The Economics of the End of Life

Dr. William L. Anderson

A Journal for Western Man-- Issue XXXIV-- April 10, 2005

The Schiavo case, aside from the specifics of the family dispute at the heart of that case, raises fundamental economic questions that cannot be avoided. The welfare state is central to this case, since much of the payment for the services Schiavo received came from that entity. It is increasingly a factor in most institutionalized end-of-life scenarios.

Given that fundamental situation, one cannot discuss these cases apart from the fact that governmental programs provided the funding that kept her alive for so long. Such will be the case for many others.

Let me say that I am an opponent of euthanasia and abortion and adhere to the idea of the inherent dignity and worth of all human life. And yet to say that still begs many questions that are both economic and political in nature.

• Keeping people alive with permanent care, which technology has made an option in an overwhelming number of hospitalized cases, requires resources that someone must relinquish in order to make it possible.
• In grey areas, it seems that the best policy is to locate decision-making power in the hands of those closest to the situation, where compassion and good sense stand the best chance of prevailing.
• The above two principles should work hand-in-hand: the economic decisions that are unavoidable need also to be made by those closest to the case in question.
• The socialization of medical care has driven such a huge wedge between those who have the strongest interest in the outcome and those who actually make the decision. 
• That is the essence of the dilemma we face over the economics of the life, and it results from the collectivization of payment and thereby decision making.

Many say, "How can you put a price on life?" Now, economics does not necessarily put a clear, delineated money price on a situation like this, but it does remind us that when the Law of Scarcity comes to the fore, we can no more ignore it than we can ignore the Law of Gravity if we contemplate jumping off a building. We speak of the personal services, the medical treatment, the hospice room, and everything else associated with the care of people in permanent vegetative states as being goods that by their nature are scarce, which means that one must give up other scarce goods in exchange for them.

Keep in mind that even if all of the goods one received, including the health care services, were donated to the hospice, that still would not negate their very scarcity. Just because one forgoes compensation does not mean that a good is free in an economic sense.

The presence of the welfare state has permitted the costs that ordinarily would have fallen upon the families had they been left alone to foot the bill. While the third-party payments have mitigated the real costs that the families could not have paid on their own, this is not the same thing as claiming that welfare state payments somehow eliminate the problem of scarcity. Yes, they limit the scarcity issue for the families directly involved, but payment is made because the costs are diffused among large numbers of taxpayers who involuntarily are contributing their share of compensation for those who are performing the medical services in this case.

The presence of welfare state payments also means something else: the decisions regarding care for anyone in a condition similar to Shiavo's are going to be made by people who do not know anyone involved, are not fully in possession of the facts of the issue, but who control the access to the purse. This is the nature of any third-party payment system.

Hence, in the last weeks of her life, we saw hundreds of people, ranging from judges to state legislators to members of Congress to President George W. Bush to his brother Florida Gov. Jeb Bush to protesters to Jesse Jackson, all become involved in this case, each with an agenda that may or may not directly have involved Terri Schiavo or her family. To put it another way, the life and death realities of Schiavo's condition gave way to the political process, or, to say it more accurately, were swallowed up by the political process.

The Schiavo case in the end was a resource issue involving both the limits of the medically possible (even if unlimited funds were available) and the limits of what we can produce. While her parents argued that she could "improve" with care, no one—including her parents—believed she could be brought back to a "normal" condition, that is, the condition that existed before the 1990 incident when she collapsed and she received brain damage. Medical technology could keep her alive, but it could not restore her to full health.

No amount of money that anyone could have spent would have changed that sad fact. A living Schiavo still would have been a profoundly impaired Schiavo no matter how extensive the resources that might have been spent on her.

That being said, the question of what should have been spent for her care is quite a different matter. Those with a thoroughly utilitarian view of life would argue that the plug should have been pulled as soon as it became apparent her mental condition would not improve. Others have argued that her life should have been preserved at all costs.

Perhaps the key word here is "costs," for as immoral as some might think that word to be in this case, it is profoundly relevant. The costs for her care ran to about $100,000 annually, or more than $1 million. For one person, that is significant in that it is doubtful that her family could have raised that money on their own.

A welfare state supporter might take that situation as an example of why such services are "needed" in our society. However, multiply that number across the population of people who are in circumstances similar to what Schiavo faced and it does not take an economist to point out that the costs to the taxpayers would be enormous.

Furthermore, if the polls that showed the general public having a negative reaction to efforts by the Bush brothers, Congress and the Florida legislature to circumvent the courts are accurate, it is doubtful that there would be much political support to keeping thousands of people alive via life supports or through feeding tubes if it were being done through government welfare payments.

While politicians might utter sayings like "putting price tags on the lives of people," it is clear that when faced with the utilitarian views of the general public, the political classes will have no desire to provide funds to keep terminally ill or brain-damaged people alive (unless those people happen to be well-connected to people in politics).

