India’s health minister jumped the gun in a big way back in December. Veronica Hackethal, MD, writing for MedPage Today, explains:
“Back in December 2020, 271 million people (about one-fifth of India's population) were already infected with COVID-19. Modelling studies suggested that India may have already reached herd immunity through natural infection. India's health minister announced that the country had successfully contained the spread of the virus.
“Three months later, India is battling its biggest COVID-19 surge yet. Infections are at the highest daily average reported, with over 340,000 new infections reported daily, and experts believe the actual number of infections and deaths may be underestimated.
“Could the new variant be to blame for the current surge? Or is it a confluence of factors related to people letting their guard down – a lack of masking, large gatherings of people mixing and travelling together, and people somehow thinking that India was already immune?
“No one really knows, but a similar situation has already occurred elsewhere in the world.”
Hackethal quotes a recent newsletter from Katelyn Jetelina, PhD, MPH, who teaches epidemiology at the University of Texas Health Science Center at Houston. Jetelina warned, “‘We saw the same story in Brazil. The city of [Manaus] had over 70% of people “naturally” infected. But, once P.1. hit, they had a major surge…. Populations that have high “natural” immunity are getting re-infected. It doesn't look like natural infection will protect us for long. Get your vaccine.’” (“India's COVID-19 Variant: What We Know So Far,” https://www.medpagetoday.com/special-reports/exclusives/92345)
Dear Readers: The B.1.617 variant that has overwhelmed India’s healthcare system is in the United States, as is the P.1 variant that has plagued Brazil. Anti-vaxxers here are playing with fire by avoiding a critical form of defense. The unvaccinated are the easiest targets for the SARS-CoV-2 virus, and doubly so, as many of them are also less likely to mask or take other precautions; so we expect many of them to get COVID-19. Some will become seriously ill; some will be hospitalized; and some will die. That is what the anti-vax community can expect, whether they grasp that likelihood or not. As we see in India and Brazil, even if you have had COVID before, without a vaccination you can certainly get the new variant. You can also get it if you are vaccinated, but the vaccine does help mitigate your risk, and it does strengthen your defense.
An anti-vaccine attitude in abundance are why we expect B.1.617 and P.1 to spread in the US. We don’t have herd immunity here, and we cannot achieve it when 50–70 million Americans refuse to participate in mounting a defense. The implications will be revealed over time, but markets are already starting to reevaluate the entire false narrative that we have “beaten the virus.”
The B.1.617 variant has been confirmed in the US, in California and in Michigan. (See “An Indian SARS-CoV-2 Variant Lands in California. More Danger Ahead?” https://www.forbes.com/sites/williamhaseltine/2021/04/12/an-indian-sars-cov-2-variant-lands-in-california-more-danger-ahead/ and “First case of India COVID-19 variant confirmed in Michigan,” https://www.detroitnews.com/story/news/local/michigan/2021/04/30/first-case-india-COVID-19-variant-b-1-617-confirmed-michigan-clinton-county/4896521001/.) The P.1 variant had been identified in 29 states as of April 10 (https://www.cdc.gov/coronavirus/2019-ncov/transmission/variant-cases.html).
We can be sure there are other cases of these variants (and others) that have not yet been identified. Genomic sequencing capacity still falls short of what we need in the US, though the American Rescue Plan will enable the CDC to further expand it. An April 16 statement from the White House outlines the Biden administration’s effort to scale up sequencing, the better to catch and address variant-driven outbreaks early:
“In early February, U.S. laboratories were only sequencing about 8,000 COVID-19 strains per week. Since then, the rate of sequencing has increased substantially, strengthening the country’s ability to detect and respond to emerging and more contagious COVID-19 strains, like the variants currently sweeping through the Midwest and parts of the East Coast. The Biden Administration has already made a nearly $200 million investment to help increase genomic sequencing to 29,000 samples per week. Thanks to today’s funding from the American Rescue Plan, states and the CDC will expand that even further and, importantly, provide states with more resources to expand their own efforts to increase geographic coverage of sequencing to better detect emerging threats like variants. This will mean that both existing and any new COVID variants could be detected faster, before they grow prevalent.” (“Fact Sheet: Biden Administration Announces $1.7 Billion Investment to Fight COVID-19 Variants,” https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/16/fact-sheet-biden-administration-announces-1-7-billion-investment-to-fight-COVID-19-variants/)
Even as the push to expand sequencing of cases moves forward, COVID-19 testing is lagging in a number of states, obscuring both the number of infections and the spread of variants. The trend is concerning, as three recent articles, linked below, indicate:
“A decline in testing may be masking the spread of the virus in some U.S. states,”
https://www.nytimes.com/2021/04/01/us/coronavirus-testing-declines.html
“How the decline in COVID-19 testing could blind California to new problems,”
https://www.mercurynews.com/2021/04/12/how-the-decline-in-COVID-19-testing-could-blind-us-to-new-problems/
“‘It scares me’: KC area parents refuse COVID tests for their sick kids, doctors say,”
https://www.kansascity.com/news/coronavirus/article250977904.html
Overall, we currently see the number of confirmed cases falling in the US, though we recognize that part of that rosy trend may be a function of reduced testing. New hospital admissions for COVID are also falling, but not as much as case numbers have over the past seven days (“COVID Data Tracker Weekly Review,” https://www.cdc.gov/coronavirus/2019-ncov/COVID-data/COVIDview/index.html). (Hospitalizations lag infections, of course, because a COVID illness develops over time.)
