Federal and state regulations are being waived or relaxed so that patients can receive medical care and continue their medications while social distancing or quarantining during the COVID-19 pandemic.
For example, states are relaxing licensing requirements and scope of practice laws in order to allow more health care providers to serve people in need. The Centers for Medicare and Medicaid Services has taken steps to promote the practice of medicine, including telemedicine across state lines. The Drug Enforcement Administration and the Substance Abuse and Mental Health Services Administration have made it easier for people receiving Medication Assisted Treatment for drug addiction to continue on methadone or buprenorphine while practicing social distancing.
Sadly, both acute and chronic pain patients on opioid therapy still must contend with onerous requirements, such as limits on the number of pills per prescription and the requirement to be seen by the prescriber in order to obtain a refill. Some of these requirements are state‐based. Some are federally imposed, including last year’s rule from the Centers for Medicare and Medicaid Services that Medicare Part D beneficiaries with acute pain be given no more than a 7‑day supply of prescription opioids as initial treatment for their pain. With patients confined to their homes—many already relatively immobilized by their pain—these regulations become an even greater burden.
Health Canada, the regulatory agency that oversees Canada’s health care system, recognizes this and has urged its provinces to:
- permit pharmacists to extend prescriptions;
- permit pharmacists to transfer prescriptions to other pharmacists;
- permit prescribers to issue verbal orders (i.e., over the phone) to extend or refill a prescription; and
- permit pharmacy employees to deliver prescriptions of controlled substances to patient’s homes or other locations where they may be (i.e self isolating).
In response to the current public health emergency, the DEA, SAMHSA, and CMS should follow the example of Health Canada and waive prescription limitations, as well as requirements for in‐person evaluation for refills, and encourage states to do the same. Governors should then issue executive orders waiving state‐based restrictions. As regulations are relaxed or waived to address the needs of patients while we are all being asked to engage in social distancing and self‐quarantine, pain relief must not be given short shrift.
Any day now, the Federal Reserve will start making loans to small and medium-sized businesses, breaking new ground with its Section 13(3) lending authority.
Yet this won't be the first time the Fed set its sights on Main Street businesses.
In this post, I'll first review the origins and outlines of the Fed's latest lending scheme. Then I'll tell the story of its mostly forgotten predecessor: a lending program based on a now-defunct Federal Reserve Act amendment that was also supposed to encourage the Fed to lend to smaller non-bank businesses.
I hope the story of that former program may shine a light on some potential pitfalls along the road down which the Fed plans to venture. But even if it doesn't, it seems worth telling.Read the rest of this post »
Economic nationalism was on the rise before the spread of COVID-19, and worryingly, it may be picking up even more as a result.
Countries around the world are experiencing the biggest public health crisis in recent memory, and there are concerns about having the necessary supplies to deal with it. It is understandable that governments are afraid that they will be short of the medical care products they need.
The proper response, however, is not an “every country for itself” hoarding of these products. Instead, all countries should play a constructive role in addressing the problem, taking into account their current public health situation. As our colleague Scott Lincicome put it last week, the proper response by government here should be:
conducting international diplomacy and multilateral coordination of public health and economic issues in order to share best practices, ensure global medical collaboration on potential cures, and prevent counterproductive, “beggar‐thy‐neighbor” policies such as hoarding or export restrictions;
Unfortunately, there are signs that some governments are headed in the wrong direction. So far, 54 countries have implemented some form of export restriction on medical supplies.
There have even been actions to restrict food exports. To date, the United States has not joined in this approach, but a member of U.S. Congress recently proposed a full ban on certain critical medical supplies. With the number of cases surging quickly in the United States, proposals such as this one could gain support.
As Lincicome suggests, what countries should be doing instead is coordinating with each other, which will help them figure out who needs what products at a given moment. Each country is at a different stage of the COVID-19 crisis. Those who are in the midst of the crisis should be reaching out to tell the rest of the world what they need. And those who are in recovery or have not been hit too hard, such as China and Japan, should be helping those who need it.
There was speculation that China, a major producer of medical supplies, was restricting exports, but the evidence so far suggests that has not happened. After dealing with its internal crisis, China is now trying to export again: It approved the export of 5 million masks to South Korea; and a Chinese company recently signed a contract with the Italian government to provide 8 million masks. And as Reuters reported on Sunday:
A planeload of desperately needed medical supplies arrived in New York from China on Sunday, the first in a series of flights over the next 30 days organized by the White House to help fight the coronavirus, a White House official said.
A commercial carrier landed at John F. Kennedy airport carrying gloves, gowns and masks for distribution in New York, New Jersey and Connecticut, three hard‐hit states battling to care for a crush of coronavirus patients.
