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Federal Government Ends Subsidies for Condoms for College Students. Will This Balance the Federal Budget?

Gary North
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You probably did not know that the United States government for years has indirectly subsidized condoms for college students. It has done this through Big Pharma. No more!

The ever-alert Wall Street Journal reports:

For years, drug companies sold birth-control pills and other contraceptives to university health services at a big discount. This has served as an entree to young consumers for the drug companies, and a profit center for the schools, which sell them to students at a moderate markup. Students pay perhaps $15 a month for contraceptives that otherwise can retail for $50 or more.

But colleges and universities say the drug companies have stopped offering the discounts, and are now charging the schools much more. The change has an unlikely origin: the Deficit Reduction Act signed by President Bush last year. The legislation aimed to pare $39 billion in spending on federal programs, from subsidized student loans to Medicaid. And among the changes was one that, through an arcane set of circumstances, created a disincentive for drug makers to offer school discounts.

On September 4, there was a follow-up story released by the Associated Press.

Alicia Fitz is a pharmacist at North Dakota State University's student health center. She says some students are willing to pay the higher birth control prices.The clinic warned students last spring that they would see price increases.

Fitz says most students realize it's still cheaper than being pregnant and having a baby.

You can't pull the wool over the eyes of today's college students, who are, we are constantly being reassured, "the best and the brightest in the world!"

Still, her assessment remains just a theory regarding the ability of today's college students to make effective risk-reward, cost-benefit analyses. But, as any Ph.D.-holding economist would recognize in an instant or some fraction thereof, this conclusion is based on anecdotal evidence from one person on one campus only one month into the semester. More rigorous tests are needed.

This new policy opens up tremendous research opportunities for tenure-seeking assistant professors on the nation's campuses.

We need empirical studies: the number of condoms bought for the previous three semesters vs. the number bought for the next three. Regression analysis must be applied which would segregate out such "noise" factors as a decrease in the price of beer or a decrease in the rate of increase of tuitions above the consumer price index. "More money to spend, and where to spend it."

We also need graphs that demonstrate with physics department rigor that describe the shape of the demand curve for condoms. What will be the effect on student budgets? Fewer textbooks purchased? Fewer on-line term papers purchased? There will be an article in The Journal of Political Economy with a title like "Assessing the Demand Curve for Condoms: Is It Inelastic?"

Then there is the question of an increased demand for money. Will the demand for student loans increase? Will college students work more hours in fast-food restaurants in college towns compared to non-college towns?

The Department of Political Science can also survey the effect of the loss of this subsidy. I can almost see an article in a scholarly journal 36 months from now. "Swollen Outrage: A Study in Campus Political Pressure Groups."

The Department of Women's Studies can survey the response of female students. "Picking Up the Tab: Variations in Gender Response to Male-Dominated Cut-Backs in Condom Subsidies."

Academia marches on!

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