There’s Always a Price

IN AN IDEAL world, all things will be free for everyone. The poorest could walk into a shop, take a 75-inch Ultra HD LED TV, get free electricity on which to run it in their free air-conditioned houses, eat free food sitting on their free sofas as they watch free channels. And the Supreme Court could tomorrow order this to be legally enforceable. While it would be a noble ruling, the reason they won’t do it is what doesn’t seem to have been factored in when making free testing of Covid-19 compulsory even for private laboratories.

The interim ruling on a public interest litigation this week is unambiguous: ‘The private Hospitals including Laboratories have an important role to play in containing the scale of pandemic by extending philanthropic services in the hour of national crisis. We thus are satisfied that the petitioner has made out a case for issuing a direction to the respondents to issue necessary direction to accredited private Labs to conduct free of cost Covid-19 test. The question as to whether the private Laboratories carrying free of cost Covid-19 tests are entitled for any reimbursement of expenses incurred shall be considered later on.’

The first-order effect is clear: since it is law, private labs will now have to comply; all Indians will get free testing. But then begins second-order effects that will have the opposite impact. Unlike Government, which has unlimited money to test the population of India without charging a fee, private laboratories are businesses that survive on cash flow. Assume that they are willing to commit financial suicide, how long will it be before they run out of money to buy the raw material and equipment to conduct tests? Since no one is really willing to go bankrupt either, what private laboratories will do is stop testing altogether. That is not a possible scenario but a certainty. In an interview to ET Now, A Velumani, the managing director of Thyrocare, one of the private labs that did Covid testing, said, ‘It is very difficult for laboratories; they do not have size, they do not have cash reserves and currently all vendors ask us to pay and prices of raw material all related to Covid have a higher premium. I do not think even laboratories can pay a month in advance and then wait for quarters to get the funds. So it would not be that easy. There should be some workable and practical solutions by the end of the day; otherwise, the laboratories would not be able to do the test even if they wish to.’

Contrast his predicament with the Supreme Court order which says that whether private laboratories will be reimbursed even expenses, will be ‘considered later on’. It could just as easily have been made part of the order. At least, that would give some reason for private labs to continue testing. Now they have zero incentive. If testing is key to how the pandemic will be contained, then every test, even if paid for, is useful. The alternative is a reduction of tests. Given the impracticality of the order, it will probably be modified but by then, crucial time could be lost at the worst possible juncture.

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Madhavankutty Pillai

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