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“Free” Kidney Treatment

Apr 2, 2011 • Demand, Supply, and Markets, Economic Debates, Government, Households, Thinking Economically • 145 Views    No Comments

In October 1972, Congress decided that the federal government should pay for treating chronic kidney disease. Concerned that care went primarily to those who could afford it, Congress proclaimed dialysis and transplants an entitlement for almost all of us. They expected, though, that most patients would be younger than 54 and relatively healthy.

It did not work out that way.

Now, almost 40 years later, many more people, including the elderly, receive treatment. Accounting for 42% of the cost of the program, older patients on dialysis tend to have a plethora of other health problems including diabetes, heart disease, stroke, and dementia. For people with multiple chronic conditions, dialysis has been found not to be a life saver. Still though, treatment is provided for all who request it because it is an entitlement. And, as an entitilement, it is free.

Free???

The federal government pays between $40 and $50 billion dollars annually treating end-stage kidney disease.

The Economic Lesson

Here is where we have a dilemma. The cost for society to treat kidney disease is very different from the cost for the sick individual.

As a society, we have a limited supply of the land, labor, and capital that we use to make goods and services. For that reason, producing more of one good or service means less of another one. Allocating an unlimited supply of land, labor, and capital for treating kidney disease means having less elsewhere.

Our question: Would you support the current cost (defined as sacrifice) of treating kidney disease?

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