The age distributions of the seriously ill have changed, however, now that more than 80% of Americans 65 and older are vaccinated. Hospitals are seeing more serious cases among younger adults, which is a predictable trend given the prevalence of the B.1.1.7 variant that originated in the UK. NPR reports:
“Nationally, adults under 50 now account for the most hospitalized COVID-19 patients in the country – about 35% of all hospital admissions. Those age 50 to 64 account for the second-highest number of hospitalizations, or about 31%. Meanwhile, hospitalizations among adults over 65 have fallen significantly.” (“COVID 'Doesn't Discriminate by Age': Serious Cases on the Rise in Younger Adults,” https://www.npr.org/sections/health-shots/2021/05/01/992148299/COVID-doesnt-discriminate-by-age-serious-cases-on-the-rise-in-younger-adults)
B.1.1.7 is both more contagious and more deadly than the original strains of SARS-CoV-2, though our current vaccines are effective against it.
Falling case numbers overall suggest hope that the US is emerging from its COVID-19 crisis. But India banked on that kind of hope, too. The reality is that we have not secured a victory over COVID. We have not yet deployed adequate vaccines, testing, genomic sequencing, and the kinds of behaviors required to defeat a resourceful, stealthy, ever-evolving virus. We are still vulnerable to the kinds of surges this virus can mount against us, emerging first in one place and then another.
India and Brazil offer lessons every nation should heed. The conclusion is simple: When there is not enough defense, the virus wins on the attack. That means more people will be sick in America, and more of them will become seriously sick, and more will be hospitalized, and more will eventually be killed by COVID-19.
Remember, too, that for each person who dies, several more will become COVID long haulers, suffering continuing symptoms and impairments that, for some, affect their capacity to work or to undertake everyday activities. Long COVID risk far exceeds risk of death. What we know so far is sobering: A recent study in the UK found that, among a sample of 20,000 who had tested positive for COVID, 13.7% experienced symptoms for 12 weeks or longer, with a higher incidence among women than among men and the highest incidence, 18.2%, among ages 25–34. (“Prevalence of ongoing symptoms following coronavirus [COVID-19] infection in the UK: 1 April 2021,” https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/conditionsanddiseases/bulletins/prevalenceofongoingsymptomsfollowingcoronavirusCOVID19infectionintheuk/1april2021)
India’s is a national tragedy that didn’t have to happen; Brazil’s has been likewise. Politics got in the way of public health in both cases, and it still threatens outcomes across the US. Those of us who respect the capacity of this COVID monster to harm and to kill have to protect ourselves. Those politicians who are responsible for disastrous COVID outcomes will either get away with their malignant behavior, or they will be held accountable by voters.
In the meantime, the COVID pandemic means that the outlook for the growth of the healthcare sector is very robust, though we certainly wish that COVID were not part of that picture. Pharma, biotech, medical devices, and treatments all combine for the next several years to become a growing sector of the US economy. We expect healthcare to reach 20% of GDP; it was 17% pre-COVID. Eleven percent of the labor force is employed in the broad category of healthcare. That number is destined to rise if enough skilled personnel can be found or can be enticed to immigrate. We are short a huge number of nurses. We need medical technicians and researchers. The healthcare labor force is shorthanded.
At Cumberland, we remain overweight the healthcare sector in our US ETF accounts. We use several ETFs to obtain that exposure. We think the sector has many years of growth ahead, as American companies are world leaders in this arena.
David R. Kotok
Chairman of the Board & Chief Investment Officer
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