Everyday Policy Studies No. en35

Health Economics of Infectious Diseases (Part 1)

 One of the criteria for classifying medical care is “non-infectious disease” or “infectious disease”. For example, the former refers to malignant neoplasms, heart disease, cerebrovascular disease, diabetes, etc. which are considered unaffected by infection. The latter refers to influenza, viral hepatitis, tuberculosis, and similar diseases, the infection and worsening of which are considered basically preventable by vaccination and early treatment.
 However, the novel coronavirus (hereafter, COVID-19) is spreading from human infection across different regions and countries because no prevention or treatment methods have been established till the writing of this essay (April, 2020). This essay considers a fundamental economic issue associated with infectious diseases.
 To make the issue easier to understand, consider two individuals (workers), A and B, as an example. Let us assume that A’s income is Ia and B’s income is Ib, and that incomes vary depending on working hours. In the following, we consider two cases: (1) cases where the spread of infection can be suppressed (influenza) and (2) cases where it is difficult to suppress the spread of infection (COVID-19).
 Concerning case (1), when A becomes infected without receiving a vaccination, this leads to a decrease in Ia, but when B has received it and do not become infected, Ib is unchanged (at least in the short term). If both A and B become infected or severe without receiving a vaccination, this could lead to a decrease in Ia and Ib, which in turn can lead to a decrease in income for society as a whole. Preventive measures such as vaccination and early treatment are essential for maintaining the health and earning opportunities of both workers/parties (Note 1).
 In case (2), such a response is currently considered impossible, and the preventive measures for B when A is infected are limited, then it is possible that both Ia and Ib may decrease. If this situation persists, there are concerns about the stagnation of the economy as a whole due to the decline in consumption.
 The main preventive measures against the spread of COVID-19 are: (1) encouraging hand washing and gargling, (2) refraining from going out, and (3) avoiding enclosed spaces, crowded places, and closed quarters. If (2) and (3) are prolonged, this also will have a negative impact on the economy. It is thought that many countries, including Japan, are coming to such a state. In the following essay, I will focus on telemedicine among several measures (suggestions).

(Note 1) This is generally discussed as “external economies”. Strictly speaking, it is necessary to consider such factors as the cost and side effects of vaccination, and the impact of suppressing infection to others (other groups).

This essay is the English version of No. 137, April 14, 2020 on the Japanese website.

(Author: Masahito Abe)


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