COVID Bed Auctions: Searching for the Liberal in 'Neoliberal'

As our country deals with a flagrantly increasing rate of Covid infections, bringing to sharp relief the dire state of our long under-resourced and discarded public healthcare system, particular outrage has arisen over the excessive admission rates being charged by private hospitals of Covid patients across the country.

Reports abound of patients being charged rates ranging between 17,000 and 45,000 rupees per day, with equally high add-ons for high-end medicines and specialised equipment. Since a Covid patient’s treatment and convalescence can take one to four weeks, patients at private hospitals have been handed bills totalling several lakh rupees.

These rates are exorbitant by any measure, and beyond the reach of the large majority of Indians, who as per the Centre’s national income measures earn on average Rs.11,254 per person per month.

A whopping 57% of salaried employees earn less than Rs.10,000 a month, and only 1.6% of workers earn a monthly wage over Rs.50,000, as per a report by the Azim Premji University.

In our current lockdown-fostered economic predicament, where so many workers have been laid off, not paid or forced to take pay cuts, the financial capacity of the average Indian is bound to have further shrunk. This dwindling financial capacity has become ever more crucial as essential services are commercialised at the cost of public provision.

Delhi CM Arvind Kejriwal has publicly scolded private hospitals by warning them against “black-marketing” hospital beds. The Tamil Nadu government has capped daily charges for Covid patients in private hospitals in the state at Rs.15,000, as has the Maharashtra government, at Rs. 9,000. Meanwhile, the Karnataka government is planning to introduce similar price caps for its private hospitals.

The Gujarat High Court too has directed the state government there to regulate the fees charged by private hospitals for treating Covid patients. And a Supreme Court bench headed by Chief Justice Sharad Bobde is currently hearing a petition on the matter of fixing Covid treatment fees in private hospitals.

These are not the first accusations of profiteering in the provision of essential products or services by commercial medical providers in the midst of this pandemic.

Last month, there was controversy over the rapid antibody test kits procured at Rs.245 but sold to the Indian Council of Medical Research by importers and distributors at Rs.600. Ironically, these tests proved to be too inconsistent for use anyway, with the ICMR, which functions under the Union health ministry, directing states to stop using them.

The cost of the regular RT-PCR Covid test, for which most private labs are charging their customers at the ICMR-set upper limit of Rs.4,500, has also come under scrutiny, because the actual cost of testing is reportedly much lower. In April the Gujarat government was itself accused of profiteering by selling N95 masks at a 31% markup.

In early March, as the Covid scare was entering the frame of our national imagination, the prices of surgical masks and N95 masks too were jacked up by 300-400% by sellers, and liquid hand sanitisers were being sold on e-commerce platforms by some retailers at ridiculously inflated prices.

Of course, the Union Ministry of Consumer Affairs, via a notification dated March 21, regulated the prices of both masks and hand sanitisers to far more reasonable rates, up to June 30 with the price caps likely to be extended further.

At this point one might wonder: who are these nasty, soulless, unscrupulous commercial vultures, trying to make money during a pandemic off sick and desperately fearful people?

Are these profiteers only “some people with a corrupt mindset”, as per Lok Sabha MP and de-facto Leader of Opposition Rahul Gandhi? Or are these instances of price gouging just the trending symptoms of a deeper malaise?

The belief called capitalism

The prevailing system of organising economic relations in our country is called capitalism, an economic ideology in which everyone is essentially dependent on a market for their survival.

Crudely put, there are two main groups in this system: the owners (of capital, such as enterprises or degrees) who sell in the market to get their money, and the workers (or labourers) who sell their labour for money to survive.

In this system, workers sell their labour power to the owners, the capitalists, who in turn sell the products of that labour.

The premise of this system is that the capitalists must sell their products at a profit, that is, at a price higher than what it cost them to have the product made, in order to keep the enterprise running, and capital alive. Profit-making is the underlying premise of capitalism.

One of the reasons this system has kept going for so long is that it requires individual players or participants to function in set, predictable ways, and incentivises them to carry on their roles without any explicit coordination.

