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The recession risk
Economists are growing more certain both the U.S. and the world are going to have a recession in 2020, Axios markets editor Dion Rabouin reports.
The big question: How bad will it be?
- The answer depends on how quickly the outbreak can be contained and how fast people regain confidence to participate in activities they once enjoyed.
What’s happening: Economists and investment banks continue to write down their expectations for growth this year, as more economic activity is halted “until further notice.”
- The shutdown of the NCAA’s annual March Madness basketball tournament and Austin’s South by Southwest festival are just two examples of mass gatherings that were expected to generate billions of dollars.
- And that’s to say nothing of the millions of dollars that Chinese and European tourists would have spent, but who are temporarily banned or reluctant to come to the United States.
The bottom line: Businesses had pulled back on spending even before the year began, as a result of the U.S.-China trade war. That left consumer spending as the only thing holding up the economy, and the COVID-19 outbreak will kick that leg out from under us for an unknown period of time.
Go deeper: Listen to Dion discuss the risk of a recession with Dan Primack on the Pro Rata podcast.
Too much for the health care system to handle
A severe coronavirus could easily overwhelm the U.S. health care system, Axios health care editor Sam Baker writes.
Most pandemics put health care workers at particular risk, both to become infected and then to spread the infection.
- Experts were sounding the alarm even before the first U.S. cases about limited supplies of masks and protective equipment.
- If health care workers do get sick in large numbers, staffing shortages would make it all the harder to care for new patients.
Experts fear a shortage of ventilators and intensive-care beds, if the outbreak becomes severe.
- The U.S. has roughly 46,500 beds designated for ICU use, but even in a moderate scenario, it’s projected that 200,000 people could need ICU treatment, according to a report from Johns Hopkins.
- Yes, but: Many younger, healthier patients will likely be able to recover at home, leaving hospital capacity dedicated mainly to seniors and people with other health complications.
What we’re watching: The coronavirus also seems likely to expose structural gaps in the health care system.
- Insurers have promised to make coronavirus testing available for free, and a handful of hospital systems have imposed temporary freezes in billing patients for coronavirus treatments.
- But relying on individual acts of corporate benevolence won’t provide any blanket assurance that care will be affordable, especially to the poor or uninsured — and if people don’t get care because they’re afraid of the cost, rightly or not, that risks further spreading the infection.
Go deeper: Listen to Sam and Dan examine the health care issue.
What you need to know about the Coronavirus
There’s a lot of confusion and misinformation swirling around the virus, so here are quick just-the-facts answers to your most urgent concerns, based on current knowledge:
Q: What are the symptoms I should watch for?
- Fever (88%) and dry cough (68%) are two of the most common symptoms, followed by fatigue, thick mucus coughed from lungs, shortness of breath, muscle and joint pain, sore throat, headache and chills.
Q. If I have those symptoms, should I go to my doctor or the hospital?
- Right now, the CDC recommends you distance yourselves from others, including your family and your pets. If you can, designate a separate bedroom and bathroom for yourself.
- Call your provider and tell them you suspect COVID-19. Remind them of any travel and if you are over 60 or have underlying conditions like diabetes or a heart condition.
- Don’t share dishes/glasses with anyone; wash hands often; clean surfaces frequently. Stay hydrated.
- The CDC does not recommended you go to the hospital unless you have shortness of breath, persistent chest pain, new confusion or strong lethargy, or a bluish tint to lips or face.
- CDC’s hotline number for questions: 800-CDC-INFO (800-232-4636).
Q: Why is there a shortage of tests in the U.S.? When will we get them?
- The CDC’s initial test for the virus was faulty. And, for reasons that remain unknown, the U.S. opted not to rely on the World Health Organization’s test while the CDC developed a new one. Red tape slowed down academic labs that wanted to quickly develop their own.
- With both academic and commercial labs now pitching in, testing is becoming more widely available. But we’re still playing catch-up, and the virus has likely been spreading undetected in the meantime.
Q: What’s known about children and COVID-19?
- Children, fortunately, rarely seem to experience severe complications from the coronavirus, but it’s not known whether children with underlying conditions may be at higher risk for severe illness.
- It’s unclear what about children’s immune systems is protecting them.
Q: What stage is the outbreak in the U.S.?
- The virus has now been confirmed in 49 states plus Washington, D.C., and Puerto Rico. However, due to the lack of testing, the level of infection in the U.S. beyond the currently confirmed 2,508 cases is unknown.
