How to End the Kidney Shortage

[Clark]

https://www.cato.org/regulation/spring-2023/how-end-kidney-shortage

How to End the Kidney Shortage
Few if any of these news stories lamenting the kidney shortage or touting hightech breakthroughs mention that we already have a solution to the shortage: compensating kidney donors to induce more supply
SPRING 2023 • REGULATION
By Frank McCormick and Philip J. Held

News stories abound of kind people—relatives, close friends, and even complete strangers—who donate a kidney to someone suffering from kidney failure. These stories usually explain that people whose kidneys have failed must either obtain a transplant, which enables them to live 10–20 years in reasonably good health, or suffer on dialysis for an average of four to five years as their health steadily deteriorates until they die.
Sometimes these stories explain that many kidney failure patients never receive the optimal treatment of a transplant because there is a drastic shortage of transplant kidneys. About 125,000 patients are diagnosed with kidney failure each year, but only about 22,000 receive a transplant. In a 2022 Value in Health article, we estimate that more than 40,000 additional kidney failure patients would be saved from premature death each year if they received kidney transplants.

Recently, there have been news stories about xenotransplantation: the transplanting of animal organs (usually from pigs) into humans. These came after a patient with terminal heart failure received a genetically modified pig heart and lived for two months. That raised the hopes of many that this breakthrough might be extended to kidneys. However, Food and Drug Administration approval for xenotransplant kidneys will not occur for some time (if ever); the data from the first Stage One trial—which is merely the first step toward any approval—won’t be available for at least a decade. It is extremely unlikely that anyone currently suffering from kidney failure will benefit from xenotransplantation.

Few if any of these news stories lamenting the kidney shortage or touting high‐ tech breakthroughs mention that we already have a solution to the shortage: compensating kidney donors to induce more supply. Frustratingly, the U.S. government is obstructing this solution.

NOTA is the problem / Virtually all economists who have studied the issue believe the basic cause of the kidney shortage is a provision in the 1984 National Organ Transplant Act (NOTA): “It shall be unlawful for any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce.”

This sentence seems innocuous, but it imposes a price ceiling of near‐ zero on the market for kidneys. Both economic theory and abundant evidence have shown that whenever the government holds the price of a good below the market‐ clearing price, it causes a shortage of that good. Moreover, if the government holds the price far below the market‐ clearing price (our 2022 article estimates that price would be about $80,000 per kidney), then the shortage will be huge: more than 40,000 kidneys per year in the United States alone. For context, that is more deaths than from motor vehicle crashes each year.

Compensation is the solution / To economists, the solution is straight‐ forward: allow kidney donors to be compensated. But this is not at all obvious to most non‐ economists, who fear it would lead to a world in which rich people would buy kidneys from poor people. Steven Levitt, co‐ author of the best‐ selling economics book Freakonomics, put the dichotomy this way in a May 2022 episode of his People I (Mostly) Admire podcast: “This is an interesting issue because it is one every economist agrees that of course we should have a market for kidneys, and virtually every non‐ economist thinks it is crazy.”

Because there are a lot more non‐ economists than economists, that takes the policy option of a completely free market in kidneys off the table. Instead, policymakers must come up with some solution that allows kidney donors to be compensated but addresses the concerns of the public through regulation.

There does seem to be a consensus developing that the government should take on the role of compensating kidney donors, and it should distribute the acquired kidneys to all patients who need one. In a 2018 PLOS One article, we showed that poor people as a group would be much better off if donors are compensated than they are now when compensation is prohibited, mainly because many would‐ be kidney recipients are poor.
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