Bioethics A

Undergraduate Economic Review A publication of Illinois Wesleyan University

Vol. II – 2005-2006

Title “Free Kidney For Sale? Substitution, the Shortage, and

Procurement Policy”

Author Matthew E. Allen

Affiliation College of Saint Benedict / Saint John’s University

Abstract From 1989 to 2003 kidney transplant waiting lists have grown 247%. The effect of this growth and advances in kidney transplant technology has caused a shortage of available organs and the death of thousands waiting for their transplant. Current procurement policy based on altruism has failed to increase the supply of kidneys, yet many consumers and professionals are opposed to a market based system. This paper will examine the current altruistic procurement policy as well as presumed consent and a hypothetical open market approach. With the use of data from the United Network of Organ Sharing and the United States Renal Data System, I will discuss the economic and moral dilemmas of the shortage and argue for a market based procurement policy.

Free Kidney For Sale? 3

Outline Introduction I. Dialysis, Transplant, and Substitution

A. Why are Transplant and Dialysis Substitutes i. Microeconomic theory

ii. Health economic theory B. My Empirical Finding and Other’s Findings

i. Limitations ii. Regression results

iii. Explanation of the numbers II. The Shortage

A. The Size of the Shortage i. National Shortage

B. Why is it increasing i. Technology influences

ii. Third-party-payers iii. Current procurement policy

C. The effects of the Shortage i. Loss of life

ii. Dialysis treatment costs iii. Monetary costs iv. Black market activity

III. Required Request and the Current Procurement System A. Is Required request working

i. History and efforts to procure organs ii. Review of required request literature

IV. Alternative Solutions A. Presumed Consent

i. Definition ii. Discuss property rights with presumed consent

iii. Ethics of presumed consent B. Open Market

i. Define the market and set constraints ii. Review literature on market based organ procurement

V. Ethical Concerns for Open Market Operations A. Coercion of the poor B. Transplant accessibility to the poor C. Premature termination of care

VI. Conclusion

Free Kidney For Sale? 4

Introduction Technology in the Healthcare Industry is unique in that one must weight better-

quality outcomes and longer life against the costs of producing those results. Kidney

transplant and dialysis treatment have been introduced and developed over the last half

century and have had large benefits and costs. Specifically, the first successful kidney

transplant was performed in 1954 between identical twins (Barney & Reynolds, 1989).

Since then the development of immunosuppressive drugs have increased survival rates of

transplant recipients and increased the number of individuals on waiting lists for

transplant. Unfortunately the increase in the demand for kidneys has not been met with

an increase in supply, and today 65,226 people are waiting for a kidney transplant

(OPTN, 2005). This shortage of transplantable organs has lead to significant social costs

that have not been corrected by the altruistic policy that guides organ procurement today.

The current policy of altruism or volunteerism is the by-product of property rights

established in the two guiding statutes on transplantation and organ procurement. The

Uniform Anatomical Gift Act (UAGA) of 1968 enabled people to formally document

their wish to donate their body or organs for transplantation and research after death.

This act is “grounded in the idea that volunteerism would supply a sufficient amount of

organs for transplant while promoting altruism and protecting patient self-determination”

(Barney & Reynolds, 1989). Soon after the draft of the UAGA, all fifty states passed

versions of the law to be held and abided by in the procurement and transplant of organs.

The second influential statue is the National Organ Transplantation Act (NOTA) passed

by Congress in 1984. Within this legislation, the buying or selling of human organs

became illegal. NOTA states: “It shall be unlawful for any person to knowingly acquire,

Free Kidney For Sale? 5

receive or otherwise transfer any human organ for valuable consideration for use in

human transplantation if the transfer affects interstate commerce.” Interestingly, NOTA

does allow compensation for blood donation and reasonable payments for obtaining and

processing a donated organ such as travel, housing, and lost wages costs (Altinanahtar,

Alper, B.A., M.A., May 2004). NOTA also organized the current system of Organ

Procurement Organizations into the Organ Procurement Transplant Network (OPTN) and

placed the United Network for Organ Sharing as the regulatory body in the procurement

and disbursement of organs.

UAGA and NOTA further specify the policy that has been present since the first

kidney transplant in 1954: organ donors are unable to receive compensation for donation.

