheck Protection Program was supposed to help prevent small companies — generally those with fewer than 500 employees in the United States — from capsizing as the economy sinks into what looks like a severe recession.
The loan program was meant for companies that could no longer finance themselves through traditional means, like raising money in the markets or borrowing from banks under existing credit lines. The law required that the federal money — which comes at a low 1 percent interest rate and in some cases doesn’t need to be paid back — be spent on things like payroll or rent.
But the program has been riddled with problems. Within days of its start, its money ran out, prompting Congress to approve an additional $310 billion in funding that will open for applications on Monday. Countless small businesses were shut out, even as a number of large companies received millions of dollars in aid.
Some, including restaurant chains like Ruth’s Chris and Shake Shack, agreed to return their loans after a public outcry. But dozens of large but lower-profile companies with financial or legal problems have also received large payouts under the program, according to an analysis of the more than 200 publicly traded companies that have disclosed receiving a total of more than $750 million in bailout loans.
Another dozen or so collected money even though they have recently reported being able to raise large sums through private means. Several others have recently showered top executives with seven-figure pay packages.
The government isn’t disclosing who receives aid, leaving it up to individual companies to decide whether to disclose that they obtained loans. That makes a full accounting of the loan program impossible.
“It’s outrageous,” said Amanda Ballantyne, the executive director of Main Street Alliance, an advocacy group for small businesses. She added that there were countless small business owners “who have laid off all their staff, are trying to file for unemployment and will go bankrupt because of the problems with the way this Paycheck Protection Program was designed.”
Applicants for loans do not need to provide evidence that they have been harmed by the pandemic. They simply need to certify that “current economic uncertainty makes this loan request necessary” to support their operations.
Instead of having the Small Business Administration, which is guaranteeing the loans, decide which companies get funding, the process was essentially outsourced to banks. The banks collect fees for each loan they make but don’t have to monitor whether the recipients use the money appropriately.
For small business owners shut out of the program, watching big companies collect loans while their applications languish has been infuriating.
“It has been beyond frustrating,” said Diane Burgio, a single mother who runs a design business in New York City that employs four people. She was one of more than 280,000 applicants who sought, and did not get, a loan from JPMorgan Chase.
The New York Times identified roughly a dozen publicly traded companies that had recently boasted about their access to ample capital — and then applied for and received millions of dollars in the federal loans.
Legacy Housing, a Texas company that manufactures premade homes, announced on April 1 that it had access to a new $25 million credit line. Curtis D. Hodgson, Legacy’s executive chairman, told investors that he expected any damage from the coronavirus to be short-lived. “Our order book is still strong, and we are well-positioned once the situation begins to normalize,” he said.
Less than two weeks later, on April 10, the company announced that a local lender, Peoples Bank, had approved it for $6.5 million under the S.B.A. loan program.
In an interview on Sunday, Mr. Hodgson said that an inquiry from The Times led the company to decide to give back the money it borrowed, though he defended seeking the loan in the first place. “Legacy is a highly leveraged company without cash on hand,” he said. “Here was a way to get a cash infusion.”
Escalade Sports, which makes things like table tennis tables and basketball hoops, already had a $50 million credit line from JPMorgan Chase. The company’s chief executive, Dave Fetherman, told investors this month that the company, based in Evansville, Ind., had “a strong balance sheet” and was seeing rising demand for its products, with so many Americans cooped up in their homes.
Days earlier, Escalade got a $5.6 million federally backed loan. A spokesman for Escalade said the company “fully met all required conditions at the time we applied for the P.P.P. loan.”
Executives at some companies said applying for the loans made clear business sense. The loans are essentially free money: They have rock-bottom interest rates and can be forgiven if, among other things, the borrower maintains the size of its work force. In some cases, executives said, their bankers encouraged them to apply for the loans.
At least seven companies that received a total of $45 million in loans under the federal government’s program have recently had serious scrapes with the federal government.
MiMedx Group, a biopharmaceutical company in Marietta, Ga., got a $10 million loan on April 21. On April 6, the company had agreed to pay the Justice Department $6.5 million to resolve allegations that it violated federal law by knowingly overcharging the Department of Veterans Affairs for medical supplies.
MiMedx, which makes and sells human tissue grafts, also ran into problems with the Securities and Exchange Commission. Last year, the agency sued MiMedx, accusing the company of exaggerating its revenue to investors over several years. MiMedx agreed to settle the case for $1.5 million, without admitting wrongdoing. Two of its former top executives were indicted last year by federal prosecutors in Manhattan on charges of accounting fraud.
A MiMedx spokeswoman, Hilary Dixon, said the company was trying to move past its accounting scandal. “We don’t have the option of raising capital in the public markets owing to our financial restatement process,” she said.