- Scientists believe the number of infections doubles roughly every five to six days.
- Some think the U.S. and the rest of Europe could follow Italy’s exponential trajectory arc, but this will depend on how effective school closings and event stoppages are at flattening the trajectory curve of the outbreak.
The pandemic shaping the future
The world that emerges from the coronavirus pandemic will be fundamentally different, Axios Future correspondent Bryan Walsh writes.
- Why it matters: This crisis may prove to be as significant as the 2008 financial meltdown or even 9/11.
- So the choices that businesses and governments are making now will have enormous social and economic ramifications.
The intrigue: U.S. health and government officials are facing the epidemiological equivalent of the “fog of war,” worsened by a massive American failure to act on weeks of warnings as the virus spread in China.
- The Trump administration declared a national emergency yesterday, seven weeks after the first U.S. case was announced by the Centers for Disease Control and Prevention.
- By failing to rapidly scale up testing, U.S. officials have added an additional — and partly unnecessary — layer of uncertainty about how to respond.
- Harvard epidemiologist Michael Mina calls it “the most daunting virus that we’ve contended with in half a century or more.”
Flashback: As recently as the 1918 influenza pandemic, scientists lacked the ability to rapidly respond to an infectious disease outbreak.
- Today, scientists can sequence a virus in days, develop rapid tests that can determine infection before obvious symptoms, and use complex mathematical models to predict future spread.
What we’ll find out in coming days:
- The actual fatality rate of the virus.
- How contagious it is, and the precise role that children — who seem outwardly unaffected by the disease — may play in transmission.
- If the outbreak will naturally slow down when the weather warms, as tends to happen with influenza.
What’s next: For now, distance becomes the first line of defense. Schools and companies are shifting online — with potential consequences.
- If companies are able to function relatively well with a largely remote workforce, expect lower levels of business travel.
- After decades of emphasizing the efficiency of supply chains — which often meant complex international linkages and just-in-time inventories — businesses will look to build resilient supply chains.
The bottom line: The mobility — of people, capital and products — that we’ve taken for granted may not outlast the virus.
Pelosi, Trump strike deal on coronavirus response package
Speaker Nancy Pelosi (D-Calif.) and President Trump have struck a deal on a multibillion-dollar stimulus package aimed at assisting millions of Americans directly hurt by the coronavirus outbreak.
Pelosi announced the deal on Friday evening after days of roller-coaster negotiations that put the outcome in doubt, as the nation’s leaders raced to ease public anxiety and stabilize volatile markets. Trump said on Twitter that he looked forward to signing the legislation.
“I have directed the Secretary of the Treasury and the Secretary of Labor to issue regulations that will provide flexibility so that in no way will Small Businesses be hurt. I encourage all Republicans and Democrats to come together and VOTE YES!” Trump wrote in a series of tweets.
Just hours before the deal was announced, Trump said in a Rose Garden address that he wasn’t on board, suggesting a bipartisan deal was out of reach even as the number of cases in the U.S. approached 2,000.
And even after Pelosi’s announcement, there was widespread confusion across the Capitol about whether Trump had endorsed the package. Several GOP lawmakers said no agreement had been secured, and even House Majority Leader Steny Hoyer (D-Md.) suggested Friday evening that the talks were still in flux.
Yet Treasury Secretary Steven Mnuchin, who has been leading the negotiations with Pelosi, seemed to put the confusion to rest just before 8 p.m. when he told Fox Business that there was, in fact, a deal.
“We have an agreement that reflects what the president talked about in his speech the other night. He’s very focused on making sure that we can deal with the coronavirus,” he said.
The frantic, eleventh-hour talks that brought the sides together highlight the urgency facing leaders from both parties to take aggressive actions to contain the fast-moving virus, for reasons of both public health and national morale.
“As Members of Congress, we have a solemn and urgent responsibility to take strong, serious action to confront and control this crisis and to put Families First and stimulate the economy,” Pelosi wrote in a letter to Democratic members announcing the deal.
The deadly pandemic has roiled the stock market, upended small businesses and large industries alike, and cancelled major sporting and political events around the country. Millions of Americans could lose income — or their jobs entirely — due to mass public closures, work-from-home orders and the economic downturn sure to follow.