The purely altruistic approach to organ procurement and the developments in medical

technology have increased the shortage of donable organs drastically. In this paper I will

observe the developments in technology that have made kidney transplant the more

attractive treatment for End Stage Renal Disease (ESRD). I will discuss the costs

associated with transplant and dialysis and the reasons for their substitutability. Three

policies will be examined; the current altruistic/required request policy, presumed

consent, and a hypothetical open market approach. The ethical implications of each

policy will be discussed, and I will propose that a market solution will both correct the

shortage and reduce costs.

This paper will rely heavily on microeconomic theory and health economic theory

in its discussion of open market policy and the substitution of transplant and dialysis.

This reliance is necessary because open market operations have never been implemented,

thus no empirical data exists to study its effects. In addition, the amount of data that is

Free Kidney For Sale? 6

available for kidney transplants/costs and dialysis treatments/costs free of charge is

inadequate. Still, the arguments made and the statistical data should not be unrecognized

or seen as useless. The issue of the organ shortage is a large medical, economic, and

ethical problem. The assumptions behind open market operations and substitution

clustered with medical market observations will serve as a foundation for working toward

correcting the shortage of kidney organs.

I. Dialysis, Transplant, and Substitution Before discussing the theoretical assumptions of substitution in the medical

market, I would like to elaborate on ESRD and the various treatments that are available

for patients suffering from this disease. ESRD occurs when the kidneys fail, thus

creating a creatinine buildup because the body is unable to filter and excrete it properly.

Individuals with ESRD have three treatment options available to them; Hemodialysis,

Peritoneal Dialysis, or Transplant (Bryant, 2005).

Hemodialysis is not a synthetic kidney, but it performs the blood filtering function

of a healthy kidney. A patient undergoing hemodialysis must be hooked up to a machine

three times a week for periods of three to four hours per treatment. The machine acts as a

filter passing urine, while retaining suspended proteins. This treatment requires a

surgical procedure where a fistula is created to accommodate the sixteen gauge needle

that must be directly inserted into the patient’s vein (Bryant, 2005).

Peritoneal Dialysis (CAPD or CCPD) is a less evasive treatment which requires

no medical assistance and can be performed at home. This treatment works inside the

body using the peritoneal membrane to retain a reservoir of dialysis solution which is

exchanged via catheter every four to six hours. It is important to recognize that

Free Kidney For Sale? 7

peritoneal dialysis does have an increased probability of infection and is more machine-

dependant, but it does allow the patient daytime freedom because the treatment can be

administered during sleep due to an automated cycler (Bryant, 2005).

The third and final option for ESRD patients is transplant. With the introduction

of immunosuppressive drugs, which fight the body’s instinct to destroy foreign objects

such as the new kidney, transplant survival rates have increased substantially. Patients

must be on these immunosuppressive drugs for the duration of their post-transplant life

and initial costs for transplant are quite high. The main problem with transplant is the

shortage of available organs; the patient may never get the organ that he or she needs so

desperately (Bryant, 2005).

A. Why are Transplants and Dialysis Substitutes

Economists assume that when consumers make choices, such as choosing dialysis

or transplant, they act rationally. This is to say that consumers are risk adverse, price

minimizing, and benefit maximizing beings. Along with this logic, consumers are

assumed to choose a good or service as long as the good or service’s marginal benefit is

greater than or equal to its marginal cost.

Certain constraints must be placed on this behavior. The rational choice model

considers a world with two goods and measures the amount of goods that a person will

consume in bundles or a particular combination of the two specified goods. The bundles

available to the consumer are constrained by that consumer’s income in the form of a

budget line, which is the set of all bundles that exactly exhaust the consumer’s income.

Indifference curves are then used to identify when a consumer is indifferent to a set of

bundles. The indifference curve that lies above the budget constraint is preferred to those

Free Kidney For Sale? 8

that are on the budget constraint and the indifference curve on the budget constraint is

preferred to those under it. With the use of budget constraints and indifference curves, a

consumer’s utility choices can be derived (Frank, 2003).

This microeconomic model is transferable to health economics and patient

decisions. In the medical industry, patients are deciding between different treatments that

give themselves the best health outcome within a certain income range. However, the

presence of third-party-payers gives the patient an extremely large “income” and the

price of treatment becomes less likely to affect decisions of treatments (Henderson,

2002). The influence of third-party-payers in ESRD began with the 1979 amendment to

the Social Security Act which allowed the federal government to pay for 80 percent of

treatment costs (both dialysis and transplant) for kidney disease (Blair & Kaserman,

1991). Private insurance has also increased its coverage in transplant costs, which has

further clouded the consumer’s sensitivity to price. The presence of third-party-payers

lowers the out-of-pocket costs for the consumer. When you are not paying the bills, there

is little incentive to reduce demand or act rationally when considering the price of

transplant and dialysis (Henderson, 2002). The impact of third-party-payers will have a

direct impact on the analysis of the rational choice theory for dialysis and transplant.

