A Model of an Assisted Reproductive Techonology (ART) Market

During the last twenty-...ve years, assisted reproductive technologies (ART) such as in vitro fertilization (IVF) have emerged as a leading treatment for infertility. An estimated 10% ¡ 15% of American married couples include a wife of reproductive age who is infertile,1 and during 2000 approximately 100,000 treatment ART cycles were performed at 405 clinics in the United States. These treatment cycles resulted in 25,000 live births and 35,000 babies.2 The di¤erence between the number of births and the number of children born following ART highlights one of the important characteristics of infertility treatment. Multiple births are much more common following medical treatment than occur naturally. This has important economic consequences, since the health risks and medical expenses of multiple births can be substantial.3 Moreover, not all of these costs are borne by ART clinics and their patients, so choices may be a¤ected by moral hazard. Another important feature of the ART market is that most patients pay out-of-pocket for their treatment. The full cost of one ART cycle to a patient is typically $10,000 – $15,000, with 70% of this expense for clinics’ fees and 30% for ovulation drugs. The expected expense of one birth is even higher, as ART patients currently have a success rate of about one-third.4 However, a small ¤Contact information: Barton Hamilton: [email protected]; Brian McManus: [email protected]. Infertility is generally de...ned as the inability to conceive a pregnancy after 12 months of trying to conceive without contraception (Stephen and Chandra [2000]). Data from the 1995 National Survey of Family Growth indicate that 21% of childless women aged 35-44 have received infertility treatments (Abma, et al. [1997]). A single event recorded as a “live birth” may be the delivery of twins, triplets, or more. See Reynolds, et al. [2003] for additional details on the relative importance of ART to multiple birth rates in the United States. Goldfarb, et al. [1996] calculate the mean medical cost of delivering a singleton baby or set of twins to be $39,000, while the average cost of delivering triplets is $342,000. Low birthweight children experience more medical problems later in life, and the costs of these problems fall more heavily on parents. This in‡uenced both by the current state of ART techonogy and the selection of patients who take treatment.