What is the cost of self-righteous indignation? In the case of indignant opposition to compensating transplant organ donors, we can actually ascribe a number to it: a cool $125 billion over the next decade for the federal government alone, according to a new study recently published in the American Journal of Transplantation (AJT). That staggering figure is just a fraction of the $40 billion the federal and state governments spend each year providing free kidney dialysis for people suffering from renal failure, a sum that equates to nearly $100,000 per dialysis patient per year.

But what if we paid organ donors, thereby boosting the supply of transplant organs? The authors of the AJT study estimate that if we were to pay kidney donors enough to eliminate the current organ shortage, it would generate $46 billion per year in net societal benefits via longevity gains and a higher quality of life for transplant recipients. It would also save government roughly $12 billion a year. Beyond saving money, compensating donors would also save lives: roughly 7,000 people die each year waiting for a kidney, liver, or heart to become available for transplant, and an equal number perish without being considered for a transplant list because of the improbability that an organ could be found in time to save them.

While a few thousand preventable deaths may not be enough impetus for the government to relax the prohibition on paying organ donors, Congress’s Pay-As-You-Go spending constraint offers a more tangible incentive to abolish this lethal ban. Under the current budget rules, any savings generated from a change in the law could be used to cut taxes or boost spending elsewhere. Given the dearth of usable “pay-fors” these days and the propensity of Congress to do favors for its constituencies, it has every reason in the world to enact such a bill.

Supply and demand / The genesis of today’s flawed transplant organ policy emanates from two pieces of legislation, the National Organ Transplant Act of 1984 (NOTA) and the Organ Donation and Recovery Act of 2004.

NOTA established the Organ Procurement Transplantation Network, a national system for matching organs and individuals in need. Paradoxically, NOTA did nothing to drive down transplant waiting lists—in fact, the length and wait time has grown enormously since its passage. In 1988 about 16,000 individuals were awaiting an organ for transplant, a figure that jumped to 44,000 by 1995, and today exceeds 122,000, which amounts to a 700 percent increase in 24 years. There are currently a little over 100,000 patients seeking kidneys alone, a number roughly equal to the population of Peoria, Ill. That number excludes people who need a kidney but who aren’t put on the list because they aren’t expected to survive long enough for one to become available to them under current rules. The National Kidney Foundation estimates that 500,000 Americans are on dialysis.

The explosion in the number of people awaiting a kidney transplant owes largely to two factors: First, higher obesity rates have contributed to a large increase in the incidence of type 2 diabetes, which greatly increases the incidence of renal failure. Second, advances in medicine have improved the health of people suffering from chronic illnesses. The ravages of diabetes that would have taken a life 30 years ago have been turned into chronic conditions that people can manage successfully for an extended period of time.

But while the demand for kidneys has exploded, the supply has not. And there is no reason to think that it ever will, given that there are no incentives in place to encourage people with two healthy organs to go through the pain, hassle, and slight increase in risk to their own health from a non-minor operation and life with one kidney. (For perspective, the death rate for a person donating a kidney is about 0.2 percent, or one out of every 5,000 donors.) The long waiting lists lead to a predictable outcome: a significant proportion of these people do not survive the wait. Approximately 5,000 to 10,000 people die each year while waiting for a kidney transplant.

NOTA explicitly prohibits the buying or selling of organs “for valuable consideration for use in human transplantation,” stating that the intent of the legislation was to make the buying and selling of human organs unlawful. (The law does allow for the recipient to reimburse the donor for various expenses, such as lodging, lost wages, direct and ancillary medical bills, and transportation.) The penalties for breaking this law are stiff: violators are subject to a $50,000 fine and up to five years in prison.

The enormous worldwide shortfall in organs has been slightly ameliorated within the last decade, thanks to two innovations. The first has been the advent of the “opt-in” default on driver’s licenses in several countries, although it has yet to be adopted anywhere in the United States. Instead of someone needing to affirmatively check a box to become an organ donor, the presumption in these countries is that the person agrees to be an organ donor unless he or she actively opts out of participating. This has increased participation rates in these countries, but the gains have been minimal, partly because of stubborn cultural stigmas against organ donors as well as the fact that most countries with this default still require permission from the next of kin.

The other innovation has been the matched kidney exchange program, pioneered by Nobel economics laureate Alvin Roth. This consists of a sophisticated computer algorithm whereby someone who wants to donate a kidney for a friend or relative, but is not a tissue match for the intended recipient, is instead paired to donate to another person who also has someone willing to donate on his or her behalf. By connecting a network of such donors, it becomes possible to create a match of numerous donors and recipients in a virtual domino chain. It has been estimated that this system has resulted in 2,000 kidney transplants that would not have occurred otherwise.

People who oppose allowing organ donors to receive compensation like to suggest that improvements in such schemes hold the potential to alleviate the chronic shortage. However, neither has come remotely close to eliminating the mismatch between kidney donors and those in need of a transplant. Suggestions that perfecting these systems will prove sufficient amounts to little more than wishful thinking.