Finally, in the medical care industry, treatments that lead to the same outcome are

considered substitutes. As described above, the influence of third-party-payers makes

consumers extremely insensitive to price and makes demand for medical treatments

extremely price inelastic. Appropriately, the high costs of dialysis treatment and kidney

transplant are infinitesimal when considering the possible health advantages to these

treatments. Patients will focus more on the time involved to administer dialysis treatment

Free Kidney For Sale? 9

or the physical strain from kidney surgery and weigh the health benefits with these costs

rather than monetary expenses.

B. Empirical Analysis and Findings

When using the rational choice model in considering dialysis and transplant there

must be a few modifications. First, the consumer cannot use both treatments or consume

a half of a transplant. They must consume X dialysis treatments (dialysis is an on going

procedure) or one transplant. This will lead the analysis to a corner solution, or when the

consumer does not consume one of the goods. Second, because of third-party-payments

from Medicare and private insurance the cost of each treatment will not largely decide

which treatment a patient chooses. Therefore, patients will migrate to the treatment that

offers the best outcomes. I argue that, because of the medical advances in kidney

transplant such as the immunosuppressive drug cyclosporine in 1979, along with newer

drugs, Prograft and Cellcept, and the costs of dialysis apparent in the hours wasted each

week connected to a dialysis machine, the majority of ESRD patients would prefer

transplant (Bryant, 2005). Finally, utility and demand for dialysis treatment is overstated.

Patients are pushed into receiving dialysis because there is a shortage of transplantable

kidneys; because of this, dialysis treatment can be considered an imperfect substitute

because the results do not have the same quality. As I argued above, the majority of

patients want transplant except for those who feel they could not undergo the trauma of

surgery. However, this majority is moved to a lower indifference curve and receives less

utility because they must be treated with dialysis.

Free Kidney For Sale? 10

Figure 1.1

Dialysis I0

I1 Transplant

Figure 1.1 illustrates the argument in graphical form. Notice that each indifference curve,

I0 and I1, leads to a corner solution because the patients can only consume dialysis or

transplant, not both. Patients want to be on the indifference curve I0 because they believe

transplant has the most health and lifestyle benefits. However, the majority of these

patients who demand transplant are moved to indifference curve I1 because of the

shortage of organs available for transplant. I1 is less preferable to these people because it

is below I0, where their utility is maximized.

To study the shortage of kidneys and the substitution effects of dialysis treatment,

I turned to the United Network of Organ Sharing (UNOS) and the United States Renal

Data System (USRDS). These groups provide transplant and renal data free of charge to

the public for educational and research purposes. Although I found sufficient data for my

undergraduate research and argument of substitution and the resulting shortage, I must

rely heavily on the theory behind the numbers. There is no such thing as a free lunch;

Free Kidney For Sale? 11

thus, the data set from UNOS and USRDS is smaller than a data set from a subscription

based supplier. More importantly, although the data set is diminutive, the results convey

the theory on which I rely.

My sample for analysis stretched from 1996 to 2002 for transplant “patient years

at risk,” and dialysis Medicare payments per “patient years at risk.” To determine the

substitution of kidney transplant for dialysis treatment, I named transplant my dependent

variable with dialysis and time as my independent variables. I then performed a

regression of these three variable’s natural logs to determine the cross-price-elasticity of

transplant and dialysis. Cross-price-elasticity is the percentage change in the quantity

demanded of one good caused by a one percent change in the price of the other. The

results of this ratio if below zero are compliments, and if above zero are substitutes.

The following are my results:

Regression output confidence interval

variables

coefficients std.

error t (df=4) p-value 95%

lower 95%

upper intercept -87.3694 5.0388 -17.339 .0001 -101.3593 -73.3796

LN of Dialysis Pmts 0.0873 0.0825 1.059 .3495 -0.1417 0.3164 Time in years 0.0486 0.0028 17.598 .0001 0.0410 0.0563

Data Source: (USRDS, 2005) Though my sample was relatively small, only covering seven years, the results can be

explained by the budget constraint and indifference curve model that I presented above.

