We’ve had a lot of stories the past several days about the swine flu outbreak in Mexico and smaller groupings of confirmed cases in New York, California and elsewhere in the United States. There has been years of discussion on the H5N1, so called avian flu, pandemic risks. We all remember the impact of SARS. And we’ve been rocked, recently, by what some have tagged a ‘depression’ but all of noted as the largest economic downturn since The Great Depression. The losses associated with this ‘Great Recession’ are still playing out.
But I was wondering — what if the Swine Flu became a pandemic at this time? All indication (including the CDC site) indicate that aside from some serious implications for Mexico City’s public health, the cases in the United States have been mild, with no hospitalizations. The 1918 flu pandemic that took 20m lives world-wide, however, is the standard modern example of potential personal and economic costs of a flu pandemic. Not to minimize the terrible pain and suffering that such a pandemic would cause by putting an economic slant on it– but I was wondering what might be the economic impact to our already tottering United States economy if a pandemic struck.
So I took a look at a study the CDC had commissioned in 1999. It showed the potential U.S. economic impact of a pandemic. The CDC used this as a way to assist the public policy discussion in light of strategies regarding flu immunization — i.e., which immunization policy could provide the best net value in the case of flu pandemics of differing severity. It’s beyond this post (or its author) to analyze the article and it’s conclusions. But I thought the numbers were notable and summarize the potential economic exposure (without vaccination). And, of course, this looks at U.S. exposure only. A pandemic would have a far reach. Look how quickly in this age of easy travel the virus spread from Mexico to the United States and even potentially exposed the President of the United States during his trip. From the CDC’s study:
Without large-scale immunization, the estimates of the total economic impact in the United States of an influenza pandemic ranged from $71.3 billion (5th percentile = $35.4 billion; 95th percentile = $107.0 billion) (gross attack rate of 15%) to $166.5 billion (5th percentile = $82.6 billion; 95th percentile = $249.6 billion) (gross attack rate of 35%) (Table 6). At any given attack rate, loss of life accounted for approximately 83% of all economic losses. Outpatients, persons ill but not seeking medical care, and inpatients accounted for approximately 8%, 6%, and 3%, respectively, of all economic losses (Table 6) (Appendix II).
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If it cost $21 to vaccinate a person and the effective coverage were 40%, net savings to society would result from vaccinating all age and risk groups (Figure 2). However, vaccinating certain age and risk groups rather than others would produce higher net returns. For example, vaccinating patients ages 20 to 64 years of age not at high risk would produce higher net returns than vaccinating patients ages 65 years of age and older who are at high risk (Figure 2). At a cost of $62 per vaccinee and gross attack rates of less than 25%, vaccinating populations at high risk would still generate positive returns (Figure 2). However, vaccinating populations not at high risk would result in a net loss (Figure 2).
There’s also an interesting Congressional Budget Office (CBO) assessment (and see generally the goverment web page) of possible economic effects of an avian flu pandemic. That study concludes that a pandemic involving a highly virulent flu strain (such as the one that caused the pandemic in 1918) could produce an impact worldwide similar in depth and duration to an average postwar recession in the United States — but citing studies ranging from a .5% to 6% decrease in GDP. Query, of course, what impact if such a pandemic hit during an ongoing recession.