NCPA - National Center for Policy Analysis

How Free-Market Kidney Sales Can Save Lives and Lower the Total Cost of Kidney Transplants

March 14, 2012

The 1984 National Organ Transplant Act prohibits the sale of human organs, yet economic analysis of the potential market for human kidneys has shown that the legislation is detrimental.  While opponents of free kidney trade argue that it would price the poor out of the market, further investigation finds that free trade would provide better results for both donors and recipients, say Kathryn Shelton, a research assistant in the O'Neil Center for Global Markets and Freedom at Southern Methodist University, and Richard B. McKenzie, professor emeritus in the Merage Business School at the University of California, Irvine.

  • By offering compensation for donors, a free-trade market for kidneys would increase the number of kidneys made available to those who demand them, reducing the current shortages.
  • There are 90,885 American kidney-disease patients now lingering on waiting lists for donated kidneys.
  • The supply increase of kidneys associated with selling them on a market would result in a reduction of as many as 4,573 annual deaths from kidney disease.

Often, proponents of a market for kidneys emphasize the benefits of increased supply while conceding the point to opponents that the policy change would increase the price that recipients pay.  However, this ignores the fundamental economic dynamics of kidney donations.

  • When donors give their kidneys to hospitals, those hospitals receive the organ for free.
  • These hospitals then sell their services surrounding a kidney transplant to desiring recipients.
  • However, because the actual kidney is necessarily packaged with the services, the hospitals are essentially able to incorporate the market price of a kidney into the total cost of the transplant.
  • Recognition of this behavior, and the fact that it would be eliminated by a market for kidneys, is crucial in understanding that such a market would decrease the cost of kidneys.

An additional benefit of the free sale of kidneys is that selling a kidney offers yet another option for the poor who could take advantage of the substantial cash compensation.

Finally, the increased rate of donation from live donors would decrease the incidence of kidney rejection, which occurs much more often with organs from cadavers.  Increase supply would allow doctors to get better matches between donors and recipients, reducing waste and saving lives.

Source: Kathryn Shelton and Richard B. McKenzie, "How Free-Market Kidney Sales Can Save Lives -- And Lower the Total Cost of Kidney Transplants," Library of Economics and Liberty, March 5, 2012.

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