With a 10% increase in the price of dialysis there will be an increase in quantity

demanded for transplants of 8.73%. As apparent by the t-statistic, less than the absolute

value of two and a p-value stating a 34.95% chance that the results occur because of

random chance this coefficient suggests an increase in the price of dialysis treatment

would not be reason for increased demand for transplantation. This result does not come

Free Kidney For Sale? 12

as a surprise when considering third-party-payers. The out-of-pocket payment for the

patients would increase by very little relative to the increase in the total price of the

treatment. Therefore, an increase in the price of either treatment will not have a large

effect on the demand of the substitute good. Also, in figure 1.1, I argued that most ESRD

patients would prefer transplantation, thus wanting to be on indifference curve I0, but the

shortage of organs moves the patients to indifference curve I1, consuming dialysis.

Consequently, no matter what the cost of dialysis, the majority of ESRD patients will

have to consume dialysis. This explains the poor significance of a rise in the price of

dialysis affecting the quantity of transplants demanded.

II. The Shortage

A shortage occurs when the price of the good is set below the equilibrium level.

Thus, shortages occur when a price ceiling, the most a good can be sold for, is set below

the equilibrium price and quantity. When looking at the transplant market, we can assert

that the zero price for kidneys, which must be maintained by transplant centers, is a price

ceiling. Under the current policy, procurement organizations have been unable to supply

the number of organs that are needed for those wanting kidney transplants. This

relationship is shown in figure 1.2 where D0 is the demand for kidney transplants and S is

the supply for transplant. Notice that the demand curve is fairly steep, indicating that

consumption is inelastic because of third-party-payers. Also notice that the supply is

fixed at Q0S because the price of kidneys is zero and selling above that price is illegal.

With the price set at zero, a shortage is created shown by Q0D – Q0S, noted by the bold

line.

Figure 1.2

Free Kidney For Sale? 13

This shortage will persist as long as there is a price ceiling on the price of kidneys. Later

in this paper I will show how this shortage will be decreased and potentially eliminated

by the institution of an open market.

A. The Size of the Shortage

The present shortage of kidneys is the result of the zero price that is placed on

them. Since 1989 there has been an enormous increase of 247% in the number of

patients on the waiting list and a small increase of 74% in the number of organs supplied

by living and dead donors. However, when looking at this problem, the actual number of

kidneys demanded is compressed because many doctors will not allow patients who want

a kidney to be on the waiting list because they do not meet certain medical criterion to be

a candidate for transplant, though they would be a candidate if there was a large enough

supply of organs. Graphically the shortage of kidneys is represented by:

Figure 1.3

D0

S

Q0S Q0D

Price

Quantity

Free Kidney For Sale? 14

The Shortage of Kidneys

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

Time

N u

m b

er o

f P at

ie n

ts o

n W

ai tin

g Li

st s

an d

T ra

n sp

la n

ts

P er

fo rm

ed

National Waiting List Transplants performed

Source: www.optn.org

This graph shows the upward trend of the waiting list and the meager incline of

transplants performed. But why is the gap widening?

B. Why is it increasing

As seen by the waiting list data presented in the previous section the shortage of

kidneys is increasing at alarming rates, 247% since 1989 (UNOS, 2005). The reason for

this shortage is explained by three phenomena.

The first is a growth in technology. Medicine is always changing because of

advances in drugs and procedures, thus causing a problem of higher costs for the same

treatment but better results. Kidney transplant has evolved since its birth in the middle of

the twentieth century beginning with transplantation only being possible between patients

who were genetically related. At that time, rejection of the organ was extremely likely,

Free Kidney For Sale? 15

so patients had to bring in potential living donors to the hospital with them for the

operation. If the patient could not find a suitable donor, there would be no operations,

hence, no shortage (Altinanahtar, Alper, B.A., M.A., May 2004). With the introduction

of the immunosuppressive drugs, cyclosporine in 1979 and new drugs Prograft and

Cellcept, rejection rates decreased drastically and survival rates increased, making

transplant the procedure of choice for ESRD patients (Bryant, 2005)

The increase in third-party-payments has also increased the shortage of kidneys.