The first plane, funded by the Federal Emergency Management Agency, carried 130,000 N‑95 masks; nearly 1.8 million surgical masks and gowns, more than 10.3 million gloves; and more than 70,000 thermometers.
(Of course, there have also been restrictions on the import side, but those can easily be removed by the countries imposing them. Hoarding goods for your own citizens to use is at least understandable. Restricting your own ability to buy foreign products, through tariffs or Buy American provisions, makes no sense.)
Beyond products, people with expertise are crucial as well. The Economist recently noted the following:
veterans from the earliest battles of the pandemic are taking their knowledge to others. On March 12th eight Chinese doctors, led by Liang Zongang, a professor of cardiopulmonary reanimation, arrived in Italy on a charter flight that brought medical equipment supplied by the Chinese Red Cross. They were followed on March 18th by around 300 Chinese intensive‐care doctors.
There has been a lot of blame thrown around relating to the origins of the coronavirus and the actions taken in the early months. All of that can be sorted out later in the interest of preventing this from happening again. Public health experts need to have access to the full details in relation to both the origins and actions of each government in response.
For now, though, we need to focus on getting through the current public health crisis. The best approach is for nations to coordinate the relief effort. (Our colleague Inu Manak wrote last week about how the WTO could play a role here.) China’s contributions have been very helpful, and the U.S. State Department recently announced its own efforts.
There will be opportunities for other countries to help as well. There could be a second wave of the virus in China, and there will almost certainly be a dangerous spread through the developing world. Any country with the resources to help should plan to do so.
In the meantime, export restrictions should only be used if absolutely necessary—if a country is in the worst stages of the crisis and cannot spare any supplies. Otherwise, we should let the need for these supplies dictate where they are sold.
California Governor Gavin Newsom ordered all “nonessential businesses” in the state to close in response to COVID-19. The order closes all businesses except for those deemed to be part of America’s critical infrastructure. While it’s not possible to determine exactly which businesses will have to close—the order’s implementation is still being worked out—it is clear that immigrants are disproportionately likely to still be on the job this week, putting their health at risk to keep the state afloat.
The order’s language lacks the specificity to identify each particular case, but this post reviews data from the Census Bureau’s American Community Survey from 2018 (the most recent year available) to identify likely essential industries that will remain open. Overall, about 4.6 million immigrants will likely be deemed essential in California—33 percent of all the state’s essential workers. They are producing food and equipment, maintaining operations at hospitals and research facilities, and distributing supplies across the state.
Figure 1 shows the percentage of foreign‐born workers in each major industry classification, including only those subindustries deemed or likely to be deemed essential. It is important to note that immigrants may play a variety of specific job duties within these industries. The share of foreign physicians in the medical industry, for example, is much higher than the share of foreign workers overall.
In 2018, California’s immigrants constituted 63 percent of the workers in essential agricultural industries, 45 percent of essential manufacturing, 40 percent of essential service sector workers, 39 percent of essential wholesale workers, 38 percent of construction, 36 percent of transportation, 33 percent of social and child agencies, 32 percent of medical facility staff, 30 percent of essential professional services, 28 percent of essential retail, and 26 percent of essential finance. Only the extraction industry and the three governmental industries—utilities, public administration, and the military—had immigrant shares below 20 percent. Overall, 27 percent of Californians were immigrants in 2018. Nationally, the share is less than 14 percent.
Table 1 provides the full list of industries that I estimated are or are likely to be deemed essential based on the governor’s order. One noteworthy essential subindustry is manufacturing of pharmaceuticals and medicines where 42 percent of its labor force in California were immigrants. Immigrants were the same share of the workforce for manufacturers of medical supplies. Another noteworthy example is grocery wholesalers—nearly half (48 percent) of its workers are immigrants in California. Similarly, 46 percent of the workers at California’s nursing care facilities—which are on the frontlines of protecting the elderly from COVID-19—are immigrants.
Immigrants are helping California survive this unprecedented challenge. They are making and distributing food, producing pharmaceuticals, and caring for the sick.
Last week, three Foreign Intelligence Surveillance Act authorities expired after a watered‐down reauthorization and reform bill that had been hastily approved by the House ran into opposition in the Senate. Though the Senate ultimately agreed to a short‐term 77 day extension, the House has yet to act on it. Since the authorities are grandfathered for investigations already underway, or for potential offenses a temporary lapse is unlikely to have much operational impact, and an extension soon seems inevitable. When Congress does finally take up the issue again, this most recent compromise bill will be the baseline for further improvements—and improvements are sorely needed.
