Research shows economic benefit of providing free RATS to all Aussies ‘highly likely’ to outweigh the cost

The PM has fought off pressure to make rapid Covid tests free for all, with one reason standing out. But new research suggests he should rethink.

The Prime Minister this week fought off a wave pressure to make rapid antigen tests (RATs) free for all Australians.

Despite a record wave of Covid cases sweeping the nation, a switch to recognise RATs as the preferred method of initial detection, overwhelmed PCR testing centres, price-gouging and a reported shortage that is leaving Aussies searching everywhere for them, Scott Morrison has stood firm on resisting the calls.

He made a slight concession this week when he announced — with the agreement of the national cabinet — that RATs will be free for more than 6 million Australians, while also warning there would be heavy penalties for price gouging.

His resistance to making them free for all appears to be influenced by economic reasons.

“We’re now in a stage of the pandemic where you can’t just make everything free,” Morrison told Channel 7’s Sunrise program on Monday. “When someone tells you they want to make something free, someone’s always going to pay for it, and it’s going to be you.”

Scott Morrison has ruled out making the tests free for all. Picture: AFP

The economic benefit of free tests

However, new analysis from Flinders University reveals that a move to make the tests free for all — much like the United Kingdom, Germany and Singapore have done — would be “highly likely” to outweigh the cost saving of not providing the tests.

Professor Jon Karnon, Professor Billie Bonevski and Associate Professor Hossein Afzali said the economic benefit of making them free would be because they would identify asymptomatic positive cases and thus lower the spread of Covid-19.

This in turn, means less people spending time in isolation and the economy ticking over more smoothly — not to mention the lessened healthcare burden because of the reduced number of people falling sick.

“We’ve developed a model that estimates how cost-effective a policy of government-funded rapid antigen tests for all Australians would be,” they said in a joint statement. “We found a policy of government-funded rapid antigen tests for all is highly likely to be cost-effective.”

The researchers said even minor reductions in transmission rates due to increased early isolation would justify the additional costs associated with the policy.

A sign at Annandale Pharmacy in Annandale in Sydneys inner west where RAT's sell for $19.95 for 1 test of $89 dollars for 5. Picture: Richard Dobson

How did they work this out?

The researchers created a “decision tree” model, which represents the testing pathways for a hypothetical group of people without Covid symptoms.

“We used it to estimate the number of Covid-positive people isolating before developing symptoms,” they said. “It’s key people isolate as early as possible, to reduce the risk of spread to others.”

What did they find?

In the group where everyone had access to free rapid antigen tests, the model estimates a free-for-all policy would result in successfully isolating an additional 464 people early, compared with a group in which 20 per cent purchased their own rapid antigen tests.

They said providing free rapid tests for 10,000 people would cost the government $100,000, but spending less on PCR tests (which are about $150 each) reduces the additional costs to the government to around $52,000.

“But the net effect is preventing an additional 464 people from infecting more people, thereby reducing costs to the economy of further infections,” the researchers said. “The costs of these people isolating only after developing symptoms would likely be far higher than the extra $52,000 spent on tests.”

Dividing the $52,000 by the 464 earlier isolating cases gave researchers an estimate of the cost to the government per additional earlier isolating person with Covid – $112.

“The less Covid circulating, the less effective a policy of free rapid antigen tests for all would be,” they said. “But even with low prevalence, it’s still highly likely to be cost-effective.

A large queue of people outside a Hawthorn East pharmacy lining up for Rapid Antigen Tests. Picture: Alex Coppel.

“Constraining the spread of Covid is important for many reasons, including avoiding short- and long-term health effects, reducing burden on the health system, and increasing availability of essential workers.

“Easy and equitable access to testing is a cornerstone of the public health response to Covid. It also makes economic sense.”

Labor is now advocating for the tests to be made free.

Jim Chalmers, Shadow Treasurer told news.com.au Australian workers and small businesses are paying the price for Scott Morrison’s “incompetence and the absolute mess he’s made of rapid testing”.

“This shows that mismanaging the pandemic means mismanaging the economy,” he said.

“You can draw a straight line between Scott Morrison’s failure to order enough rapid test kits and his refusal to make them freely available via Medicare with workforce shortages and reduced spending.

“For two years now we’ve been warning the Morrison Government not to be complacent but time and time again they’ve let Australians down.

“Rapid tests make good economic sense and if Scott Morrison had done his job and ordered enough of them businesses and workers would be better protected and in a much better position.”

Originally published as Research shows economic benefit of providing free RATS to all Aussies ‘highly likely’ to outweigh the cost