With the amendment of Medicare in 1979 increasing Medicare payments for kidney

disease and private insurance shifting transplant from an experimental coverage

procedure to a regular procedure, the financial burden of transplantation became less of

an issue for ESRD patients when deciding between dialysis and transplantation. Since

the high initial cost of transplant was cut down by private insurance and Medicare

payments, patients have moved toward transplant as the preferred treatment which has

increased the demand for transplant and increased the shortage.

Finally, the shortage has increased because of the failure of the current

procurement system. The amount of cadaver organs has increased only slightly since

1986 with living donors showing the same results (Blair & Kaserman, 1991). This low

rate of growth is due to a paradox which has been written about at length. The number of

deaths from car accidents, which yields the most suitable donor suppliers, has decreased

with the increased usage of helmets and seatbelts. Campaigns against drunk driving have

also reduced the number of car accidents along with decreasing the amount of donor-

eligible subjects (Annas, June 1988). Though the number of organs harvested is not

increasing at levels that are needed, the decrease in traffic accident deaths is a great

Free Kidney For Sale? 16

accomplishment and should be looked at as a positive. To counteract this stagnation of

cadaver and living organ donation, the National Organ Transplant Act of 1984 increased

federal funding for the procurement of organs, but various educational campaigns have

failed to reduce the gap between supply and demand significantly.

C. The effects of the Shortage

The rapid increase in the demand for kidneys juxtaposed with the slow increase in

the supply for kidneys has caused large social costs on the United States. The failure of

instituting the proper policy to procure organs has caused monetary and non-monetary

costs.

The most obvious of these costs is loss of life. Each year a multitude of patients

die from kidney failure. The Organ Procurement and Transplant Network documents the

number of patients on waiting lists removed because of death, below is death removal

data from 1995-2004:

All Region Death Removals from Waiting Lists 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 3,723 4,247 4,811 5,505 6,971 6,639 7,195 7,257 7,008 6,727

Source: www.optn.org The above numbers should be considered relative estimates because they do not include

the large number of patients that are unable to be placed on kidney waiting lists. These

patients include those that do not meet the specifications that nephrologists must use to

decide who is most in need or would most benefit from a transplant. With this in mind,

the costs of life are not only those that are on waiting lists for donation but those that are

unable to be placed on waiting lists because they are inadequate candidates for the

“precious” and “scarce” kidney.

Free Kidney For Sale? 17

Less obvious costs are those associated with dialysis treatment. Since many

patients with ESRD are unable to receive a transplant they must consume dialysis,

making dialysis more of an imperfect substitute than a treatment that yields the same

results as transplant. Dialysis costs are apparent in the time needed to be hooked up to

the machine, which occurs for three hours per treatment about three to four times per

week (Bryant, 2005). If transplant was available to these patients, the time lost while

undergoing dialysis could be filled with more productive activities benefiting the

individual and society. Finally, patients must undergo surgery to accommodate the

sixteen gauge needle which must be directly inserted into a vascular artery for treatment.

During each treatment the skin covering this fistula must be broken, which provides

further discomfort.

Monetary costs are also apparent because of the shortage of kidneys. Paul Eggers

has compared the costs of dialysis treatment to transplant treatment in multiple studies.

Each time he has found that transplant is less costly relative to dialysis over time.

Dialysis costs remain stable over the time of treatment, while transplant has a very high

initial cost but lower maintenance costs, assuming there are no complications to the

procedure (Eggers, 1992). His study further supported the belief that transplant was less

costly than dialysis treatment over time. The high initial cost of transplant was recovered

in about 4 ½ years with a ten year savings of $42,000 (Eggers, 1992). The shortage of

organs prevents the United States Medicare system from collecting the savings that it

could if less dialysis was used and more organs were available to ESRD patients.

Lastly, a black market for kidneys has developed because of this shortage. If

patients waiting for kidneys in the United States cannot get them, they can go abroad and

Free Kidney For Sale? 18

buy a kidney from individuals that are willing to sell them. Individuals in countries such

as the United States, Canada, Italy, Australia, Japan, and Saudi Arabia have been found

buying kidneys from people in poorer countries such as Romania, Philippines, Peru,

India, and China (Scheper-Hughes, 2005). Buyers are willing to pay a large range of

prices for their kidney, from $750 to $30,000. With the institution of an open market for

cadaver organs, this black market for living donors would potentially decrease.

The shortage of kidneys is causing loss of life, large Medicare payments,

productivity and quality of care deficiencies, and a black market for kidneys. As waiting

lists grow and more patients are diagnosed with ESRD these costs will escalate.