There are certainly some things to approve of in the failed compromise bill, but it ultimately falls well short of what’s necessary—and includes a lot of cosmetic tweaks designed to mollify a president outraged over the mishandling of the Carter Page investigation, without actually effecting substantive change.
Let’s review both the good and the not‐so‐good. The bill would finally put an end to the misbegotten “call detail records program” initially exposed by Edward Snowden nearly seven years ago, and preserved in a diluted form under the USA Freedom Act of 2015. Though more limited than its predecessor, which indiscriminately vacuumed up nearly all domestic call records, the USA Freedom version of the CDR program nevertheless led to the government collecting hundreds of millions of call detail records each year, based on just a handful of orders. Like its predecessors, it was both plagued with compliance problems and errors, and essentially useless operationally, as the independent Privacy and Civil Liberties Oversight Board confirmed in a recent report. Though NSA itself decided to mothball the program, the administration formally requested that the authority for it be renewed, just in case they saw a need for it in the future. Rejecting that idea, as this latest bill does, should be a no‐brainer.
There are also welcome–if inadequate–changes to the broader business records provision, also known as Section 215, which (as the name suggests) enables the government to obtain business records, or any other “tangible thing,” that is deemed “relevant” to a national security investigation. Because the bar for obtaining §215 orders is far lower than the probable cause required for a full‐blown FISA warrant, the new bill closes a potential loophole by clarifying that the authority may not be used to obtain any record that would otherwise require a full search warrant in an ordinary criminal investigation—and that this includes location information, which the Supreme Court brought under the protection of the Fourth Amendment in Carpenter v. United States (2018).
Yet this bill does not go nearly as far as Sen. Ron Wyden’s Safeguarding Americans’ Private Records Act, which would similarly require a warrant to obtain a target’s Web browsing history and other categories of particularly sensitive records. Nor, perhaps more importantly, does it address the underlying breadth of §215: The trivially low bar of “relevance to an investigation” compounded by a requirement that the FISA Court approve orders for individuals with any connection to the target of an investigation. In the now notoriously botched investigation of former Trump campaign advisor Carter Page, for instance, the FISA Court would have been presumptively obligated to issue an order for the financial or telecommunications records of anyone “known to” or “in contact with” Page, since he was the target of a foreign intelligence investigation believed to be acting as an agent of a foreign power, and all such records are defined as automatically “relevant” by the statute. In principle, that would have made the records of virtually the whole of the senior Trump campaign staff available to the FBI without any further basis for suspecting them individually,
Also in the positive column are expansions of the role of the FISA Court’s amici curiae—expanding their ability to provide the Court with an independent perspective from the government’s, and assuring them access to files and evidence needed to do their job effectively—as well as a firmer deadline for the publication of significant rulings by the Court. But these are ultimately efforts to compensate for a deeper defect in the FISA process: Unlike ordinary criminal wiretaps, FISA surveillance is normally permanently covert by default, with only a tiny fraction of those spied on every learning about it. Eliminating that back‐end notice to the target of surveillance—notice that is normally considered constitutionally necessary to make a search “reasonable”—also eliminates an important incentive to be scrupulous in seeking applications. There may often be compelling national security reasons to delay notice to individual targets, perhaps even for quite extended periods of time, but at least in the case of U.S. persons, there is no good justification for making secrecy the universal, uniform default: The government should have to make the argument once surveillance terminates. In cases where surveillance has ultimately failed to support the government’s belief that a U.S. target had acted as a foreign agent, then there will often be no compelling national security rationale for failing to disclose.
Finally, there are what I think of as the “Carter Page provisions” of the bill. These are fairly clearly calculated to persuade Donald Trump that serious reforms have been enacted which will prevent a repeat of the grossly flawed investigation of his erstwhile advisor. As one might expect, they are largely cosmetic—sounding “tough” but with little real chance of making much practical difference. Criminal penalties for misuse of FISA are increased somewhat, which doesn’t add up to much if, in practice, nobody is ever actually criminally prosecuted for FISA misuse. Even in the Page case, only one of the attorneys involved in reviewing the application faces even the slenderest chance of prosecution. FBI agents are not thinking “well, I’ll falsify an application if I risk a three year prison term, but eight is too much!” They don’t believe they will be prosecuted, and they are well justified in that belief.
There’s also a provision requiring the “attorney general” to approve in writing of investigations targeting candidates for federal office before certain FISA tools can be employed. “Attorney general” is in quotation marks there, because for FISA purposes “attorney general” is actually defined as a cluster of senior Justice Department officials who must already sign off on any full‐blown FISA surveillance. And given the narrowness of this provision, it’s not clear it would have applied even to the investigation of Page—not himself a candidate for any office.