All of this brings up the larger issue of what Ludwig von Mises termed "economic calculation."  In his insightful criticisms of socialism, Mises said that such a system would lack a mechanism for engaging in economic calculation, which quickly would lead to the breakdown of the system. In the Schiavo case and others like it, we see that the measures to keep people alive—and absorb the costs involved—are made administratively with an eye not on the real costs to individuals, but to the socialized costs—and the individual benefits that accrue to people in the political pipeline.

Jane Orient, a medical doctor who has written a number of books and articles dealing with the problems of state-sponsored medicine, writes:

Countries that promise "universal access" are pretty good at paying for well-baby checks and vaccines and doctor visits for the common cold. Those are exactly the things most people are able to afford for themselves.

The roadblocks are at the exits that lead to the hospital. The global budgeters "contain costs"—ration health care by denying those things that you do need insurance to pay for: heart surgery, radiation treatments for cancer, hip replacements, things like that. Out of "compassion," reformers may open another exit: the one that leads to the cemetery. Do you think it's accidental that euthanasia and "universal access" are on the agenda at the same time?[i]

In the end, it was politics that first extended the life of Terri Schiavo, but it also was politics that brought about her death.

It is instructive to note that this debate would not have occurred if Schiavo lived in Europe or Canada, which have "universal access" healthcare that our political classes claim we should emulate. Government authorities in charge of doling out the funds for individual care would have denied treatment to her once they had determined she was not going to enjoy a full or even partial recovery. To put it bluntly, if she had been a Canadian or Swede, she would have been dead long ago.

Contrary to what advocates of the welfare state might tell us, government cannot do away with scarcity. In the long run, it makes the problem of scarcity worse, and the long lines that people must endure for even basic medical care in secular (and utilitarian) countries like Canada or Sweden, not to mention surgeries or other procedures that might be necessary to an individual's survival, tell a compelling story: whoever pays the piper calls the tune.

Perhaps it is ironic to note that while advocates of the welfare state (and especially government "single payer" medical care) base their support of such a system on the notion that government will provide superior care to people who cannot afford it, reality is much different. Writes Orient:

In Canada, you don't have to pay to get medical care. In fact, you are not allowed to pay. Once the global budget is reached in Canada, that's it. The on-ramps are closed. It doesn't matter if you have money. Hospital beds are empty for lack of money to pay nurses, and CT scanners sit idle all night for lack of money to pay a technician. But if some people are allowed to pay, Canadians fear that some people might get better care than others.[ii]

Had government not been paying for Schiavo's hospice care, perhaps interested individuals would have been willing to contribute to her care. As long as private individuals were voluntarily giving of their funds to keep her alive, it would have been much more difficult for a court to order her feeding tube disconnected, her husband's protestations notwithstanding (unless he were solely footing the bill). However, because the state was paying for it, ultimately, life and death decisions came from on high.

What about the situation in which government, by choosing to direct resources to extend life to severely ill people who would die otherwise (and still most likely will be dead soon after treatment), prolongs life when it should not, if only because the resources are available. There is no easy answer to such a question, because one cannot adequately define a term like "living too long."

If, however, a person is being kept alive solely to feed resources via the welfare state to doctors, medical establishments, and pharmaceutical companies, a moral hazard presents itself: is every aged person to become a victim of an end-of-life looting by those who have their own interests to serve? Yet, the presence of large amounts of government resources in such situations tells us that for the time being, this is where the political considerations are being made.

Frédéric Bastiat, in writing on what "is seen, and what is not seen," emphasized that governments often will act in ways that present a visible—and positive—picture of state power. Yet, by emphasizing that large amounts of resources be directed toward those who are dying or are in vegetative states, the Law of Scarcity also tells us that resources are being directed away from individuals who might be able to live much longer if they were able to receive services currently being denied them.

For example, each year thousands of people in the United States die waiting for organ transplants, and many thousand more are forced to undergo treatment like kidney dialysis in order to stay alive. Others on this page have noted that government policies themselves have created the organ shortages.

When medical care is tax supported, then people who in other circumstances would not be considered part of the decision making process, suddenly are given veto power. That is the nature of the political beast, and as long as government has been in existence, the beast has lived a very predictable life.

If the political classes and others are to insist that medical care is a private matter, it cannot then demand that individuals be taxed to pay for it – but also remain silent when the government engages in actions that meet with moral opposition. If this country is going to place its medical procedures under the aegis of the welfare state, then we have to prepare for more such cases to be played out in a near-circus atmosphere.

However, if we really want private individuals to be able to make decisions regarding the care they and their loved ones receive, then we have to understand that such a state of affairs can take place only in the area of truly private medicine. That is the real choice that we must make.

This TRA feature has been edited in accordance with TRA's Statement of Policy.

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