Knowing this we must look at the current procurement systems efforts and effects on the

supply of donable organs.

III. Required Request and the Current Procurement System

The current procurement system is based on a volunteerism and altruistic

framework. In the 1970s and 1980s deaths from the shortage of kidneys were on the rise,

and there was a need to implement a policy that would help the procurement of organs.

The answer was required request. This policy required physicians or nurses to request for

donation from the family members or guardians at the time of death (Caplan & Welvang,

February 1989). This policy kept the altruistic ideology of autonomy and giving, while

increasing the amount of organs that were available to transplant.

A. Is required request working?

Economic researchers have studied required request from the day it was

implemented. Education has been the most important part of required request. United

Free Kidney For Sale? 19

States policy makers have two central assumptions which govern organ donation. First,

physicians and nurses fail to ask families to donate, and secondly, families donate if

asked (Siminoff, Laura A., PhD, Arnold, Robert M., MD, Caplan, Arthur L., PhD,

Virnig, Beth A., PhD, & Seltzer, Deborah L., BA, July 1995). These assumptions have

been challenged with a study performed by Siminoff, Arnold, Caplan, Virnig, and Seltzer

which examines why required request has not increased organ procurement.

Their study found that 83% of healthcare professionals correctly identify donable

organs, and families of donor-eligible patients were approached about donation 73% of

the time (Siminoff, Laura A., PhD et al., July 1995). From these findings, the assumption

that physicians and nurses do not approach donor eligible patients seems to be

misleading. More interestingly, Siminoff and her colleagues found that, of the families

that were approached for organ donation, only 46.5% agreed to donate. This too goes

against the assumption that if families are asked they will agree to donate (Siminoff,

Laura A., PhD et al., July 1995).

Many of the reasons families fail to consent are unclear. With 95% of Americans

stating that they are aware of transplant and about 75% wanting to donate an organ after

their death, the low percentage of families willing to allow donation comes as a surprise.

Research has been mixed regarding the “donation experience.” Some families find the

approachment process to be comfortable, while others believe it to be a very real

affirmation of the death of their loved one (Siminoff, Laura A., PhD et al., July 1995).

This is evidence that the altruistic ideal is not at fault, but rather the approachment

process. It still is not known when the best time to confront families about donation.

However, it is clear that a family’s knowledge of a patient’s wishes to donate before their

Free Kidney For Sale? 20

death is central to the procurement of organs (Siminoff, Laura A., PhD et al., July 1995).

Education seems to be the answer to these difficulties and continues to be the platform

which procurement organizations use to increase the likelihood of donation.

Another study by Virnig and Caplan also examined the poor performance of

required request procurement efforts. This study also found that required request support

was very high among medical professionals and their request efforts were just as robust;

however, the refusal rates were extremely large. Though the study found that required

request did not have much of an impact on procurement, it did find that the effects of this

law helped hospitals become more effective in identifying donor-eligible patients (Virnig

& Caplan, October 1992). Considering these results, required request has not failed

entirely. Though organ increases have not been evident, required request has forced

hospitals to become efficient in identifying and approaching potential donors.

IV. Alternative Solutions

The increased efficiency of hospitals to identify donable organs, although a step

in the right direction, has not increased the number of organs obtained by any significant

measure. Many authors have pondered how to influence the current system to increase

donation, and all authors point toward the conclusions found by Siminoff--education of

transplantation is vital. Though education of treatments must always be used to make

people aware of the “gift of life” they could give to an ERSD patient, the most promising

policy alternatives are found in presumed consent and an open market. Presumed consent

is used widely in Europe, while an open market for organs has never been implemented.

The open market policy will be discussed more thoroughly than presumed consent but a

basic understanding of both is necessary.

Free Kidney For Sale? 21

A. Presumed Consent

Presumed consent is an organ procurement policy which defines all individuals as

donors unless they clearly indicate that they do not wish to donate during their lifetime

(Phillips, 2003). Many European countries including Spain, Belgium, and the Czech

Republic, which procure more organs than the United States, use presumed consent.

Though presumed consent policy has had great procurement effects in some countries,

such as those listed above, other countries that use presumed consent for procurement

have experienced less robust results. When considering this, it would be false to attribute

the increases in organ procurement entirely to the presumed consent without considering

the importance of the hospital’s policies for procuring organs (Altinanahtar, Alper, B.A.,

M.A., May 2004).