These aren’t necessarily inherently objectionable, but they are ultimately Potemkin reforms designed to persuade an audience of one to sign an otherwise relatively weak bill.
In short, the FISA reauthorization bill qualifies as a promising start, but falls fall short of the fiery rhetoric we’ve heard lately about the need to overhaul the system. But it remains a stronger baseline than many civil libertarians would have thought possible a few years ago, and if amendments offered before a final vote address some of the shortcomings identified here, reality might actually live up to the rhetoric.
Human life is highly valuable. Basic economic reasoning therefore suggests that, given the risks of COVID-19 to vulnerable populations, we should be willing to withstand large economic costs to prevent the risk of substantial numbers of deaths. This is particularly true if most of those economic costs are temporary.
They highlight estimates suggesting that the estimated value of a statistical life (commonly around $9.3 million) and a quality‐adjusted‐life year ($129,000) tend to be high. They show that modeling from the CDC and Imperial College suggests a high loss of U.S. life if no action is taken to stop the spread of COVID-19. They work out the value of additional lost lives if no government action is taken to avoid the worst‐case scenarios where hospitals are over‐capacity, with shortages of ICU beds. They conclude that we should be willing to incur trillions, and potentially tens of trillions, of lost economic output to ensure these lives are saved.
Such simple analysis, though, largely tells us one thing: that inaction could be highly costly. Yet nobody is credibly suggesting today that we “do nothing.” What usually makes economists worth their salt is their ability to think on the margin, and to judge alternative realistic scenarios. Economists need to start being economists again.
Michael Greenstone and Vishan Nigam’s work, for example, estimates that social distancing measures alone (7 day isolation for those with symptoms, 14 day isolation for their family, and infrequent social contact with over 70‐year olds for 4 months) could save up to 1.7 million U.S. lives over the next six months relative to doing nothing, providing $8 trillion in benefits.
That figure is sensitive to assumptions about the virus’s spread and death rates taken from the Imperial paper. It would be much lower at $3.6 trillion if the peak of daily deaths was 60 percent lower. But, still, even this suggests we should be willing to tolerate medium‐term losses of up to 16 percent of today’s GDP to save those lives. Though economists do expect GDP to collapse significantly in Q2, most expect it to rebound strongly whenever the public health issue ends. So, taking this social distancing action looks cost‐effective in the medium‐term.
Now, one can quibble with the assumptions of such analysis. My real problem though is that too few economists are then asking follow‐up questions about the wisdom of additional policy:
- If this is broadly right, what are the net impacts of “nonessential business” closures or shelter‐at‐home orders? Are these more suppressive measures, in isolation, cost‐effective?
- Are they even optimal from a public health perspective, given the larger economic pain and the likelihood of an infection peak if they are released abruptly?
- What if even stronger constraints on economic activity like this risk a financial crisis or widespread business failures that simple social distancing or contact tracing would not?
- After what length of time would such suppressive measures be cost ineffective?
- How does the potential for a vaccine change any of these considerations?
- Would any of these actions be bettered by throwing tons of resources simply into repeat COVID-19 and antibody testing for the whole population, combined with social distancing for those infected?
- Are there some industries caught up in the nonessential business closures we are seeing where the output costs of closures are high and the benefits in terms of reduced risk of infection low? Why aren’t these excluded? Are their big behavioral benefits to be seen to be all in it together?
I don’t know all the answers. What I do know is that we seem to be locked in an inane debate about whether what we are doing is better than nothing. We should instead be focused on which policies minimize the combined long‐term health and economic costs of this pandemic. Just because lives are valuable, and so action to save them is better than inaction, doesn’t mean specific lockdowns or shelter‐at‐home orders are optimal policy. We want to find the most cost‐effective way of dealing with the public health crisis to enable economic activity to return to normal.
In fact, big errors of thinking abound on all sides in this debate, from the “whatever it takes” crowd right through to the “cure is worse than the disease” view. So here’s some questions you should ask when you read commentators or economists comparing economic costs and healthcare benefits of certain actions:
- Are they comparing realistic alternative scenarios, or just “a particular action” vs. “complete inaction”?
- What assumption for death rates are they using, given this parameter is highly uncertain? (Hopefully greater testing will improve our knowledge in the very near future, and could help avert prolonged economic mistakes).
- How much do they value a human life? Does their assumption vary with age, rather than just presuming all human lives are of equal value?
- Are they seeking to account for a fairly comprehensive measure of costs and benefits for different scenarios? For example, potential lung damage for survivors of COVID-19, mental and physical health costs of shutdowns, risks of economic contagion, and the economic consequences of widespread bankruptcies?
