Organs for Cash? How Legitimizing the Organ Trade May Save Lives

As of today, over 123,000 people are on the waiting list for a new organ, yet only 11,845 transplants have been performed this year with 9,565 of those organs coming from deceased donors. Since organ transplants became successful, the demand for organs has increased rapidly while supply has failed to keep up. The discrepancy only widens every year, resulting in longer waiting times and the deaths of individuals who fail to receive a new organ in time. From an economist’s point of view, the solution is straightforward in theory. Since the demand for organs remains out of the control of medical specialists or policymakers, the only solution is to increase supply to equilibrate that specific market. Although the solution seems simple, in practice this remains nearly impossible because of laws forbidding the open trade of organs. What would happen if the government were to lift these laws? How would monetary incentive affect the economy and the hypothesized market for organs? Would this lead to a more efficient system while saving lives at the same time?

The idea of such a system is not so farfetched. In countries such as Iran, the sale of kidneys for profit is legal and regulated by the government. Under this system, Iran does not have a waiting list nor does it suffer from a shortage of organs. Prior to 1994, India also had a successful legal market in organ trading and has been a leading country in kidney transplants since the late 1970s. However, attempts to exploit the system for profit led to protest in many sections of the country, leading to the passing of the Transplantation of Human Organ Act (THO). Under the new legislation, a donor must be a relative who has given consent. Donation from brain-dead patients was also legalized. Overcoming organ shortage by accessing the pool of brain-dead patients was expected to limit unrelated transplant activity. Even with new regulations in place, the program has constantly suffered from kidney scandals. In most cases, the donor accused the recipient or the middle man of having not compensated them properly. The illegal organ trade in India has only worsened, leading to criminals further exploiting the poor and unsafe conditions in which transplants are performed.

To analyze what the United States would look like under a legalized organ trade system, we must consider several factors such as: how the price of both the organ and transplant would be set; how much closer the market would be to equilibrium under the new conditions; and how different demographics would be affected. Under the current system, most living donors and recipients are related, with family members supplying a majority of live organ donations. Because there is no monetary incentive involved, we can assume that the reason for live organ donations is out of concern or goodwill. The problem with how this works is that for recipients who do not have a willing relative to donate, the organ pool is much smaller, hence the long waiting time. In most countries, the cost of the organ transplant is covered by the government or insurance companies. Their ability and willingness to cover the cost increases as costs decrease. This explains why when costs fall, quantity demanded increases. The cases in which costs are not covered by either of the aforementioned options are likely wealthy individuals who can finance the costs themselves. There is also a negative relationship between willingness to pay and costs.

A basic understanding of elasticity is necessary to examine the curves in this model. Demand for organs is highly inelastic because of necessity. Because the only legal way to obtain an organ is through a donor, supply is independent of price, meaning that any change in price will not affect supply. Here we have achieved perfectly inelasticity of supply, represented by the vertical segment of the supply curve. Since donors do not receive monetary compensation for their organs, we only consider the cost of the surgery, represented by the horizontal segment showing perfect elasticity. The addition of monetary incentive to our model would be reflected in the total cost of surgery. The higher these incentives are, the more willing people would be to sell, increasing the elasticity. The benefits of legalized organ trade go beyond measures of supply and demand. Not only does this increase overall supply by eliciting more organs, but also shifts supply from the black market into the legal sector.

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Government subsidies or coverage by insurance companies would make this an even more attractive option compared to the black market. Criminals regularly exploit the poor by selling kidneys for over $160,000 in the black market while keeping most of the profit for themselves. The desire for greater profits leads to organ trafficking rings, which engage in kidnapping, extortion, and murder to harvest organs mostly from children and young adults. Transplants are also performed in unsafe conditions without proper medical supervision, leading to further health problems for both the donor and the recipient.

