After months of unsuccessfully trying to get pregnant, couples may turn to Assisted Reproductive Technology, or ART, to help overcome their infertility. However, at $10,000 – $15,000 for each round of treatments, access to ART is restricted to a relatively small portion of couples that seek it. Several state governments have turned to public policy in an attempt to make access to ART more widely available. But two professors from the Olin School of Business at Washington University in St. Louis find that market competition can be as effective at expanding access as requiring insurance companies to cover infertility treatments. At the same time, competition appears to lower the rate of high-risk births and encourages the use of new technologies.
Infertility is increasingly recognized as a medical problem that some believe should be treated as any other medical problem. About 10 to 15 percent of U.S. couples are infertile and 1 percent of all babies born in the U.S. are the result of ART. Several states have begun requiring that insurance companies either offer the option of coverage. Nine states mandate that insurance companies provide coverage of treatments. Olin School of Business professors Bart Hamilton, the Robert Brookings Smith Distinguished Professor of Entrepreneurship, and Brian McManus, assistant professor of economics, studied the effects of mandated coverage versus competition on the market for treatment of in vitro fertilization (IVF), the most common form of ART.
“Not surprisingly, we find that on average more infertile couples use IVF when it’s covered by insurance than when it’s not – and many of the new customers are those women whose infertility is such that the odds of getting pregnant are pretty good,” Hamilton says. “What’s more, in the three states that have the most generous requirements for insurance coverage, those markets see much greater use of IVF, so the clinics are bigger. We also find that they tend to treat patients less aggressively in that they transfer fewer embryos. We also find that there are fewer multiple births among patients who reside in those markets.”
Mandating coverage isn’t the only way to make IVF more accessible, less expensive and result in fewer multiple births, Hamilton and McManus find.
Competition can have the same effect.
“Competition has a similar effect on access to IVF that insurance mandates did,” Hamilton says. “In markets that are more competitive, prices will be lower, which again gives you some incentive to be more conservative in your treatment knowing it’s going to cost you less if you have to do it again.”
The findings are similar to what happens in other health care contexts as well. The professors say one would expect competition to mean each clinic tries to outdo its rivals by promising better results. For example, clinics might try to achieve higher birth rates by being overly aggressive in transferring embryos. However, the professors say that this sort of one-upsmanship does not seem to occur.
“We argue that in more competitive markets, prices will be lower,” Hamilton says. “This actually acts as an incentive to be more conservative in your treatment because you know that if it doesn’t work the first time, you can actually afford to pay for another round.” As for clinics that might try to attract patients with birth rates inflated by aggressive treatment practices, Hamilton and McManus believe that potential patients are likely to be too savvy to be fooled in this way. The empirical evidence simply does not support this criticism of competition.
McManus adds, “in competitive markets, competition had a similar effect on access to IVF that insurance mandates did. But, unlike insurance coverage, in competitive markets clinics are more likely to adopt new technology in fertility that could improve the prospect of a birth even further.”