Higher-density housing wouldn't be the worst idea, especially higher-density housing near light railway when combined with public parks. The suburban paradises are plainly incompatible with public transport.

By that same logic we could avoid surgery deaths by not doing surgery.

But then you're ignoring the benefit.

The correct analogy: avoid surgery with preventative healthcare and lifestyle changes.

How do you call this paradox where mortality increases at a hospital because simple cases are diverted to outpatient clinic and only the severe cases are seen at the inpatient facility?

Adverse selection.