The agreement announced Friday aims to ease some of the economic stress by providing financial assistance to those most directly affected by the crisis, including unemployment and paid leave benefits. Perhaps more importantly, the deal aims to calm some of the public trepidation and market turmoil of recent weeks by demonstrating that Washington policymakers can put aside partisan differences and unite quickly behind an emergency response befitting — at least in rhetoric — the severity of the crisis.
On Friday, Pelosi and Mnuchin spoke no fewer than 13 times by phone as they neared an agreement, aides said.
To get there, they had to iron out a small handful of stubborn wrinkles that threatened to sink the entire package — disagreements that were finally resolved late Friday evening.
Republicans, for instance, had insisted on the inclusion of language, known as the Hyde Amendment, explicitly barring the use of federal funds for abortions. Democrats conceded and threw it in.
Republicans also balked at Democrats’ initial paid leave provision, which would have required employers to provide the benefit not only for the coronavirus, but for all future public health emergencies. The final compromise bill removed the permanent language, limiting the benefit to the current outbreak.
In addition, Republicans were concerned about the effects of the paid-leave expansion on small businesses. The final bill provides subsidies to businesses with 500 employees or fewer, Mnuchin said.
“Obviously, we expect the bigger corporations to pick up these costs,” he told Fox.
The deal comes on the heels of an initial $8.3 billion package, signed by Trump last week, that focused largely on the most immediate health concerns surrounding the crisis, including a boost in the nation’s efforts to locate victims, treat them and stop the spread of the deadly epidemic.
The second round of relief focuses more squarely on mitigating the economic fallout of the coronavirus, giving priority to those most directly affected by the outbreak.
House lawmakers are now set to vote on the bipartisan package late Friday night, before heading home for a 10-day break. The Senate has canceled its recess plans for next week and will take up the House-passed measure then.
The fast-moving events reflect the heightened urgency facing lawmakers as they try to assess the scope of the coronavirus and contain its economic fallout around the country and the world.
Early in the week, House leaders signaled they would pass a Democratic bill on Thursday and then leave town for their pre-scheduled 10-day recess, pushing the bipartisan negotiations to the week of March 23.
But leaders sped up their timeline for talks amid a chaotic 48-hour stretch that saw broad changes in American society.
Trump put sharp restrictions on travel from parts of Europe. The NBA and NHL suspended their seasons. The NCAA nixed March Madness. Disneyland shuttered its doors. Officials closed the U.S. Capitol to the public after a Hill staffer tested positive. One of America’s most beloved actors, Tom Hanks, and his wife Rita Wilson, announced they had tested positive for the virus. And the Dow Jones Industrial Average plunged roughly 15 percent over the course of two days, including Thursday’s 2,300-point drop, which marked its worst day in more than 30 years.
Also on Thursday, lawmakers in both chambers had been briefed behind closed doors by public health experts and other administration officials leading the coronavirus response. Many lawmakers emerged from those meetings exasperated that, weeks after the first case was diagnosed in the U.S., test kits have been slow to be analyzed and the number of cases remains anyone’s guess.
“There’s too many basic numbers that they don’t have,” said a frustrated Rep. Pramila Jayapal (D-Wash.), who represents much of hard-hit Seattle. “Lab capacity. It doesn’t matter how many kits are out there; if you don’t have the lab capacity to process those tests, then it means nothing.”
The crush of calamities put pressure on leaders of both chambers to roll up their sleeves and secure an agreement, prodded by vulnerable lawmakers wary of facing voters in their districts without doing so first.
While House and Senate Republicans had objected to the Democrats’ initial bill, Trump’s support for the revised package is likely to convince many Republicans in both chambers to get on board.
Central to the package are provisions to provide paid sick leave for affected workers; bolster unemployment insurance for those who lose their jobs as a result of the crisis; expand federal food aid for low-income families and children; and ensure free coronavirus testing.
Pelosi said Friday that it’s the last provision that’s the most crucial.
“We can only defeat this outbreak if we have an accurate determination of its scale and scope, so that we can pursue the precise, science-based response that is necessary,” she said.
Taking a look at the Biden healthcare plan
https://mailchi.mp/325cd862d7a7/the-weekly-gist-march-13-2020?e=d1e747d2d8
Now that the Democratic primary campaign has produced a clear front runner, it’s worth examining Joe Biden’s healthcare plan, which aims to expand the Affordable Care Act (ACA) by increasing access and affordability. As the graphic above highlights, former Vice President Biden has a broad—if at this point, still fairly high-level—proposal that includes a Medicare-like public option along with a variety of other ACA tweaks that aim to offer consumers more options and lower their healthcare costs.
