By Ge Bai – The Curious Case Of ‘Free’ Covid-19 Tests
Starting from November 20th, 2023, every household in the U.S. can order eight “free” at-home Covid-19 tests (four for those that already ordered this fall). How much taxpayers paid for these tests remains undisclosed.
Our government has provided “free” Covid-19 at-home tests to households across the country in four previous rounds. We were told that more than 755 million tests have been provided for the previous rounds. However, no information on pricing or total spending is available for any of them.
Retail price in Germany for Covid-19 at-home tests has been less than $1 each. In the U.S., it’s about $7 and used to be more than $10 before the Food and Drug Administration (FDA) expanded approved vendors. Businessman Bill Gurley described how FDA, influenced by certain test manufacturers, restricted test approval to them, resulting in an uncompetitive market and high test prices in the U.S.
axpayers, who ultimately foot the bills, are entitled to ask questions: How much exactly did our government pay for the “free” tests? Among the hundreds of millions of tests bought on our behalf, about how many were used, how many ended up in landfills, and how many are in warehouses waiting to expire?
The “free” test program disadvantages low-income households that order fewer tests. It uses taxpayers’ money to subsidize households that order a lot of tests—regardless of how rich they are; it penalizes households that use fewer or no test—they still must pay through their tax dollars.
This inequity issue is especially problematic for low-income households that would be better off from receiving cash subsidies to buy things that they deem most necessary, rather than receiving “free” tests. They are worse off as they cannot decline “free” tests and get cash instead.
We could have expanded early on the pool of approved test vendors beyond the few politically well-connected ones, allowing competition to drive down prices to the European level. Individuals in need would have been able to buy as many tests as they wish, and private organizations would have afforded to purchase them for financially disadvantaged stakeholders to use.
For low-income households, a cash subsidy that allows a wide range of purchases such as Covid-19 tests could have been substantially more helpful than packages of “free” tests. Taxpayers would have gotten a much bigger bang for their buck.
Despite these shortcomings of the “free” Covid-19 test program, it benefited certain individuals, enriched politically connected interest groups and reaped political gain through virtue signaling.
The “free” Covid-19 test program is merely the tip of the iceberg of inefficient government purchasing and subsidization. Other examples include overpaying Covid-19 PCR tests and the allocation of the relief dollars. They should serve as cautionary tales.
Governments are composed of groups of individuals spending other people’s money. Like everyone else, individuals working in governments have their own self-interest and incentives. It is up to the public to understand the drawbacks of relying on governments to provide “free” commodities or services. Surrender the control of money, get ready to be exploited.
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I am a professor of accounting at the Johns Hopkins Carey Business School and a professor of health policy & management at the Johns Hopkins Bloomberg School of Public Health. An expert on healthcare accounting, finance, and policy, I have testified in Congress, written for popular press, and published my research in leading academic journals. My work has been widely featured in the media and cited in regulations and congressional testimonies. I was a visiting scholar at the Congressional Budget Office from 2022 to 2023
