It isn’t too late for pandemic insurance!
Talk about burying the lead! But this “story” actually started with research into the local Covid-19 contact-tracing app. So I was writing about contact tracing before getting to the “main course”. Sorry, readers, but the full rewrite doesn’t seem justified (though your thoughtful reactions might change my mind).
The main problem with this contract-tracing app is that the incentives are all wrong. A contract-tracing app is a lot of hassle and has no positive rewards. If I do everything correctly, then the “best” case is a couple of weeks of expensive self-isolation while waiting to get sick. Or not get sick, but in that case the entire exercise was futile. (There are LOTS of other problems with the contact-tracing approach, but I’m just focusing on the main and most obvious one for now.)
Why not a simpler approach? Why not help people make themselves safer from Covid-19? If each person is better able to avoid catching Covid-19, then ALL of us will be better able to avoid catching Covid-19.
Rather than contact tracing, why not start with simple contact counting? Won’t anyone give me an app that just tells me how much risk there is and helps me reduce my risk? Let me break such an app down by steps:
Step 1: Count the other phones that approach my phone. Show me a simple graph of near approaches over time. I can look at the peaks and try to reduce them. For example, I could change the time when I commute or shop to find safer times with fewer contacts.
Step 2: Add in GPS data so the phone can help me know where those potential contacts take place.
Step 3: An option to upload my data to a properly secured government website for more sophisticated analysis and feedback. This is the first stage where privacy and anonymity need to be considered. I think the default should be for anonymized reporting with a private key for the queries, but there are some options that could be enabled here. (Detailed suggestion approaches available upon polite request, as the ancient joke goes.)
Step 4: A reporting channel for people who do catch Covid-19 so that their pre-sickness data can be linked to actually getting sick. The default reporting mechanism can be handled with same anonymized private key from Step 3.
Step 5: High level collective analysis of the data at the government end. Most obviously, the government wants to find the areas of highest risk and using the data from the confirmed cases will be extremely important here.
Step 6: A broadcast channel so the app can also notify people when they are entering those risky areas identified in Step 5.
Step 7: An option for the existing contact-tracing approach. But color me not interested. Especially hopeless once community spread has begun.
Now for the “main course”, considering the economic damages of Covid-19. I really don’t understand why the economic responses from the government have been so… Wacky? Ineffective? Feckless? Sorry, but those are the kindest adjectives I can come up with. Most of the government responses have been like spraying money out of fire hoses.
The standard (and sane) approach to risk management is called insurance. Too bad the government didn’t have a time machine, eh? If the government had known that a pandemic was coming, then it could have mandated that all businesses buy sufficient pandemic insurance. If insurance had been required beginning a couple of years ago, then the money would have been waiting when the disaster arrived and now the government could focus on the medical problem without panicking about the economic damage at the same time. The insurance companies would be doing their usual business of validating and paying the damage claims. (It’s a separate problem that SOME pandemic was sure to arrive sooner or later, even without having a time machine to see it coming.)
But wait! The government does have a time machine. It’s called deficit spending. Now that the pandemic has arrived, the government has been forced to act as insurer of the last resort, but in an incoherent fashion. Why not do it the right way? The insurance companies can even take care of processing the damage claims. The trick is that the government provides the money to settle the claims with deficit spending and then pays the insurance premiums with future tax revenues. Yeah, it’s normal to pay the premiums before the claims, but sometimes the rules have be changed around. With that approach, the government would negotiate the best Covid-19 pandemic insurance policies directly with the insurance companies, basically considering how to adjust the coverage to encourage businesses to find innovative and safe ways to adapt to this pandemic without creating the massive debts that are currently driving many businesses into bankruptcy.