These include allowing individuals in states without Medicaid expansion to join the pubic option premium-free, providing unlimited subsidy eligibility, and limiting drug price increases to the level of consumer inflation.
An independent analysis projects Biden’s plan would cost $2.25T and add an additional $800B to the deficit over 10 years. While large at first blush, these costs pale in comparison to Sen. Bernie Sanders’ Medicare for All plan, which would add a projected $12.95T to the deficit over the same period.
Of course, there are still many unanswered questions in Biden’s proposal, including how much consumers would pay under the public option, how much the public option plan would reimburse providers as a percentage of Medicare, and how the public option would impact competition among private insurers.
A public option offered at a significant discount has the potential to drive private plans out of business, which some project could eventually result in Medicare for All as an ultimate consequence. The devil will, as always, be in the details.
Seeking standards, not standardization
https://mailchi.mp/325cd862d7a7/the-weekly-gist-march-13-2020?e=d1e747d2d8
We’ve been working with a number of our members on the topic of “systemness”: helping think through how health systems can (finally) make progress on creating value from consolidation, moving from being a holding company of assets to a true, functioning system of care.
One critical aspect of that work is standardization—making sure that, where appropriate, operational and clinical processes are uniform across different clinics, hospitals and markets. That’s one of the core sources of corporate value for any company—it would be crazy for GE to make refrigerators differently in Hyderabad, India than in Louisville, KY, for instance. Of course, delivering healthcare is more complex than making refrigerators, and (as we point out in our work on systemness) there needs to be a certain zone of allowable variability in many operational and clinical areas.
Along these lines, a phrase that one physician executive used in a meeting recently caught my attention: he said what he tries to achieve are “standards, not standardization”. In other words, setting clinical and operational standards (for example, how much a knee implant should cost) rather than fully standardizing elements of care (what knee implant must our surgeons use).
Of course, there are lots of things that should be completely standardized across the system—especially in “back office” areas like marketing, HR, revenue cycle, and legal. And some clinical work can be standardized as well: care protocols and agreed-upon pathways for treatment. But allowing variability in clinical practice requires a more flexible approach—one built on standards that clinicians can build consensus around—rather than on rigid standardization. We’ll have more to share about our systemness work in weeks to come—it’s a critical topic for executives as cost pressures mount, and questions about the value of health system scale abound.
“Beyond containment”: sobering predictions for coronavirus spread
https://mailchi.mp/325cd862d7a7/the-weekly-gist-march-13-2020?e=d1e747d2d8
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Confronting a national emergency over coronavirus
https://mailchi.mp/325cd862d7a7/the-weekly-gist-march-13-2020?e=d1e747d2d8
President Trump declared a national emergency today, in response to the growing spread of coronavirus across the country. The administration had come under sharp criticism for its sluggish response to the coronavirus crisis, in particular the widespread shortage of tests. Dr. Antony Fauci, director of the National Institute of Health’s infectious disease branch, told Congress on Thursday that the government’s response on testing was “not really geared to what we need right now…That’s a failing. Let’s admit it.”
In response, the administration today announced a series of emergency steps to increase testing capacity, turning to private labs to support the effort. The emergency status frees up $50B in federal emergency funding. Trump also announced that the Health and Human Services (HHS) Secretary will be able to waive regulations around telemedicine licensing, critical access hospital bed requirements and length of stay, and other measures to provide hospitals with added flexibility. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have negotiated a sweeping aid package that would strengthen safety net programs, and offer sick leave for American workers affected by the virus.
Meanwhile, the American economy likely entered a recession, as consumers continued to pull back on spending on airline travel, entertainment, and other discretionary areas, while financial markets experienced the worst one-day drop in more than 30 years. Many school districts and universities shut down and announced plans to convert to online instruction for the foreseeable future. Employers imposed broad travel restrictions on their employees, moved to teleworking where possible, and even began to lay off workers as demand for services cratered. Shoppers stocked up on staples, cleaning supplies, and (inexplicably) toilet paper, as shelves ran bare in many stores.
Epidemiologists and disease experts urged broad adoption of “social distancing”, restricting large gatherings and reducing the ability of the virus to spread person-to-person. The objective: “flattening the curve” of transmission, so that the healthcare delivery system does not become overwhelmed as the virus spreads exponentially.
HENRY KOTULA 