Another company, US Auto Parts Network, which received a $4.1 million loan through the program, has been in a heated dispute in recent years with Customs and Border Protection. The agency has seized some of the company’s imported products, claiming they are counterfeit.
US Auto Parts Network didn’t respond to requests for comment.
At least two companies that received federally backed loans have previously borrowed heavily from their own executives or others close to the firms — meaning that the new loans could help the companies repay their insiders.
Infinite Group, a cybersecurity firm in Pittsford, N.Y., had been borrowing hundreds of thousands of dollars from its board members and the brother of a top executive at annual interest rates as high as 7.5 percent. This month, Infinite secured a nearly $1 million federally backed loan whose 1 percent interest rate could allow the company to dramatically lower its funding costs. Company officials didn’t respond to requests for comment.
Intellinetics, the company that announced that it was buying a rival days after it received its emergency loan of $838,700, borrowed nearly $400,000 last fall from two brothers who run a small New York brokerage firm, Taglich Brothers. If the money isn’t repaid by May 15, Intellinetics will need to give the brothers stock in the company or start paying a steep 12 percent interest rate. (Some of that debt has already been converted into stock.)
“Securing the PPP funding gives us extra confidence and ability to restart and hit the ground running,” James F. DeSocio, the company’s chief executive, said in a news release.
Infinite Group and Intellinetics have not said precisely how they intend to use the loan proceeds.
A number of other companies have had serious accounting problems. The chief financial officer of CPI Aerostructures, an aerospace manufacturer that got a $4.8 million loan, resigned in February after the company disclosed major problems with how it reported revenue.
And several firms have been paying their top executives millions of dollars despite financial problems that predate the coronavirus crisis.
For example, AutoWeb’s chief executive, Jared Rowe, got $4.7 million in total compensation over the past two years — including $1.7 million in 2019 — even as its stock price plummeted more than 70 percent. The company declined to comment.
And Manning & Napier, an investment firm in Fairport, N.Y., that has about $20 billion in assets under management, disclosed in March that its chief executive, Marc O. Mayer, earned nearly $5 million last year. On April 19, the company was approved for $6.7 million in the paycheck protection loans — even as the company said it would pay out a quarterly dividend to its shareholders.
Last week, amid mounting public anger toward large recipients of the rescue loans, Manning & Napier said it had decided not to take the money.
While the federal loan program is supposed to help companies avoid layoffs, some of the large recipients of loans have already dramatically reduced their workforces — and not always because of the coronavirus.
Harvard Bioscience, based in Holliston, Mass., has been trying since last year to pacify an activist investor that is pressuring management to boost the company’s stock price. The company closed facilities in North Carolina and Connecticut and said in February, before the coronavirus upended the economy, that it was laying off about 10 percent of its work force.
This month, Harvard Bioscience received a $6.1 million loan through the paycheck protection program. In a securities filing disclosing the loan, the company didn’t say why it sought the money or how it would use it. A spokesman didn’t respond to requests for comment.
A number of relatively large companies with connections to Mr. Trump also received millions of dollars in loans.
Phunware, a data-collection company that received a $2.9 million loan this month, counts Mr. Trump’s re-election campaign and Fox News as two of its biggest clients.
Continental Materials, a heating and air conditioning and construction material supplier based in Chicago, got a $5.5 million loan. The firm’s chief executive, James Gidwitz, is a major Trump donor, and his brother Ronald was appointed ambassador to Brussels by Mr. Trump after serving as Illinois campaign finance chairman for the 2016 Trump campaign.
It isn’t clear whether political considerations helped Phunware and Continental Materials get their loans approved. Neither company responded to requests for comment.
“Immunity passports” in the context of COVID-19
https://www.who.int/news-room/commentaries/detail/immunity-passports-in-the-context-of-covid-19
Scientific Brief
WHO has published guidance on adjusting public health and social measures for the next phase of the COVID-19 response.1 Some governments have suggested that the detection of antibodies to the SARS-CoV-2, the virus that causes COVID-19, could serve as the basis for an “immunity passport” or “risk-free certificate” that would enable individuals to travel or to return to work assuming that they are protected against re-infection. There is currently no evidence that people who have recovered from COVID-19 and have antibodies are protected from a second infection.
The measurement of antibodies specific to COVID-19
The development of immunity to a pathogen through natural infection is a multi-step process that typically takes place over 1-2 weeks. The body responds to a viral infection immediately with a non-specific innate response in which macrophages, neutrophils, and dendritic cells slow the progress of virus and may even prevent it from causing symptoms. This non-specific response is followed by an adaptive response where the body makes antibodies that specifically bind to the virus. These antibodies are proteins called immunoglobulins. The body also makes T-cells that recognize and eliminate other cells infected with the virus. This is called cellular immunity. This combined adaptive response may clear the virus from the body, and if the response is strong enough, may prevent progression to severe illness or re-infection by the same virus. This process is often measured by the presence of antibodies in blood.
