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These social policies could help the U.S. cope with the coronavirus pandemic

Social systems need some ‘slack’ to weather sudden spikes in need

- March 24, 2020

Experts have long known that a pandemic could swamp the U.S. health system. A Johns Hopkins study this year identified weak spots in U.S. pandemic preparedness, including limited access to health care; limited medical resources like such as doctors, nurses and hospital beds; and a lack of social resilience, such as trust in government. A 2017 federal tabletop exercise found a long-expected pandemic would require more doctors, hospital beds and equipment than the United States had available.

Sure enough, last week governors and health authorities announced they were running short of key medical staff and protective equipment to treat the geometrically expanding waves of covid-19 patients in need of ICU care. President Trump invokedbut didn’t actually use — the 1950s-era Defense Production Act to increase production of critical supplies like masks and face shields that could protect health-care workers from catching the virus. Distilleries around the country are making hand sanitizer.

The U.S. approach to social policy and the health-care industry make our society particularly vulnerable to the effects of covid-19. Here’s what can we learn from other rich democracies about how to be resilient in a pandemic.

U.S. health care has insufficient ‘slack’ to cope in an emergency

Over the past 30 years, many economists and policymakers have converged on the view that it’s inefficient to have too much “organizational slack” — meaning resources like financing, employees or supplies above the minimum required for normal functioning. But greater slack has its benefits, too: It offers greater ability to respond to crisis. The covid-19 pandemic has revealed how helpful that slack can be.

The need for slack is why public health authorities want everyone to take measures to “flatten the curve”: handwashing, social distancing, canceling elective surgeries, staying home and stopping panic buying. If fewer people need care at any particular time, that gives all kinds of systems — from grocery supply chains to hospital ICUs — the slack needed to keep working despite the pandemic’s increased demands.

But coping with an emergency could be easier if systems had more resilience built in. For instance, “social shock absorbers” like cash income supports, unemployment insurance, subsidized housing and health care, and publicly provided child care give household budgets a little slack. That could allow people to continue to work, or at least consume, during periods of either personal misfortune or mass disruption — thus reducing the threat of broad economic collapse.

What social policies would create slack, enable the U.S. to cope with covid-19 and build resilience for the future?

Universal paid sick leave would allow people to maintain quarantine if they become infected. The United States is nearly unique among rich democracies in lacking a national policy for paid sick leave. Without it, sick people continue to go to work, making it easier for illnesses to spread — whether that’s the common cold, a norovirus or covid-19. The slack created by paid sick leave would help them stay home.

Just now, many businesses are facing disastrous prospects as demand disappears. Major airlines are at risk of shutting down by May. Countless service and small businesses are in danger, including restaurants, hairdressers, small retailers and bars. One tool for dealing with sharp downturns in demand is kurzarbeit, or short-work. After the 2008 global financial crisis, Germany allowed employers to cut employees’ hours down to one or two days a week, with government subsidies making up the rest of the salary. Denmark’s government has committed to paying 75 percent of the salaries of employees who cannot work as the pandemic affects their firms. Even the United Kingdom, with probably the least regulated labor market in Europe, has committed to paying 80 percent of employees’ salaries when they cannot work during the pandemic. Short-work policies can protect workers and help keep firms of all sizes afloat during temporary downturns.

Some jobs cannot be saved, which sharply hurts individuals and families while also resulting in declining consumer demand — hurting the economy more broadly. Unemployment insurance offers the slack that helps individuals and families navigate hardship. Compared to that of most other rich democracies, U.S. unemployment insurance is spotty, depending on the policies of individual state governments — and at best is stingy and does not last long. Further, comparatively few workers can use it; for instance, independent contractors, consultants, gig workers and freelancers can’t claim benefits.

U.S. health-care insurers and administrators have focused on operational efficiency for decades, even as consumers’ costs steadily increased. Medicare and Medicaid payment systems, for example, encourage hospitals to keep the number of beds to a minimum and to offer those only to the most critical cases. In this view, outpatient surgery is “operationally efficient,” because it demands no staffed hospital bed — but then there aren’t enough beds available in a pandemic. The United States has far fewer hospital beds per capita than most rich democracies, and roughly one-quarter the number in South Korea and Japan.

Analysts are predicting the current pandemic will lead to dramatic economic damage and many lost lives. In response, the U.S. and state governments are allocating dramatically large sums of money. Leaders are making policy decisions that were unimaginable a few days ago. Of course, greater slack comes at a cost, too. Deciding how to trade off between slack and efficiency is the province of policymakers, not social scientists. But U.S. policymakers may wish to learn from other governments’ health and social policies as they can help the U.S. cope with covid-19 and prepare systems resilient enough to handle future crises.

Scott Greer (@scottlgreer) is a professor of health management and policy, global public health and political science at the University of Michigan, and lead author of “Everything you Always Wanted to Know about European Union Health Policy but Were Afraid to Ask” (WHO, 2019).

Julia Lynch (@juliaflynch) is an associate professor of political science and a senior fellow of the Leonard Davis Institute of Health Economics at the University of Pennsylvania, and author of “Regimes of Inequality” (Cambridge University Press, 2020).