Who should get access to a ventilator?

This article describes the tradeoffs deciders consider when they think about how to ration scarce ventilators (WSJ, March 2020). Some commentary on the article follows below. This post also discusses ways to ration ventilators and asks what would happen in the market system.

Summary: Because of the recent flood of Covid-19 patients, hospitals around the nation have halted or curtailed the number of what are deemed to be nonessential surgeries. Doctors and hospitals have struggled to establish guidelines to determine who will receive treatment and who will not. In some cases, these guidelines determine which patients will live and which patients will be allowed to die.

Classroom Application: Economics is the study of how scarce productive resources – and the goods and services made from these resources – are allocated. Scarcity means that there are not enough resources to provide all of the goods and services that people want. In market economies, price is used to ration scarce goods and services. But scarcity and the need to ration scarce resources exists outside of markets. Some decisions to use scarce resources in non-market environments have trivial consequences, while others, such as deciding which patients doctors and hospitals choose to treat, have very significant costs.

Questions:

• There is always an opportunity cost when a decision is made to use a scarce resource or product. Define opportunity cost.
• Assume that a medical doctor had to choose only one of four patients to receive medical treatment for the Covid-19 virus. If the doctor decides to treat one of the patients, what is the opportunity cost of the doctor’s decision?
• The article explains that policies in different states that hospitals and doctors use to determine which patients get to use medical ventilators vary: “…doctors could end up drawing names from hats to break ties…ln still other cases, there isn’t any plan, leaving doctors and administrators to make choices as they go.” When ventilators are sold in a private market, how are the ventilators rationed?
• Explain the difference between positive economic analysis and normative economic analysis.
• From the article: “This week, Dr. Emanuel co-wrote an article in the New England Journal of Medicine urging hospitals to avoid providing ventilators to similarly ill patients on a first-come-first-serve basis that could be biased toward well-connected patients, arguing that a random draw is fairer.” Is Dr. Emanuel’s endorsement a random draw to ration ventilators to ill patients an example of positive economic analysis or normative economic analysis? Briefly explain your answer.
• Which of the two rationing methods is fairer: a random draw, or first-come-first serve? Is your response based on positive economic analysis or normative economic analysis?