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The Free Market Approach to This Pandemic Isn’t Working

by | Dec 1, 2020 | New, News

Don’t be afraid to give up the good to go for the great.

— John D. Rockefeller

America’s health care system has always been bizarre. During the Covid-19 pandemic, it’s become absurd. I am a laboratory medicine physician, and one of the most difficult parts of my job is giving patients bad diagnoses—bad not just because of the disease but because of the unaffordable medical bills that often follow. I regularly have patients whose condition progresses unchecked because they don’t have the resources to address it. As an individual doctor, though, I don’t control the distribution and cost of medical care. The truth is that no one is controlling the health care system. American health care is a free market affair. It’s an endless fight between individuals, hospitals, and insurers over who gets treatment and who pays for it.

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Free markets are powerful tools to efficiently distribute resources. But they are not magic—especially right now. A functional market can’t spring up overnight for a disease that didn’t even exist last year. Worse still, markets have no concern for the public good. The US health care system may be a free market, but it’s not a fair one. Covid makes this terribly clear.

Take testing, for instance. The number of tests being done has increased by more than an order of magnitude since last spring, yet we still don’t have enough to meet demand. The privileged and connected, however, don’t seem to be having any problems. Billionaire Elon Musk recently tweeted that he had taken four rapid antigen tests for Covid in succession, and then sent off multiple PCR tests (with an enviable 24-hour turnaround) for confirmation. In the beginning, labs were hampered by a slow-to-respond Food and Drug Administration. Now the problem is lack of resources. PCR testing—the gold standard for Covid diagnosis—relies on expensive machines, multiple chemical reagents, highly trained staff, and a pile of cheap plastic “consumables.” All of these are still in short supply. The US can run millions of Covid-19 PCR tests every day, but it’s just not enough given the ongoing outbreak. Many of these supplies are used for testing other infectious diseases, too—so the delays are not limited to Covid.

Musk may be an eccentric example of how the wealthy and powerful cut to the front of the testing line, but he’s not the biggest offender. More uncomfortable is the use of widespread testing to keep college campuses and professional sports open. Schools like the University of Illinois can run more than 10,000 tests per day, while nursing homes—the places hardest hit by the disease—struggle to keep their turnaround times acceptable. This is America’s free market health care system at work: If you can pay more or have the right connections, you get what you need; if you don’t, you suffer.

We might well end up with gold-standard PCR tests for the privileged, and jankier antigen tests for the masses.

The pandemic didn’t have to go like this. With no time for “market wisdom” to develop, the government could have jumped in to coordinate and ration testing resources. Instead, the list of market failures seems to grow daily. Testing capacity is not evenly distributed, so some labs are sitting idle while others are crushed under the volume. Because no one’s sure how long the pandemic will last, labs don’t want to invest too much money in expensive equipment that will be useless in a year or two. Providers are left to their own devices to figure out where to send tests. Many struggle to identify which labs will provide the quickest turnarounds, lowest prices, and most reliable results.

The federal government has taken some half-hearted steps to intervene. When test manufacturer Abbott’s rapid antigen test was authorized, the Trump administration immediately purchased almost the entire supply. The feds have since attempted to distribute these tests by need rather than wealth (though nursing homes remain reluctant to use them). The government also utilized the Defense Production Act to expedite and coordinate testing and protective equipment, but experts suggest this could be done far more aggressively, with even the Congressional Research Service calling Trump’s use of the act “sporadic and relatively narrow.”

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In a free market pandemic, labs, hospitals, and patients are actually competitors. Profit may be prioritized over need. Hospitals and laboratories have taken huge financial losses as the pandemic cut into lucrative elective procedures. The quick expansion of Covid testing has, despite its challenges, provided income to ameliorate this damage, but it’s not enough. Universities, fearing an existential loss of tuition revenue, will do anything possible to keep their students from the supposed indignity of Zoom classes.

Despite these failures, the Trump administration is still relying on free market approaches. After a public outcry over testing delays, Medicare announced it would cut reimbursement if results take longer than two days. Normally, a financial incentive like this would make a difference—but these aren’t normal times. This does nothing to fix global supply-chain shortages. Seniors who rely on Medicare will become less “competitive” in our perverse testing market. Reducing reimbursement may even drive some labs out of the market entirely, leading to a decreased availability of tests.

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The incoming Biden administration offers an opportunity for a new approach. The president-elect’s plan calls for more instant and at-home testing. Rapid antigen tests will be crucial, given that we may never be able to scale up PCR testing to meet demand. But they remain a less reliable alternative, and I worry that their spread could exacerbate the testing divide that already separates the haves and have-nots: We might well end up with gold-standard PCR tests for the privileged, and jankier antigen tests for the masses. Antigen tests also face their own supply chain constraints. There will still be a need for coordinated rationing. Abbott has only promised to produce 50 million of its antigen tests per month—far short of the tens of millions per day for which some experts have been advocating. If our free market health care system can’t produce enough plastic tips and nasal swabs for PCR, then it’s unlikely to produce enough material for rapid tests.

Biden’s team could do a lot more to address our unequal and incoherent response. First, they ought to reverse reimbursement cuts for tests that take too long. We should be increasing payments for testing across the board. Economists have warned us that nickel-and-diming labs during an infectious disease outbreak will cost us far more in the long run. Second, they should ensure that the people who need the most accurate tests can access them. Colleges and sports can make do with rapid antigen tests. Nursing homes need PCR tests with 24-hour turnaround times to keep their vulnerable residents and staff safe. Third, the Biden administration must be careful not to leave non-Covid patients behind. As we marshal resources to fight the pandemic, we can’t have people go untested for other dangerous conditions or without a hospital bed when they get sick. Later on, when a vaccine becomes available and recovery begins, hospitals must not prioritize the most lucrative elective procedures over less profitable but essential care that has been delayed for so long.

I am in awe of the many individuals in the health care system and otherwise who have been going above and beyond to help each other. But their sweat and altruism do not add up to a successful national strategy. Markets work through knowledge and time. In a pandemic, we don’t have enough of either.

Photographs: David Ramos/Getty Images; Omar Haj Kadour/AFP/Getty Images; Morris MacMatzen/Getty Images

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