This incentive – as every capitalist understands regardless of political leanings or social affiliations – is that the only way to survive in a competitive market is to make the most money at the lowest cost, so that profits are maximised. This is done through interrelated economic, ideological, social, and political means.

Economically, the capitalist must hire workers, get them to work so they make him more wealth than they cost, and sell their products in a market. To get the requisite work out of his workers, the capitalist exercises power over them, both inside and outside the workplace.

Inside the workplace, it is through wages and the job insecurity that stems from hire-and-fire practices. Nearly 81% of all Indian workers are hired in the informalised sector, as per an ILO report from 2018, with no written contract, paid leave or any other benefits, all of which leaves them at the mercy of their employer. The ongoing humanitarian crisis of “migrant workers” is rooted in the helplessness of workers in informalised conditions.

Outside the workplace, the capitalist’s control is exercised through political and ideological means.

Capitalists manage politics in most nation-states either by sponsoring legislators or parties in inordinately expensive election campaigns, or by winning elections to become legislators themselves.

Look at the current Lok Sabha: 475 of the 542 elected members, about 88% of the total strength of the House, are crorepatis, or individuals with declared assets over ten million rupees. The House of the People has become the House of Capital.

These agents of capital then make laws and policy to help their capitalist ilk. Among several instances, these include tax subsidies such as Special Economic Zones, waivers or whittling down of corporate taxes that benefit only a very small number of large companies, and labour ‘reforms’ that obliterate internationally recognised labour rights by which the state is bound.

While theoretically everyone has an equal say in the election process, it is materially true that competing in elections, and winning them, requires significant material resources. The 2019 Lok Sabha election is estimated to have “cost” political parties Rs.50,000 crores, or $7 billion, a full $0.5 billion higher than the cost of the 2016 US elections.

It wasn’t always the case that elections were so expensive.

Since material resources are distributed unequally in our society, the ability to participate in elections and win is also skewed. Parliaments become filled with representatives enormously wealthier than their constituents, and political parties awash in “campaign donations”. The election winners use their public office to return the donors’ favour, giving these capitalists disproportionate power to promote their interests at the cost of the working majority.

Ideologically, capitalists have shaped the social ethos in such a manner that the inequities in, and the marketisation of society perpetrated by contemporary capitalism are seen as the eternal, natural order of things.

According to capitalist ideology, people get the income they deserve, and if they don’t like it, they cannot change it.

Compare a 2018 World Bank report revealing that 75% of the current average income of a millennial Indian is based on inherited parental, social and political privilege.

Why do private hospitals get away with profiteering?

Now that we better understand how capitalism works, let us revisit the private hospitals. In the pre-Covid era, the bread and butter of these hospitals were elective surgeries, OPDs and international patients, all of which have declined substantially post Covid.

In the last ten days of March the commercial medical-care sector is estimated to have suffered a loss of 50-70% in revenue, a quantum of loss thought to have continued into the present, as private hospitals are pressed to dedicate a higher proportion of their beds to Covid patients.

However, owner-profits are paramount to the survival of any capitalist endeavour. One cannot expect the fundamental tenet of capitalism to change merely because of a pandemic. Short-term profit-making reorients itself to the upheaval the pandemic has caused.

As a matter of fact, academics and scholars who have faith in capitalism resolutely defend price-gouging and profiteering. In this scenario, for governments or courts to sporadically regulate the prices of certain goods or services is a band-aid that redresses some symptoms, but not the actual ailment.

The sooner we realise that the “black” activities we mistakenly attribute only to some people with a “corrupt” mindset are actually the article of faith in our system of economic organisation, the sooner we will learn to ask:

Why has something as essential as health and medical care been left to the vagaries of the market in the first place?

Then we can begin the work of instituting meaningful reform in this system that does not benefit most of us, especially in times of crisis.

In simpler words: don’t hate the player, hate the game.


Vineet Bhalla is a Delhi-based lawyer