Long Term Fiscal Implications of subsidizing In-Vitro Fertilization

Abstract: Today, almost three percent of all babies born in Sweden are conceived with the help of in vitro fertilization (IVF). Nonetheless, studies indicate that IVF is underproduced by society and the Rand Corporation concluded in a recently published report that IVF has the potential to increase fertility rates in Europe. If IVF is considered as a method to improve fertility rates, reimbursing IVF could arguably be seen as an investment in demographic structure by the Swedish Government. The present study aims at evaluating the long run net fiscal implications of subsidizing IVF during the assumption that it is seen as an investment in population structure. A simplified model was developed to calculate the net present discounted value (NPV) of a successful IVF treatment to the Swedish government. The model describes relevant financial interactions between a hypothetical individual and the State throughout the individual’s life. Based on average life-expectancy (age 80) in Sweden the model indicates that an individual born in 2005 after IVF-treatment returns a lifetime positive NPV to the government of 254 000 SEK with a break-even point (the age at which a positive NPV is achieved) at age 41. Despite the obvious difficulties that lies in predicting future payments during a 80 year long investment one important observation sustains: the costs associated with IVF treatment is relatively insignificant vis-à-vis other costs and benefits to the government. The model is not sufficiently sophisticated to provide an adequate forecast of the full economic costs and benefits associated with subsidizing IVF. However, it does show that in the long run, subsidizing IVF is not a burden to the State budget; on the contrary, the IVF-offspring returns a net positive value to the Swedish State.