Preparations for the next pandemic must incorporate quantitative risk assessments and allow private-sector solutions to share and manage pandemic risks
NEW YORK, NY – Earlier this month, the White House issued a new report on preparedness for future pandemics, citing President Biden’s January 20th E.O. 13987 on fighting COVID-19 and promoting U.S. leadership on global health and security. As senior fellow Randall Lutter explains in a new issue brief for the Manhattan Institute, the new report falls short of the requirements of E.O. 13987. He argues the report did not provide the review and recommendations for action that the E.O. required by July 19th to “identify, monitor, prepare for, and, if necessary, respond to emerging biological and pandemic threats”, nor did it “incorporate lessons from the COVID-19 pandemic” as the E.O. mandated. Instead, Lutter says, the White House’s report fails to address serious shortcomings in preparedness strategies from the pre-COVID era, asking for bigger federal budgets without analyzing the causes of the lack of private and public investment in preparedness, despite widespread awareness of the threat of pandemic.
Lutter points out the need for quantitative estimates of the odds of a pandemic and suggests multiple ways to accomplish this. Drawing on a study in Taiwan, he notes the capabilities of prediction markets for estimating the odds of specified public health events. He also suggests tapping public health experts through carefully designed surveys asking for their informed estimates of a pandemic of given severity occurring by a given date. These approaches can be complimented by big data early warning systems, such as an upgrade to the now defunct PREDICT program of USAID, to provide better monitoring, surveillance, and prediction capabilities for future emerging new diseases and pandemics. The implementation of big-data solutions to pandemic preparedness is a worthwhile and important endeavor, but unfortunately has received insufficient attention in White House recommendations.
Lutter points out that national pandemic preparedness policy needs to include the creation of market signals for private organizations to prepare for pandemics and hedge against pandemic-related risks. He notes that catastrophe bonds and prediction markets can provide prices for the risks of future events. Looking at prediction markets, he suggests certain sectors could insure themselves against future pandemic-related downturns or upswings after noting the disparate effects of Covid-19 on various industries. He calls on the federal government to examine and correct regulatory and legal obstacles impeding the growth of robust prediction markets for pandemics and pandemic-related catastrophe bonds, including measures to allow such bonds to trade on secondary markets. But the first step must involve policymakers identifying the lessons from the COVID-19 experience, and recognizing the importance of using the power and creativity of the private sector to reduce and mitigate the damage from the next pandemic.