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COMMENTARY | The reserve stock of medical supplies is insufficient for our current crisis. The U.S. needs a new approach for maintaining emergency reserves.
In mere days, the unthinkable could happen: New York City may run out of ventilators to keep critically ill coronavirus patients alive. This problem isn’t unique to New York. Hospitals across the country expect severe shortages. And the challenge isn’t just limited to ventilators, but a range of necessary medical supplies.
While these events are unprecedented, this is not the first time our country has struggled to weather a sudden shock. Insufficient safety systems contributed to the 2003 Northeast blackout. California fire departments have been repeatedly short-staffed despite periodic, severe wildfires. And banks had insufficient capital available prior to the 2008 financial crisis.
The U.S. has time and again failed to set aside sufficient reserves to handle large spikes in demand. Most of the blame for our lack of preparedness falls on disastrously bad policy decisions.
The Trump administration left our country vulnerable by crippling the global health section of the Centers for Disease Control and Prevention and consistently reducing public health funding. And the White House disbanded the National Security Council's global health security team.
But this isn’t just a federal problem or a Republican one. State and local leaders of both political parties have been shortsighted. Former California Gov. Jerry Brown, a Democrat, eliminated his Republican predecessor's program that stockpiled medical equipment. Similarly, New York City previously scrapped a plan to stockpile ventilators and masks.
Systemic forces like cost-cutting, market competition and human biases encourage us to cut safety reserves to dangerously low levels. Yet, we need large amounts of underutilized or unused capacity during normal times to have sufficient capacity during a disaster. The costs of maintaining excess capacity are highly visible. And not using that capacity seems wasteful. But the main benefit—reduced risk of a large failure during a disaster—is normally invisible.
This is exacerbated by a mismatch between individual and collective interests. Suppose that a more risk-averse hospital maintains a safety buffer of unused ventilators, while a more risk-tolerant hospital operates near capacity. In an emergency, everyone benefits from the former hospital's extra ventilators. But since that hospital bears the full cost of maintaining those ventilators, the risk-tolerant hospital will have lower expenses. This competition pushes organizations to operate close to capacity.
One common response to these problems is to pool resources, where hospitals lend each other ventilators to handle local spikes in demand. This works well for local crises. But for larger events like a global pandemic, when Boston and Philadelphia send their ventilators to New York, it makes those cities temporarily vulnerable, increasing the risk of a large cascading failure. What’s worse, cascading failures are especially hard for people to anticipate.
We documented this “cascade blindness” in our 2018 paper in Behavioral Public Policy. For that study, we created a computer game in which people played the role of a power company executive who must choose how much extra capacity to maintain to handle surges in demand. Our research suggests that people systematically underestimate the risk of cascading failures. As a result, they choose policies that lead to catastrophe when large disruptions occur, similar to the severe disruptions medical systems are experiencing around the globe.
There is some good news. We also found that people choose much better policies if they understand the nature of the risks they are taking. In our studies, when people were informed about the odds of catastrophic system failure, they invested more in risk reduction and made safer decisions.
The Covid-19 crisis is a wake-up call that our approach to maintaining emergency reserves leaves us critically vulnerable in a crisis. When this crisis subsides, we must counter the market incentives for reducing safety buffers and the biases that prevent us from anticipating cascading failures. Otherwise we will find ourselves with insufficient resources when, inevitably, the next crisis occurs.
Adam Elga is Professor of Philosophy at Princeton University. Danny Oppenheimer is Professor of Decision Sciences and Psychology at Carnegie Mellon University. He is the winner of the 2006 Ig Nobel prize in literature, co-author of “Democracy Despite Itself: Why a System that Shouldn’t Work at all Works so Well” and author of “Psychology: The Cartoon Introduction.”
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