In the saga of the virus and the lockdown, the wisdom of the
crowds, that is the wisdom of each of us, was thwarted by bad data, perhaps
intentionally bad. On the other hand, the ersatz wisdom of the collective
bureaucracy in federal, state and local health agencies was based on crafted
data. In the end data didn’t matter, as the bureaucracies were more concerned
with their natural territorial imperative, which is to rule and control.
The most frightening aspect of the coronavirus-19 (COVID-19)
epidemic in the US is that it brought about exaggeratedly heightened fear of
death. That fear, once magnified to proportions which become palpable to the
individual, became the basis for dreadful economic and medical policies from
governments and crushed the natural optimism of the public.
In early days, we were caught in a squeeze of conflicting
information. Was COVID-19 a bioweapon gone rogue and destined to
indiscriminately wipe out young and old? Or, was it another bad flu or perhaps
an extremely bad flu? After all, initial information showed the victims were
concentrated in a nursing home in Kirkland, Washington.
No cases were reported amongst the homeless on West Coast
streets. No deaths among children were reported. And in the closed world of
cruise liners and later a military ship, there were lots of early cases and
some deaths. As time passed, there was little more bad news. We should have
been suspicious of the data.
We were mainly focused on the case fatality rate (CFR: deaths as
a percent of diagnosed cases) which were frighteningly high. We worried about
the infection fatality rate (IFR), but there was too little data and testing
available to have any idea how many people were or ultimately would be
infected.
But those concepts – CFR and IFR – are not the most important
strategic measures of the severity of the disease. It is the death rate,
properly defined and understood, that should matter for long-term policy
makers, our erstwhile more level-headed thinkers, in determining policy.
In the past few weeks, we have obtained more useful data in the
US. There were secrets lurking in the data, waiting to be uncovered, that could
help ascertain what was really happening. The purpose of this report is to do
just that – to ascertain what the data are telling us. It also gives us the
basis for judging the appropriateness of past and present policies
So, let’s begin with a simple question: what is the relevant
death rate due to COVID-19? There are many definitions in the epidemiological
world such as the CFR and IFR mentioned above. My focus is on the overall death
rate – actual and projected. Until we have more widespread testing for
COVID-19, we cannot know with any accuracy how many people were infected by the
virus. We cannot know what proportion of the population has some sort of
natural or acquired immunity.
We do not even have accurate data on how many people have died
from COVID-19 alone versus COVID-19 plus some other complications that were
already present such as diabetes, morbid obesity and prior respiratory
complications, any one of which might equally have been the proximate cause of
death. There is ample evidence, especially in the Northeast region that there
has been “over classification” (a euphemism for data bias). We do not have the
demographic details for those infected and those who died. But we do have death
data, and it is more accurate than the number of cases and the number of
infections.
To understand how our minds have been misdirected in
understanding the real risks associated with COVID-19, let’s begin with a brain
teaser. It will awaken our numerate minds in preparation for understanding the
data deception and misunderstandings that prevail.
When is
1.7% greater than 98.3%?
In the bizarro world of COVID-19 reporting that is the case –
1.7% is greater than 98.3%. Specifically, deaths among a narrow 1.7% group of
the population are greater than deaths from the other 98.3%. Numerically a
death may be a death, but from a policy point of view, to be blunt about it,
not all deaths are the same.
Fact #1: 1.7% of the population in the US resides in long-term
medical care facilities (LTMCFs) and total 5.7 million.
Fact #2: The residents of LTMCFs accounted for 38,800 or 53% of
all COVID-19 deaths (based on recent data). The rest of the country, the 98.3%,
have experienced approximately 34,600 deaths, or 47% of the nation’s total
COVID-19 deaths.
The
Death Rate at LTMCFs Is Stunning
That means the death rate, deaths expressed as a percent of
those living in medical care institutions, is 0.682%, more than 50 times the
death rate of the rest of the population at 0.012%. The death rate for the
overall populations is 0.022%.
That should leave you speechless.
