Living Economics

Supply-chain Births
Caesarean sections, which are preferred for their predictability, are more prevalent when reimbursement policy favors their practice even when they are not medically necessary.

In Brazil, Caesarean births involving abdominal surgery are as high as 80 90% in private hospitals. That is up to three times the overall rate in the U.S. (3/27/2006). It is also far higher than the 5 -15% range considered to be normal by the World Health Organization.

Such a large difference in delivery practice is all the more surprising when maternal mortality is nearly three times as common in C-sections as in normal delivery. Babies born by C-sections are also more likely to have respiratory distress syndrome. So C-sections are normally performed on only high-risk pregnancies. Brazilian women are no more physiologically susceptible to C-sections than women in other countries. The prevalence of C-sections appears to be the direct result of economic incentives. Doctors in private Brazilian hospitals are still typically paid per procedure. Since a C-section can be performed in as little as 25 minutes, doctors can earn more by delivering more babies in a given time period than using the unpredictable vaginal delivery that can last for 12 hours each.

In Brazilian public hospitals where the economic incentives are less favorable to C-sections, the C-section rate is a much lower 25%. Here, the government caps the number of reimbursable C-sections and expands the role of obstetrical nurses who are allowed to do only normal deliveries.

In the U.S., higher reimbursements for C-sections have also led to higher repeat C-sections in for-profit hospitals.

That economic incentives can strongly affect how health care is practiced illustrates how slippery the concept of "medical necessity" is. Medical necessity seems to be highly stretchable to empty the allowable purse. And if economic incentives are set properly, the same amount of health-care dollars can be made to deliver more bang for the buck. But when a matter of life and death is involved as in many health-care situations, interest-group politics will ensure that the incentives will not be set properly.

Beyond economics, C-sections also are a result of lifestyle choice. Predictability of delivery makes it easier to plan lives around the event for both doctors and mothers.

  • WSJ. 3/27/2006. "NIH weighs risks, benefits of pre-planned C-sections."
  • WSJ. 6/14/2001. "For Brazilian women, Caesarean Sections are surprisingly popular."
  • WSJ. 1/2/1991. "C-sections tied to economic factors in study."
  • WSJ. 1/19/1984. "Controversy surrounds the increasing number of Caesarean deliveries."
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