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Dutch Treat
THE Dutch health minister, Ab Klink, is considering a recommendation to offer free health insurance for life to anyone who donates a kidney for transplant.
The award would be quite valuable, worth about $1500 a year or $24,000 in present discounted value (30 yrs, 5% discount rate, no increase in health care costs). Becker and Elias predict a large increase in organ supply at $15,000 so the Dutch are in the ballpark for a good test. More here.
Thanks to Dave Undis of LifeSharers for the pointer.
Posted by Alex Tabarrok on November 20, 2007 at 07:10 AM in Economics, Medicine | Permalink
Comments
I bet Austin Powers' father will have to revise his opinion of the Dutch.
Posted by: shawn at Nov 20, 2007 7:53:36 AM
Interesting. My understanding is that under the Dutch system the poor only pay a nominal flat amount for health care coverage, while those in the upper third or so pay for their own insurance. So is the $1500 a year figure for the lower, middle, or upper class, or an average across the population?
The $15k figure for a kidney sounds about right, for convincing people that really need money. It sounds low for middle or upper class people (I'm thinking of the arbitrary $7500 they added in for pain and suffering, on top of their calculations).
However, if their situation is similar to ours and they're only covering a 200kidney/million people shortfall, $24K sounds like it might well do it.
Posted by: different jeff at Nov 20, 2007 7:58:05 AM
Random reactions:
-I didn't know Ab Klink was a terrorist! [/organ sale opponent reaction]
-Yeah, but isn't someone's expected health care cost going to shoot up when they have to hedge
against a more severe kidney failure event?
-Ab Klink is a pretty weird name, even in Dutch.
Posted by: Person at Nov 20, 2007 9:51:50 AM
Hmm... Seems like a good idea... I also wonder if there's a way to reward people for signing up to be organ donors in general that would work (though outright kidney donation is vastly more useful).
Posted by: mkohler at Nov 20, 2007 9:55:11 AM
Interesting. My understanding is that under the Dutch system the poor only pay a nominal flat amount for health care coverage, while those in the upper third or so pay for their own insurance. So is the $1500 a year figure for the lower, middle, or upper class, or an average across the population?It used to be (something) like that. Nowadays everyone practically has the same kind of basic insurance á €100,- per month. You can add some extra insurances for your own special needs, but on average it's about $1500 for everyone.
Posted by: Marc at Nov 20, 2007 10:22:09 AM
Why should the people have to give up a part of their bodies just to get free health insurance? Why not free health insurance for everyone in the country? Is it really that hard for a government to do? Help out the people of your country instead of being greedy and demanding money or a kidney to lend out a hand when they are sick and in need of help.
Posted by: Robert at Nov 20, 2007 12:34:35 PM
What I find interesting is the psychological issue here. In The Netherlands as much as in the rest of the Western world, paying somebody for a body part in an outright commercial transaction is considered unseemly. The present plan is obviously intended to re-frame the reward as a generous gesture of recognition for a citizen who sacrifices a kidney for the common good. The reward is free health insurance, not an annual sum of cash, even though the two are nearly equivalent in a country where health insurance is mandatory and priced within pretty tight regulatory limits. If you replace "free health insurance" by "an annuity," the proposal immediately sounds a lot weirder, even though it would be pretty much equivalent. I'm not sure the re-framing has succeeded entirely (the Christian-Democrats are busily criticizing the plan), but the basic insight is probably correct: quid pro quo works, but obscuring the quid pro quo brings political acceptability. @Robert: There is much to criticize about the present Dutch health insurance system, but coverage of the poor is, as far as I know, actually very good.
Posted by: Jaap Weel at Nov 20, 2007 2:26:26 PM
Why not free health insurance for everyone in the country?
There's no such thing as free health insurance. Someone is paying for it. Their top income tax rate is 52% I believe, which is probably at or near the zenith of the Laffer Curve, something they are no doubt acutely aware of or they might very well have increased their top rate to 60% like Sweden has.
If you can't soak the rich anymore (no, they aren't a bottomless piggybank, even if you ignore the fact that they are the biggest job creators, directly or indirectly), then that means taxing the poor and middle class even more by doing something like increasing the VAT even higher than it already is. Taxing the poor and middle class for the purpose of giving them their own money back in the form of "free health insurance" is pointless at best, and highly inefficient at worst.
This is also ignoring the coming demographic nightmare that is about to hit pretty much the entire developed world in about a decade, hitting Europe far worse than the US. The governments of these countries simple will not be able to finance everything they are paying for right now, let alone handle the increased pension and healthcare burdens they will be saddled with when their baby boomers start retiring en masse.
By pointedly refusing to engage in the illusion of "free" health insurance, the working Dutch know they will have to finance it themselves, and will take the appropriate savings and work adjustments as a result (i.e. they'll save more and work more). If it was "free" then they wouldn't make those adjustments. They'll still be screwed when retirement comes along, but in the meantime at least the workers won't get screwed by a government Ponzi scheme going broke.
Posted by: happyjuggler0 at Nov 20, 2007 2:27:34 PM
Many peoples objection to paying for organ donations stems from the worry that the poor would be desperate enough to sell body parts for short term gain but suffer a long term loss. Offering a reward that has less monetary value to the poor, and that guarantees care for any long term negative effects reduces the worry.
Posted by: joan at Nov 20, 2007 3:40:21 PM
@joan
So what about the current system, where it is likely that a black market organ bought in India is already coming from someone poor willing to take a risk? When you legalize the market, the risk reward becomes smaller, so the poor will lose out on opportunities.
Posted by: kurt at Nov 20, 2007 5:42:05 PM
It doesn't make sense to me, because the one isn't related to the other (it actually makes the system _more_ expensive). Next year I'll pay EUR 400 (after taxes) for my health insurance, assuming I don't use health services. Otherwise I only get anything back if I spend more than EUR 650 on health. And there's no opt-out because everybody is insured by definition.
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