The huge economic cost of the enhanced community quarantine (ECQ), the government’s main response measure to the COVID-19 epidemic, has been widely discussed. The issue is often posed as a choice between saving lives and saving the economy. But framing the issue this way obscures a more difficult dilemma.
By driving the economy into recession, the ECQ puts hundreds if not thousands of lives at risk now and in the coming years. Saving lives today will cost lives tomorrow.
There is compelling evidence that economic recessions lead to higher mortality. Study after study has documented an increase in total deaths – deaths due to cancer, cardiovascular diseases, respiratory infections, chronic liver disease, suicides, homicides, during periods of economic crises. Infant mortality and elderly death have been shown to rise with recessions and unemployment. Unlike epidemic deaths which bunch up in time and space, deaths linked to recessions are spread over many years, unlikely to attract media coverage.
A recent study of the Organization for Economic Development (OECD) member-countries conducted by the Harvard T.H. Chan School of Public Health, Imperial College London, and Oxford University, published in the Lancet, found that the global economic crisis of 2008-2010, and the rise in unemployment that accompanied it, was associated with more than 260,000 excess cancer-related deaths during the recession – including many considered treatable.
Despite overwhelming evidence of the impacts of recessions on lives and public health, the logic is rarely extended to the unfolding lockdown-induced recession. The International Monetary Fund (IMF) has warned of “a global crisis like no other” as a consequence of almost simultaneous lockdowns across countries, including the world’s largest economies, in response to the COVID-19 pandemic. The pandemic has claimed more than 200,000 lives – and counting.
Alarm signals
Will the global lockdown and the ensuing recession be accompanied with 260,000 excess cancer-related deaths? Not to mention deaths in other countries, and deaths due to cardiovascular diseases, respiratory infections, chronic liver disease, suicides, and homicides.
The consensus view sees a quick recovery unlike the last global recession, so the health impacts could be subdued. But recent developments – unprecedented mass unemployment in the biggest economies, the price of oil in the world market plunging to negative territories – are not encouraging.
In the Philippines, the COVID-19 death toll has breached the 500 mark. The Luzon-wide ECQ has shuttered 70% of the economy for a month and a half. While restrictions will soon be eased in parts of Luzon, over 60% of the economy will remain paralyzed until May 15.
What will be the consequences of the ECQ to the broader public health? How many lives will the ECQ put at risk?
We can get a sense of the magnitudes of the risk to lives posed by an ECQ-induced recession by extrapolating from previous studies. A 2019 study in Brazil published in the Lancet using data for 2012-2017 found that a one percentage-point increase in unemployment rate was associated with a 0·50 increase per 100, 000 population per year in all-cause mortality, mainly due to cancer and cardiovascular disease, mostly in the 30–59 age bracket. Cardiovascular diseases and various types of cancer are among the top causes of death in the Philippines.
There is a wide range of estimates of the extent by which the unemployment rate will rise in 2020 as the economic output is expected to take a huge hit from the ECQ. The IMF estimates unemployment to reach 6.2% in 2020, an increase of about one percentage, while former NEDA Secretary Ernesto Pernia had warned that the unemployment could reach double digits if the ECQ is extended, an increase of at least 5 percentage points.
Infant and elderly deaths
Extrapolating from the Brazilian study, all-cause mortality would increase anywhere between 300 and 1,000 per year as a result of the ECQ, compared with COVID-19 deaths of more than 500 to date.
Another study that looks at the impact of recession on infant mortality and elderly death gives a more alarming picture. In Mexico, a 0.4% increase in mortality for the elderly was associated with the 1995-1996 crisis, which saw Mexico’s GDP fall by -4.4%. Applying directly these numbers to the Philippines implies 1,400 excess elderly deaths.
Can we expect Philippine GDP to fall by -4.4% in 2020? This is a very likely possibility using very conservative assumptions:
- the ECQ has been at least 70% effective, thus shutting down 50% of the economy (Luzon accounts for 72% of the economy, NCR accounts for 62%) for two months; and,
- the rest of the economy grows by no more than 4%. Exceeding 4% is a tall order considering talks of a gradual opening up after May 15.
These excess death numbers due to the recession induced by the ECQ are by no means accurate. They are meant only to convey a sense of the magnitude of the risk involved, and to highlight an underappreciated aspect of the ECQ.
Exit strategy
The high cost of recessions on lives and people’s health has implications for an exit strategy. Two caveats: First, make no mistake, COVID-19 is a serious threat to public health and will remain so for quite some time, with the elderly facing the highest risk from the virus. Second, the ECQ has created certain conditions that are not easily reversed.
Lifting the ECQ – whether gradual or total – is likely to be followed by a spike in cases as cases delayed by the ECQ appear, and a second wave is almost certain. An exit strategy must be designed around a gradual easing of restrictions.
The cost to lives of the ECQ has implications for an exit strategy.
One, the exit strategy must now take a broader of view of public health and consider both short-term and longer-term impacts. It should increasingly place greater weight on avoiding a deeper recession and hastening a recovery – to minimize deaths from non-COVID-19 causes down the road. In other words, it must lean heavily towards reviving the economy in the shortest possible time.
Two, the epidemic has placed a double burden on the health sector that will remain for years to come. The novel coronavirus is unlikely to go away soon and a vaccine is many months if not years away. As the health system deals with more deaths from the coronavirus, it too must cope with the burden of excess mortality and morbidities, no thanks to the unfolding recession.
The same studies linking recessions and unemployment to mortality also show that higher levels of public-sector expenditure on health care and universal health coverage can lower the death toll of recessions and unemployment.
Support for health sector
Going forward, fiscal support to the health sector becomes a critical issue. The need to provide income support to the population affected by the ECQ has forced the government to exceed self-imposed fiscal limits. In past crises, government has cut back on health and social spending to rein in the budget deficit. This epidemic has exposed the huge cost of this policy mistake in money and lives.
Finally, this crisis shines the light on the state of social protection for the elderly. The elderly are the most vulnerable during the pandemic. In the short term, it would be more effective, from both management and health impact perspectives, if energies and resources are deployed in a more strategic, focused manner, for example, focusing rapid testing, community-level health surveillance and monitoring, health advisory, financial assistance, etc. on the most vulnerable segment of the elderly population.
Over the longer term our response should place greater weight on protecting senior citizens from health risks and concomitant financial burden. What we have now is a raft of benefits, largely motivated by electoral politics and accessed through a fragmented system.
Universal health insurance is provided, but benefit coverage is woefully inadequate. The poor end up going around government offices and private charities begging for aid. A centralized system to access aid through Malasakit Centers has been set up in public hospitals and may have improved the ease of begging.
Such a system needs redesign. – Rappler.com
Clarence Pascual is a consulting economist with a master’s degree from the UP School of Economics. He has worked with NGOs, and was former director at the Governance Commission for GOCCs and assistant secretary at the Housing and Urban Development Coordinating Council.