We have a COVID-19 problem, but we have an even greater and more
serious LTMCF problem that is clouding our understanding of the contagion and
therefore what our best public health policies should be. Shutting down the
economy, the world wherein the 98.3% live and prosper was too draconian. The
feared overloading of the hospital system with emergency patients, which was
short-lived, was disproportionately coming from the residents of LTMCFs, not
the general public.
The data have been there all along, but they were not properly
collected, catalogued and analyzed.
Much of the data in this report came from a landmark study by
Gregg Girvan and Avik Roy of the Foundation for Research of Equal Opportunity.
Their work was based on data collected through May 10th, 2020 for
most states. Since their publication, revisions have been incorporated as
states have corrected or updated their data since the original report. The
calculations given above are imputations from the updated data.
At this point, we do not know what the ultimate count of deaths
and the death rate will be, but what we have in hand are statistics that are
very indicative and telling of the gross misunderstanding that the public and
federal, state and local decision-makers have been working with on which to
base their decisions.
Long-term medical care providers to the aged and medically
infirm (per the Girvan-Roy study) consist of: Nursing homes and skilled nursing
facilities; Assisted living facilities, i.e., residential care communities or
personal care homes; Adult day service centers; Home health Agencies; and
Hospices.
The first two medical care providers for seniors are referred to
as long-term medical care facilities (LTMCF) and are the source of the data.
Data for the other three elder care facilities are not collected or were not
available for the Girvan-Roy study. In fact, it has been acknowledged that
there continues to be underreporting of deaths related to LTMCFs. Some
providers are just not reporting. In other cases, the residents die in hospitals
and they are not categorized as LTMCF deaths. Nonetheless, the data are
sufficient to draw some useful if not stark observations.
What
about the Flu and Pneumonia Death Rates in Earlier Years?
To even better understand these death rate figures, it is useful
to put them into the context of what we know about death rates from the flu
before the arrival of COVID-19. Is the COVID-19 death rate worse, better or
about the same as prior flu seasons? We should expect the rates to be worse
because there is no vaccine whereas most people get a vaccine shot for the
routine flus that are expected each year.
In 2017 the Centers for Disease Control (CDC) reported that
annual deaths from all causes were 2.8 million or 0.866% of the population. The
leading causes of death, in order of magnitude, were heart disease, cancer,
accidents, respiratory disease, stroke, Alzheimer’s disease, diabetes, flu
& pneumonia and suicide.
Just looking at the Flu & Pneumonia (FP) cause, in 2017 it
accounted for 55,672 deaths or 0.017% for the population as a
whole. Death from FP, as you would expect, fell hardest on people over 75
totaling 38,078 deaths. That translates into a FP death rate of 0.180% for
those over-75 group, which is a little more than 10 times the death rate for
the overall population. For the rest of the population under 75 the death rate
was only 0.006%, or or 1/30th of those over 75 (0.006% vs 0.180%).
DEATH
RATE FOR COVID-19 AND THE FLU FOR SELECTED DEMOGRAPHICS
|
2020
COVID-19
|
2017
Flu & Pneumonia
|
|
|
Overall
Death Rate
|
0.022%
|
0.017%
|
|
Over
75 DR
|
0.161%
|
0.180%
|
|
LTMCFs
DR
|
0.682%
|
|
|
Non-LTMCFs
DR
|
0.011%
|
|
|
Under
75 DR
|
0.010%
|
0.006%
|
What this means at this point is that in the aggregate the
overall COVID-19 death rate is slightly worse than the flu death rate in a
prior year (0.022% vs 0.017%). However, for seniors in LTMCFs, the COVID-19 death
rate is 100 times greater than the flu and pneumonia DR was for
those under 75 in 2017 (0.682% vs 0.006%) and nearly 4 times
greater than those over 75.
In summary the COVID-19 death rate is far more skewed to those
older than 75 and those residents in medical care facilities for the aged.
What
Does the Future Hold?
