More on the Costs of Political Failure on Zika

Author: David Kotok, Post Date: August 12, 2016

As we reported in our Aug. 2 update on the Zika virus outbreak (see, the CDC has estimated that the cost of care for each child born with Zika-caused microcephaly will be as high as $10 million over a lifetime. And with the number of cases rapidly multiplying in the US and its territories (especially Puerto Rico), we know that there will be many cases of microcephaly and other brain-related birth defects. (See below for more on the numbers involved.)

But the bill for Zika will not be limited to the direct costs of patient care. Nor will it be limited to the costs of combatting the virus. There will be a substantial impact on tourism in the affected regions (particularly in Florida), which will mean reduced airline ticket sales and cancelled flights, lower earnings and falling stock prices for travel companies, and dwindling sales for local businesses.

These costs are so far difficult to quantify, but we do know that Tourist arrivals in Hong Kong fell by 68 percent two months after the World Health Organization issued a warning about the SARS epidemic in 2003, and by 54 percent in South Korea two months after the 2015 MERS outbreak. (Source:

So far, in Florida, the effects of Zika on airlines and hotels appear to be minimal, according to the Wall Street Journal. But for the more than 300 businesses in the Wynwood district of Miami, where transmission of the Zika virus by local mosquitoes has been concentrated, the impact has been “Pretty catastrophic,” according to one restaurant owner. (See “Zika Weighs on Businesses in a Miami Neighborhood,”

Moody’s has released an Issuer Comment that affirms Zika as a municipal credit risk for Miami–Dade Co. In responding to the Moody’s action, Chris Mier of Loop Capital Markets said,

“While we believe that the State of Florida is well-prepared to combat the Zika virus, our concerns lie with those local issuers, highly dependent on tourist activity, that may suffer revenue loss due precisely because of the newsworthy aspect of the virus. Thus, it is the unnerving headlines and the health risks they highlight to travelers in their child-bearing years that represents the avenue by which risk is imparted to certain local credits in areas identified as being focal points of Zika virus activity. While travelers may have limited fears about their own health, risks to unborn children represent a category of concern more likely to influence travel decisions.”

Zika cases have now appeared in every US state except Alaska, Idaho, Wyoming, and South Dakota. The US total stood at 1962 as of Aug. 10, according to the CDC. (See New York actually has the highest number of cases, with 530; but Florida’s 328 cases now include 17 cases of local transmission.


Meanwhile, in Puerto Rico the total number of cases has climbed to 6505, of which 98% are locally transmitted, according to the CDC. The island’s already struggling economy is taking a huge hit from Zika.

If what is happening in Puerto Rico starts to happen in Florida, it would be a national catastrophe,” says Dr. Lyle Petersen, director of the CDC’s division of vector-borne diseases. (Source:

The risk now is that, like the West Nile virus, Zika could become endemic to the US, with recurrent outbreaks each summer, according to Dr. Scott Gottlieb. (See “Confronting the Growing Risk from Zika,”

Hillary Clinton was campaigning in Florida last week. She toured a health clinic in Miami’s Wynwood neighborhood and called on Republican congressional leaders to bring lawmakers back from their protracted summer recess so that they can vote on a Zika bill – a call that is either courageous or cynical, given Democratic intransigence on Zika funding to date. (See

Our politicians on both sides of the aisle have given Zika a big head start in this country, and the costs are likely to run into the billions. The costs in needless individual and family suffering will be incalculable. When Congress does finally reconvene to take up a Zika bill, we must let our representatives know that further inaction is intolerable.

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