Political economy / The main criticism of donor compensation is that poor individuals, desperate for money, will sell their organs to wealthy patients. However, that doesn’t come close to describing the situation at hand. A study published in the AJT late last year points out that the recipients of donated kidneys were typically at the lower end of the economic ladder. In general, the poor (and African-Americans) tend to be overrepresented on kidney waiting lists and stand to benefit the most from compensating donors. It is not far-fetched at all to assert that such a policy would, in fact, reduce income inequality. For taxpayers and society, the billions of dollars of savings—as well as billions of dollars of benefits, both tangible and intangible, that accrue to the recipients of new organs as well as the federal government—deserve to be presented in opposition to the moral hand-wringing surrounding the compensation of organ donors.

The poor and African-Americans tend to be overrepresented on kidney waiting lists and stand to benefit the most from compensating donors.

Most debates on the issue ultimately fail to go beyond the same narrow ethical discussions. We eschew this debate and instead simply offer the observation—buttressed with data—that the federal government can reap significant cost savings from compensating organ donors.

To overcome the poor donor/​rich recipient concern, the AJT compensation study proposes that the federal government—and not the organ recipients—pay potential donors $45,000 per kidney for living donors or $10,000 for deceased donors. The authors estimate those amounts are high enough to allow supply to meet demand.

The study uses data from the U.S. Renal Data System and the Scientific Registry of Transplant Recipients. It values a quality-adjusted life year (QALY) at $200,000, which is the consensus estimate of the implicit value that the average person assigns to a year of life as exhibited in various decisions people make in the everyday world. The authors find that the substantial gains they ascribe to the government compensating organ donors holds even with a QALY valued at $100,000 or up to $300,000.

The estimated benefits from this proposal are profound. For instance, a typical patient on dialysis can expect to live 12.3 years, but a kidney transplant adds an additional seven years to his or her lifespan on average, which amounts to a lifetime welfare gain of nearly $1 million per kidney recipient.

The actual cost savings from removing someone from dialysis are also large. The cost of a typical transplant is $145,000, a figure that varies quite a bit depending on the region, hospital, and doctor involved. There are also medical costs following transplants—most notably the provision of costly anti-rejection drugs—that can cost tens of thousands of dollars a year. The cumulative costs resulting from a kidney transplant can approach $500,000—a sizeable amount, but one that pales in comparison to the $100,000 per person per year that it costs the government to provide dialysis.

If we add up the savings just to the government from taking tens of thousands of people off the rolls of kidney donors, the result is a staggering cost savings: the authors estimate that the net gains to the federal government from compensating kidney donors would be $120 billion over the next 10 years.

Legal barriers / Whenever someone argues that a policy change would generate enormous gains to society—and can quantify those gains in a way that’s essentially impossible to dispute—it makes sense to ask why we haven’t already adopted it, and whether there are compelling reasons to keep the status quo.

From a political economy perspective, it’s perfectly sensible that we don’t compensate organ donors: the people who stand to gain the most from this idea—people on dialysis—are predominantly low-income individuals who lack the wherewithal and energy to organize effectively. They don’t have the resources to mount an effective campaign in Congress and no one stands to profit from a change.

However, the $40 billion per annum that the government pays each year to dialysis companies has begotten several very large, profitable companies that could go bankrupt if we were to compensate donors. It will always be easier to organize a small number of well-endowed entities who stand to lose significantly than a disparate group of poor people who stand to gain from such a change and may not even be aware of it, even though their potential gains dwarf the losses to dialysis companies.

Sometimes Congress must do more than adjudicate rival disputes between vested interests and do what’s right for taxpayers and society at large. In this case, however, the gigantic pot of money that the government would save from compensating organ donors should provide a powerful incentive for Congress to act. Lawmakers could use that money to satisfy constituencies elsewhere by reducing taxes or increasing spending on other budget items—something that’s nearly impossible to do today because of the budget rules currently in place.

By spelling out a concrete compensation scheme that obviates fears of wealthy people gaming the system and also clearly illustrates the enormous government cost savings, the authors of the AJT study may have set in motion a radical change in how we deal with organ donor shortages in the United States.

Readings

  • “A Cost-Benefit Analysis of Government Compensation of Kidney Donors,” by P.J. Held, F. McCormick, A. Ojo, and J.P. Roberts. American Journal of Transplantation, Vol. 16, No. 2 (October 2015).
  • “Directions for the Disposition of My (and Your) Vital Organs,” by Lloyd R. Cohen. Regulation, Vol. 28, No. 3 (Fall 2005).
  • “Paying for Bodies, But Not for Organs,” by David E. Harrington and Edward A. Sayre. Regulation, Vol. 29, No. 4 (Winter 2006–2007)
  • “Socioeconomic Status and Ethnicity of Deceased Donor Kidney Recipients Compared to Their Donors,” by J.T. Adler, J.A. Hyder, N. Elias, L.L. Nguyen, J.F. Markmann, F.L. Delmonico, and H. Yeh. American Journal of Transplantation, Vol. 15, No. 4 (April 2015).
  • “The Failure of U.S. Organ Procurement Policy,” by T. Randolph Beard, John D. Jackson, and David L. Kaserman. Regulation, Vol. 30, No. 4 (Winter 2007–2008).
  • “What Is a Life Worth?” by Ike Brannon. Regulation, Vol. 27, No. 4 (Winter 2004–2005).