Looking ahead we obtained the most recent forecast from the
Institute for Health Metrics and Evaluation (IHME) at the University of
Washington. They are considered by many medical professionals as the most
thorough modelers. On May 18, 2020 the IHME released the results of the third run of
its new model. They predict that by August 4, 2020 a total of 143,357 Americans
will die of COVID-19. That forecast nearly doubles the number of COVID-19
deaths. It is worth noting that each run of the model has produced lower
forecasts for future deaths. There are detractors of their modeling procedures,
but it is the best we have at the moment.
One interesting medical research report suggests that a
significant portion of the population has natural immunity to COVID-19. In
the May 14 edition
of Cell, published by Elsevier, the researchers found:
T cell responses were detected in 40-60% of unexposed
individuals. This may be reflective of some degree of cross-reactive,
preexisting immunity to SARSCoV-2 in some, but not all, individuals… suggesting
cross-reactive T cell recognition between circulating ‘common cold’
coronaviruses and SARS-CoV-2.
This might be why there are so many reports of asymptomatic
cases of COVID-19. That also may mean the IHME forecast will be revised down
even more.
However, COVID-19 has brutal consequences for people over 75.
That detail cannot be minimized. But what policies would that suggest?
Did We
Adopt the Right Policies?
What do these data suggest about the medical and economic
policies that have been adopted by the federal, states and local governments?
The carnage of COVID-19 is concentrated in elder care facilities
not in the population at large. The policies and procedures, including
lockdowns and state-of-the-art personal protection practices for those
facilities, should have been more thoroughly thought out based on useful
data.
Keep in mind, about 70% of the elder care facilities are
for-profit. Yet they are not free-market enterprises; enterprises free to do
what they think is best. These for-profit facilities are licensed and regulated
by the several Departments of Health of the states. They do what the state
tells them to do.
The governors and mayors, and their medical and science
advisers, made the decision to pack them in, force them to house and retain
infected and returning infected patients. They chose to divert PPE supplies to
hospitals, not the elder care facilities. This characterization is based on
reports in the press. One certainly hopes there were some communities that did
a better job. There is reason to believe that is the case because some assisted
living facilities have reported no deaths.
As COVID-19 deaths mounted, not a word was officially spoken
about where they were occurring. Fear was stoked that it was a population-wide
epidemic. We should ALL lock down.
What a costly mistake, a mistake that continues to this day.
Governors and mayors with fresh data insights into the truth still want to be
central planners and determine which businesses can re-open and to what degree,
who should still shelter or socially distance. They send out teams to draw
circles in the grass defining where groups can camp out and place police
monitors in all the parks to warn people to stay within the circles. At this
point they are just imaginary prisons, but they are prisons.
Madness, sheer madness.
Though that is an easy and superficial observation to make, what
is really unsaid, and not easy to admit, is that large numbers of politicians
and bureaucrats have revealed their true nature. Speeches decorated with
declarations of “better safe than sorry” and “planning is better than no
planning” reveal they are authoritarians by nature; central planners of the
worst kind.
In conclusion, the relevant death rate for policy purposes has
been obscured. The consequence has been inappropriate policies. They have
resulted in a bizarro world of highly restricted commercial functioning and
immense economic destruction, alongside no evidence that lives were saved and
growing evidence of second-tier loss of life resulting from
lockdown.
Gregory van Kipnis is Chairman of the Board of the American
Institute for Economic Research. He was President and CEO of Invictus Partners,
a statistical arbitrage hedge fund manager from 1997-2007, prior to that he was
EVP at Jefferies & Co., in charge of proprietary trading from 1993-1997;
Managing Director of NatWest Financial Products (London) and Executive Director
of County NatWest (London) responsible for derivatives issuance and proprietary
trading from 1990-1992; and Principal at Morgan Stanley responsible for
proprietary statistical arbitrage trading, 1985-1990. His earlier career was as
an economist and research director at Donaldson Lufkin & Jenrette
(1973-1985) and IBM Corporation 1966-1973. He studied with Ludwig von Mises at
New York University where he obtained his MBA in economics and finance.
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