WHO continues to review the evidence on antibody responses to SARS-CoV-2 infection.2-17 Most of these studies show that people who have recovered from infection have antibodies to the virus. However, some of these people have very low levels of neutralizing antibodies in their blood,4 suggesting that cellular immunity may also be critical for recovery. As of 24 April 2020, no study has evaluated whether the presence of antibodies to SARS-CoV-2 confers immunity to subsequent infection by this virus in humans.
Laboratory tests that detect antibodies to SARS-CoV-2 in people, including rapid immunodiagnostic tests, need further validation to determine their accuracy and reliability. Inaccurate immunodiagnostic tests may falsely categorize people in two ways. The first is that they may falsely label people who have been infected as negative, and the second is that people who have not been infected are falsely labelled as positive. Both errors have serious consequences and will affect control efforts. These tests also need to accurately distinguish between past infections from SARS-CoV-2 and those caused by the known set of six human coronaviruses. Four of these viruses cause the common cold and circulate widely. The remaining two are the viruses that cause Middle East Respiratory Syndrome and Severe Acute Respiratory Syndrome. People infected by any one of these viruses may produce antibodies that cross-react with antibodies produced in response to infection with SARS-CoV-2.
Many countries are now testing for SARS-CoV-2 antibodies at the population level or in specific groups, such as health workers, close contacts of known cases, or within households.21 WHO supports these studies, as they are critical for understanding the extent of – and risk factors associated with – infection. These studies will provide data on the percentage of people with detectable COVID-19 antibodies, but most are not designed to determine whether those people are immune to secondary infections.
Other considerations
At this point in the pandemic, there is not enough evidence about the effectiveness of antibody-mediated immunity to guarantee the accuracy of an “immunity passport” or “risk-free certificate.” People who assume that they are immune to a second infection because they have received a positive test result may ignore public health advice. The use of such certificates may therefore increase the risks of continued transmission. As new evidence becomes available, WHO will update this scientific brief.
Hospitals that have disclosed bailout funds
More than $1.2 billion in federal bailout funds have been disclosed by hospitals and health systems thus far, including $150 million that was sent to Mayo Clinic, according to a review of financial documents by Axios’ Bob Herman.
Why it matters: Hospitals do not have to repay these taxpayer funds, which are supposed to offset the lost revenue and higher costs associated with handling the coronavirus outbreak. But there is no central location to track where the money is flowing.
The big picture: Hospitals and other health care providers can receive coronavirus funds through two primary sources:
- A $175 billion bailout fund that does not have to be repaid.
- Advance payments from Medicare that function as loans and must be repaid.
Where it stands: Axios has found 11 hospital organizations — ranging from small community hospitals to large, multistate systems — that have disclosed bailout funding and Medicare loans through municipal bondholder documents or public filings, and compiled them into a database.
- Some of the largest bailout payments disclosed so far have gone to HCA Healthcare ($700 million), Mayo Clinic ($150 million), Mercy ($101.7 million) and NYU Langone Health ($73.1 million).
- $50 billion of the first $100 billion in bailout funds is “allocated proportional to providers’ share of 2018 net patient revenue,” according to HHS, and therefore likely favors systems that are bigger and/or charge higher prices.
- Medicare has sent $100 billion as loans as of April 24, $7 billion of which has been disclosed to these 11 hospital systems.
Go deeper: The hospital bailout funding database
Covid-19 Testing is increasing, but still not good enough
The good news is that the number of daily coronavirus tests is going up again. The bad news is that it’s still not nearly enough for the country to safely reopen.
Why it matters: If we don’t know who has the virus, we can’t stop it from spreading without resorting to stringent social distancing measures.
Driving the news: On Saturday, Anthony Fauci said that the U.S. is testing roughly 1.5 million to 2 million people a week, but “we probably should get up to twice that as we get into the next several weeks, and I think we will.”
- Deborah Birx, the White House coronavirus task force coordinator, said yesterday that “we have to realize that we have to have a breakthrough innovation in testing.” She said we’ll need tests that can detect antigen, or the part of a pathogen that triggers an immune response.
Between the lines: Testing has been hampered by shortages of supplies like swabs and test kits. There has also been a lack of coordination between labs with excess testing capacity and communities struggling to meet testing demand.
What we’re watching: Some major cities and states — including New York and California — have begun to expand testing beyond the sickest patients, which is a good sign.
Cartoon – Solving a Problem not Caused by Leadership
Cartoon – Following the Herd Today
HENRY KOTULA 