Alex Tabarrock on Using Incentives to Increase Organ Donation. More at http://www.marginalrevolution.com/marginalrevolution/2010/05/changing-views-on-organ-prohibition.html

1. Using Incentives to Increase Organ Donation Alex Tabarrok Department of Economics George Mason University

3. A World Shortage Millions of people suffer from kidney disease and the numbers are increasing rapidly but in 2007 there were just 64,606 kidney-transplant operations in the entire world. Due to the shortage many countries are now experimenting with innovative incentive systems designed to increase the supply of organs.

4. The Problem The National Organ Transplant Act (NOTA) of 1984 states: In other words, incentives for organ donors are illegal. But incentives could increase the supply of organs and save lives. Let’s look at the problems and paradoxes of 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...”

5. Incentives and Paired Kidney Exchanges About one-third of potential living donors are incompatible with their intended recipient. Kidney exchanges (trade) make everyone better off. Kidney exchanges encourage donation with incentives: Donors give a kidney so that their loved one gets a kidney. A kidney is clearly “valuable consideration” so kidney exchanges could be illegal under NOTA. The Norwood Act (2007) amended NOTA so it would not apply to kidney exchanges. Kidney exchanges are important but limited because barter is much harder than monetary exchange. Picture from UCLA Kidney Exchange. www.transplants.ucla.edu/KidneyExchange

7. Absurd situation: Whole body donation for medical and scientific uses is often compensated—typically a free cremation.

9. Compensation for Cadaveric Donation in Israel In 2010 Israel legalized payments to donor families to "memorialize" the deceased. Funds for memorials may be as high as 50,000 shekel, or $13,400. The money is paid by a nonprofit group and may be used in any way the families see fit to memorialize the deceased. In the ceremony to present the first check under this program the director of the charity making the memorial payment, said: "In this country we always talk about military heroism. ... [T]his is clearly a case of civilian heroism. [His organs] saved four lives. ... [T]he family should be blessed.“ In 1994 the Pennsylvania legislature established a trust fund to reimburse donor families up to $3000 for funeral expenses but the plan was never implemented because of fear that it violated NOTA.

10. Incentives: No Give, No Take Organs today are treated like a commons – anyone can receive any organ whether or not they were willing to contribute to the commons, i.e. be an organ donor. Consider a no-give, no-take policy for organs. People who have signed their organ donor card are given priority if they should one day need an organ. Advantages of no-give, no take. Satisfies most people’s moral intuitions. Can be implemented easily be adding points to current system. (Similarly to program already in place for live organ donors.)

12. In Israel in the case of kidneys two points on an 18 point scale are given if the candidate had three or more years previous to being listed signed their organ card.

13. LifeSharers.org is an “organ club.” Anyone can join. Members agree that if their organs should become available they will go first to a fellow LifeSharers member.

15. Using Financial Compensation to Leverage Live Donation Kidney chains begin with a donor who does not receive a kidney (to a loved one) in return. If the original donor gives to someone who has a willing but incompatible live donor a chain can be created. Financial compensation could potentially be used to begin many more kidney chains. Picture from People Magazine, Nov. 30, 2009

16. Financial Compensation for Live Donation in Iran (and Singapore) Iran is the only country in the world regularly paying compensation for live donors. In a new program, Singapore allows payments for lost income, medical costs and lifetime insurance coverage. First payment was Nov. 2009. The Iranian system began in 1988 and eliminated the shortage of kidneys by 1999. Iran is the only country in the world without a shortage of kidneys. The Iranian system is managed by a nonprofit, volunteer-run patient association. Payments from government and charity are ~$3,500-$6,000.

18. We can compensate donors but continue to allocate organs according to the UNOS point system.

19. Compensation need not be upfront but could come in the form of an annuity, tuition voucher or contribution to a retirement plan.

20. In the latter case compensation should be a higher amount.

23. What would it take to increase cadaveric donation from 8000 to 12,000 a year? $2500, $5,000, $10,000? Assume, $10,000.

24. What would it take to increase live donation from 6,000 per year to 12,000? Assume, $15,000.

25. Thus increased organ donation could easily save the Federal government billions of dollars. On a pure cost-benefit analysis paying donors pays for itself!More importantly transplants increase life-expectancy and quality of life. At $15,000 per live donation the cost of financial compensation for 12,000 organs would be $180 million and savings would be $720 million. Net savings of $540 million per year.

27. Compensation is widely accepted as a payment for risk.

28. The annual fatality risk from being a commercial fisherman in Alaska is 4 to 5 times higher than the one-time risk of donating a kidney.

30. Attitudes about what is repugnant change.

32. Using Incentives to Increase Organ Donation Alex Tabarrok Department of Economics George Mason University

35. Price Controls Create Shortages