- Do they correctly recognize that it’s likely that many producers and consumers would still restrict their activity to avoid the virus before an effective treatment, vaccine or herd immunity is developed, even if government policy changed?
- Over what time period are they comparing the value of any lives saved against GDP lost? It would be wrong, for example, to compare the value of lives lost against the decline in GDP for this quarter, given economists fully expect GDP to bounce back strongly as things begin to normalize. In fact, some historical analyses find public health policies with bigger short‐term costs can produce better long‐term economic performance.
- Are they comparing apples with apples? Lots of economists seem to be comparing the value of lives saved against GDP lost. But the value of human life is a welfare measure — it incorporates the benefits an individual expects to derive from his or her own life, including leisure time, friendships, and consumption. GDP, in contrast, just measures lost output. Shouldn’t we also account for the lost value of our liberties? Casey Mulligan has valiantly tried to assess broader losses to our economic welfare from lockdowns, such as not being able to participate in our preferred leisure activities, or experiencing worse schooling. These are real costs too.
Yes, all this makes analysis more complicated. But policymakers are currently making huge decisions fundamentally altering the health and economic well‐being of all of us. Economic cost‐benefit analysis is made for trying to compare the cost‐effectiveness of different policy options. It’s time to move the debate on from straw man discussions of “action” vs. “inaction” to assess what’s next.
In the past two weeks governments across the United States have ordered the closure of countless businesses and in so doing ordered into idleness the workers, suppliers, and contractors whose livelihood depended on those businesses, along with many others affected in less direct ways.
Are these takings of property for public use? If so, would the Supreme Court rule that they require just compensation under the Fifth Amendment’s Taking Clause? If not, is there nonetheless a case for some such compensation, such as emergency rescue payments, as rough justice?
Those interesting questions have been aired lately at the Volokh Conspiracy, the liberty‐friendly legal blog. In one post, Keith Whittington begins by saying “I am a libertarian” before going on to argue that the “immediate crisis calls for relief, plain and simple”:
It is certainly the case that some on the left want to use the present moment to launch expansive new social programs. Those debates can wait until another day, and politicians on the left are doing no one any favors by trying to exploit the crisis by tying aid to a host of onerous restrictions or attempting to erect new permanent programs. Crises are often exploited to expand the state, and we should be vigilant in resisting such efforts.
That having been said, this is entirely different from the debates we were having a few weeks earlier about the proper scope if any of the welfare state and subsidies to business and employment:
With good reason, the government has disrupted people’s livelihoods and restricted individual activity for the sake of the common good. Even if we were to think the government has been misguided in some of the steps it has taken, the fact remains that the government has taken steps that have unavoidably done substantial economic damage.
In such circumstances, the government should compensate individuals for the damage it has wrought and relieve individuals from the unforeseen burdens that they have been asked to assume.
The government has instantly thrown millions of people out of work in what was previously a full‐employment economy. There will be unavoidable economic consequences to that, and the government can only take steps to mitigate those consequences. It should, however, act as quickly to provide financial support for those adversely affected by the societal lockdown as it has to impose that lockdown. If the government had been more fiscally responsible in the past, we would be in a better position to take the necessary steps now. But we cannot fix past mistakes by closing our eyes to current needs.
In a second post, Ilya Somin, professor at George Mason University’s Scalia Law School and a leading libertarian voice on eminent domain, looks at the question of whether the courts would order compensation for shutdowns based on the Fifth Amendment. He concludes that they mostly wouldn’t. To begin with, they would be unlikely to dispute the government’s assertion of broad police powers during an epidemic:
Perhaps more relevantly, large numbers of businesses were forcibly shuttered by state and local governments during the influenza epidemic of 1918–19, the last time the US faced a public health crisis comparable in scale to this one. To my knowledge, none of them were ever held to be takings requiring compensation.
Moreover, under the doctrine of the famous Penn Central case, courts have typically declined to order compensation over regulatory takings, even severe, so long as there was not a physical occupation of the property. (For this latter reason, owners of hotels or college dormitories pressed into service as field hospitals might be entitled to compensation.) Penn Central is a bad case, but it’s unlikely to be overruled any time soon.
So suing is not the answer. And yet:
That said, I do think the principle underlying the Takings Clause points the way towards a moral rationale for compensation, even if such compensation is not legally required. …
owners and employees of the shuttered enterprises are bearing a hugely disproportionate share of the burden of protecting the population as a whole against the virus.
Moreover, the people in question haven’t done anything wrong. They simply own and operate businesses that—in normal times—are not only innocent but actually make important contributions to the community.
I am not sure what the best way to compensate them is. But I do think there is a strong case for providing at least some substantial relief.