Testing labs in the U.S. have been earning windfall profits as a direct consequence of the Covid-19 pandemic. Using tax data from Hawaii, we found that statewide growth in private diagnostic labs’ monthly revenue tracked the volume of Covid-19 PCR tests in lockstep. Between May and December 2020, lab revenue grew at an average of 8% a month. Labs are making more than $10 a test in profit.
Why are these profits possible? The American healthcare system let labs set prices for Covid-19 tests well above their costs, costing taxpayers and private insurance companies dearly, for three reasons.
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