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An increase in organ supply as a result of offering monetary incentive is an intuitive observation. To analyze the effects on the economy, it is necessary to examine how the market price of an organ would be determined. The current procurement cost of an organ can range from $67,200 for a kidney to $80,400 for a heart. Donating or selling an organ may affect the quality of life of both the recipient and the seller. This will most likely be in the form of an injury or even death. We also must consider the salary lost as a result of not being able to work following surgery and any additional time if an injury were to occur. The price of the organ should include a premium to cover the above risks. The monetary compensation for risk of death can be measured by value of statistical life. Stanford economists estimate one year of quality life to be $129,000 using kidney dialysis as a benchmark. The actual risk of death for a living kidney donor is about 0.06 percent. With overall life expectancy in the United States being 79 years, we can estimate the value of statistical life to be about $10.2 million. From these values, we can conclude that an additional increase in risk of .06 percent can be valued at $6,120 (or 10.2 million*.06 percent). For a person with an annual income of $50,000, foregone earnings as a result of surgery is approximately $3,800 for 4 weeks. Adding these components gives a total expected cost to donors of about $10,000. Compare this value to what was paid to donors in pre-1994 India. The price of a kidney in India during that time was $1,177. Adjusted for inflation, that value would equal $1,584 today. The US has a per capita income that is about 13 times that of India. Adjusting for purchasing power differences between the two countries gives us a value of $20,592 (or $1584*13). However, a comparison of dollar amounts does not accurately show the difference between obtaining a transplant in the United States versus a country such as India. The quality of surgery as well as care prior to and following the surgery would be superior in the US. The added risk is reflected in our graph, in which the supply curve shifts upwards to reflect the added risk premium, as well as becomes completely horizontal to reflect the increased supply.

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So far, we have discussed many potential benefits of a legal market for organs; increased supply and access to organs, lower costs as a result of increased supply, lower waiting times, increased patient survival, and a reduction of criminal activity stemming from organ trafficking rings. All of these points are beneficial to society, so what is preventing policymakers from taking action? Some dismiss organ markets as immoral commodification of body parts, questioning the ethics behind allowing such a market to exist. Others suggest that allowing organ trade would reduce the total number of organs available for transplants because it would lower the number of organs donated for altruistic reasons. This ultimately would outweigh the number of organs sold for monetary incentive. This scenario is improbable, since compensating donors either for allowing their organs to be used after their death or while they are alive, would encourage donations, widening the scope of the organ market, and increasing overall supply.

A convincing case against organ trade is the potential effects on different demographics, with concern that the majority of the organ supply would mainly come from the poor. The poor would look to sell their organs as a way to improve quality of life, with those in desperate situations most likely to do so. In effect, it is the middle-class and the rich who would be able to afford obtaining an organ if necessary. With the middle-class and rich having a financial advantage, it would be even more difficult for the poor in need of an organ to obtain one. However, this problem can be addressed through specific government regulation that awards priority to those most in need. Other options include limiting the number of live donors from a specific income group or awarding compensation to the families of a donor who has given permission for his organs to be used after his death. It is also unlikely that the introduction of an organ market will have a significant effect on the macroeconomic level. Although the number of donations will inevitably increase, we will probably not see hordes of people flocking to immediately donate their organs. Nor will we see a substantial change in growth or GDP as a result of this activity. Many of the organs used for live transplants will still likely be supplied by relatives. Another criticism of is concern about a rise in kidnapping to harvest organs for profits such as in the black market. This could potentially happen, but not likely on a significant scale since it is not difficult to determine the source of organs offered for sale and identify the perpetrators responsible for the crime.

A legalized organ market is a possibility but not a probability in the United States. As of today, there are still many opponents of authorizing this move and there are many factors to consider to ensure the system is effective. Even with increased access to organs, there is still the matter of the costs of surgery and pre and post-care. With the number of transplants increasing as a result of increased access, either the government or private insurance companies must be willing to cover these increased costs, otherwise the operation will not be much more affordable than under the present system. Policymakers must also ensure proper legislation is taken to address secondary effects, as mentioned before. They must be vigilant as to the sources of the organ to prevent further black market activity as well as if different income groups are profiting at the expense of others. With the discrepancy between supply and demand growing every year, it is about time to give this system a chance. The problems brought to our attention by critics can be minimized and even prevented with proper oversight. This is a matter of saving lives, many of which are lost every day as the time waiting for an organ continues to increase.