How does the cost of Covid to NSW compare with traditional health spending by the State?

No publicly-funded health system can afford to run without constraints on the price of therapies. Inevitably, some therapies, whether drugs or surgical procedures, are deemed too expensive to be worthy of funding by the taxpayer, and people’s lives are shortened as a result. A moment’s reflection tells us that this must be so, yet that moment is taken by so few people that, in an instance of profound cognitive dissonance, the notion that ‘human life is priceless’ persists, and has allowed the gargantuan cost of Covid policies to be incurred with barely a squeak of public disapproval; indeed, to widespread approbation.

Yet the ‘Covid response’ is indisputably a treatment procedure, albeit prophylactic, rather than therapeutic in character. And it is certainly publicly funded. So how does its cost stack up, when compared to your average heart valve replacement?

Until 2020, Australian health authorities, like those all over the developed world, routinely put a price on human life. True, they didn’t shout about it – the average Australian would only learn that they were doing so if they were unlucky enough to fall victim to a disorder for which there was a treatment, but one so eye-wateringly expensive that they would have to pay for it themselves or resign themselves to living with – or dying of – the disease.

And the way they were doing it was by a thing called the Quality-Adjusted Life Year, or QALY. The QALY takes account of the fact that a young person dying loses more years of life than an older one, and that years spent in good health have a higher value than those spent in pain or disability. Thus half a year spent in perfect health counts as 0.5 of a QALY, as does a whole year lived in 50% good health. This isn’t the place to get stuck into how health is graded, but you get the picture. For an Australian to die at the age of 70, they would be deemed to have lost approximately 6 QALYs.

World Health Organisation (WHO) guidelines say that countries should aim to spend between one and three times their Gross Domestic Product (GDP) per capita for one of their citizens per QALY gained from the treatment. In fact, though, a recent study concluded that in practice spending decisions implied a figure about 20% lower than that. In the chart below, I’ve taken that figure, and the NSW Treasurer’s own estimate of the direct weekly cost of the present lockdown (almost certainly underestimated), and performed the simple calculation needed to see how many QALY’S we should be saving each week, according to established Australian health spending principles.

Australia GDP per capita		$71,240
Actual spending per QALY		$56,992
NSW Treasury estimate, Covid cost per week		$1,300,000,000
QALYs ‘bought’		22,810
QALYs per death (mean age 70)		6
Deaths per week		3,802
Deaths per million		432

So the amount the NSW Treasurer estimates the state is losing in its effort to combat Covid would, if spent according to long-established public health principles, save 3,800 deaths per week, or about 430 per million of the state’s population. That’s a death rate around 4 times that of the UK for its worst period (Feb 2021), and many times its overall death rate for the epidemic. Does anyone, even the most credulous modeller, seriously believe that, if lockdown were ended today, NSW would suffer such a loss of life?