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Artillery Row

A response on the cost of the coronavirus shutdown

The choice is between switching to mitigation or maintaining the lockdown indefinitely

I enjoyed Sam Bowman’s thoughtful reply to my piece arguing the Government has overreacted to the coronavirus crisis. But it included a number of errors and implausible assumptions.

Many people on Twitter and elsewhere reacted with outrage to my argument because it involved putting a monetary value on human life, with some seeing this as a uniquely Tory perspective. But as Bowman says, all governments put a cash value on the cost of extending people’s lives. That may shock those unfamiliar with health economics, but there has to be an upper limit on what taxpayers can reasonably be expected to pay to keep people alive. As Dominic Lawson pointed out in last week’s Sunday Times, “This is especially true of the NHS, a centralised, free-at-the-point-of-use system unique in the western world, which can only function on the basis of rationing (since demand for healthcare is, in effect, limitless if ‘free’).”

So the question isn’t whether it’s right to place a monetary value on extending human life, but whether the current government has placed the correct value on the lives of those who would otherwise die from coronavirus. Bowman’s article says I miscalculated the cost of saving these lives because I used the National Institute for Health and Care Excellence’s (NICE) valuation of £30,000 for quality-adjusted life years (QALYs) when, according to him, the Department of Health and Social Care values a QALY at £60,000. But in the DHSC document he links to, the £60,000 valuation referred to is that of the Department for Transport and concerns the lives of economically active 40 year-olds killed in traffic accidents. As Bowman says, this is the estimated value of a QALY to society not the cost of a medical intervention to extend life. In fact, £30,000 (as per NICE) is the upper limit cost of a medical intervention to extend the lives of patients.

It’s worth bearing in mind that £30,000 is NICE’s valuation of one additional year of perfect health. As most of those at risk of dying from Covid-19 will have poor health due to underlying conditions, the value of extending their lives by one year is significantly lower than the stated price of £30,000. 

Bowman’s article says I underestimated the life expectancy of those at risk when I pointed out that the average age of Covid-19 fatalities is 79.5 and life expectancy in the UK is 81. He points out, correctly, that people who live until 80 have an average life expectancy of nine years. However, according to data from Wuhan, 67 per cent of Covid-19 fatalities have significant comorbidities and therefore have a shorter life expectancy than nine years. As a rule, elderly persons with comorbidities should have their life expectancy adjusted downwards by three years, giving an average life expectancy of those at risk of six years.

So taking Professor Neil Ferguson’s estimate that 230,000 people will be saved if we maintain the suppression measures, that gives a total of 1,380,000 QALYs. Even if we assign the upper limit of £30,000/QALY, that still gives a total value of £41.4 billion, lower than Bowman’s optimistic assessment of the economic cost of the lockdown, which he estimates to be £66 billion, excluding the deadweight losses from having to raise £120 billion to pay for the additional government borrowing.

It’s true, as Bowman points out, that not everyone would return to work if the government ended the lockdown and, when calculating the medical cost, we need to factor in the lives of those seriously ill patients who aren’t suffering from Covid-19 and who would die through lack of hospital care if the NHS becomes overwhelmed. But these two factors are having to do a lot of work to justify the economic cost of mothballing the economy.

There’s a further difficulty with Bowman’s argument. He relies on Morgan Stanley’s analysis of the impact of the lockdown on GDP, which assumes it will not extend beyond Q2 in 2020, with the economy bouncing back in Q3. In fact, in the Imperial College paper dated March 16th, it’s anticipated that the current measures will have to remain largely in place for 18 months, which is the time Professor Ferguson anticipates it will take to find a vaccine. If we relax the extreme social distancing measures before then, Ferguson points out, the people whose lives we’ve saved will die when the delayed infection peak materialises. So if we continue to follow Professor Ferguson’s advice, the economic impact will be far greater than Bowman allows.

The choice is between switching to mitigation or maintaining the lockdown indefinitely

In fact, it’s far from certain that we’ll have a Covid-19 vaccine in 18 months, particularly as coronaviruses have a nasty habit of mutating. Eleven years after the H1N1 influenza pandemic (swine flu), there are still no antiviral therapies that have been shown to save lives. The choice we face is not between switching to mitigation after Easter or keeping the lockdown in place until 30th June, as Bowman believes, or until 30th September 2021, as Ferguson recommends. The choice is between switching to mitigation or maintaining the lockdown indefinitely.

It’s inevitable that we’re going to have to abandon the suppression strategy before we develop a vaccine out of sheer economic necessity, at which point all the gains we’ve made in terms of saved lives will be lost. Okay, perhaps not all since we may increase the critical care capacity of the NHS as we buy time, although it’s worth pointing out that more ventilators probably won’t save many lives as they’ve proved largely ineffective. (Preliminary data from Wuhan suggested that 90 per cent of coronavirus patients placed on life support die.) Logically, therefore, it makes sense to abandon it now, rather than incur economic costs for which there’ll be few benefits.

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