Far more important when discussing policies are the constraints placed on basic

human rights. Presumed consent is a policy that allows the government to “own” ones

body as a “sack of spare parts” (Phillips, 2003). This policy undermines individual

preference and autonomy and places the ownership of ones body into the hands of the

hospital or government, unless the donor specified before death that he or she wished not

to donate. Blair and Kaserman argue that though presumed consent may yield more

organs, it does so in a way that takes advantage of the general public by using their

reluctance to dissent and their ignorance or temporary confusion as a means to procure

organs (Blair & Kaserman, 1991).

There is also little public backing for presumed consent. Surveys given out by

Adams, Barnett, and Kaserman indicate that of the 391 respondents, 66% would be

Free Kidney For Sale? 22

offended if governmental policy would allow their organs to be removed without the

donor’s consent.

B. Open Market

Instituting an open market in the existence of a shortage or excess demand is an

extremely common policy in the United States. This classical approach to disequilibrium

has lasted through centuries as one that decreases shortages and provides a more efficient

use of resources. Establishing a market for kidneys involves much more than simply

allowing kidneys to be bought and sold because it is an extremely complicated market

which combines questions of efficiency and quality with real ethical dilemmas. Adams,

Barnett, Blair, Beard, and Kaserman have written extensively about open markets for

kidneys and have promoted their findings since the early nineties. Their results and ideas

will be used in creating and explaining the open market argument presented below.

There are extreme ethical conflicts with the institution of a living donor open

market; thus, I am arguing for a market for only those that are deceased. Many different

market solutions exist; however, Blair and Kaserman assume the following

circumstances, which I will also defend: the potential donor will be paid a fixed amount

of money, in the form of cash or tax credit, for entering into a binding contract which

allows the removal of one or more organs after death (Blair & Kaserman, 1991). Under

this assumption it is important to understand that the shortage of kidneys does not come

from a lack of deaths which yield transplantable organs but of the current systems ability

to only collect 15-20% of the existing supply of cadaver organs (Adams, Barnett, &

Kaserman, 1999).

Free Kidney For Sale? 23

The current procurement system is preferred by some economists for two

economic criticisms. First, individuals may be willing to donate at a zero price, however,

when the altruistic policy is replaced by one that pays a price above zero, these donors

may not donate at all because the self-giving component of the policy is gone. Second,

since a market has never been implemented in organs, the reaction of potential donors to

a small price increase is not known. The question here is will the supply curve be elastic

or inelastic? Adams, Barnett and Kaserman developed a model which presents three

possible situations that could arise with the institution of a monetary incentive. Figure

1.4 graphically illustrates these situations.

Figure 1.4

Source: (Adams et al., 1999) Under the current policy the quantity of kidneys supplied is Q0S at a zero price. The

shortage is apparent when subtracting Q0D from Q0S. This was discussed earlier in the

D0

S

Q0S Q0D

Price

Quantity of kidneys

S’’

S’

Q3e

P3e

P2e

P1e

Q2e Q1e

Free Kidney For Sale? 24

paper. The supply curve S models a market where there is no negative response (those

who were willing to donate at zero price but will not at a price above zero) and is

relatively price elastic. The shortage is substantially lowered from Q0D - Q0S to Q0D - Q1e.

Supply curve S’ illustrates a slight negative effect in which potential suppliers are

offended by the sale of organs and withdrawal from the market. With a slightly higher

price and lower quantity than supply curve S, the shortage is only decreased from Q0D -

Q0S to Q0D – Q2e. Finally, supply curve S’’ demonstrates a large negative shift and little

responsiveness to price change. In this scenario the supply of kidneys is actually lower

than the supply when a purely altruistic policy is used!

The importance of knowing which of the above situations bests fits the supply of

kidneys is essential to implementing an open market policy. If supply curves S or S’

embody the true supply curve for kidneys than open market policy is far more beneficial

than the current system. However, if the kidney supply curves has more in common with

S’’, then open market policy would decrease the benefits of the current altruistic policy

and be a poor choice to correct the shortage of kidneys.

To answer this question Adams, Barnett, and Kaserman surveyed 391 students in

eight different courses at the University of Auburn. This study was the first empirical

study on organ sale of its kind and its findings supported the widespread theoretical belief

that an open market for organs would supply a sufficient amount of kidneys to alleviate

the shortage. Most importantly, their findings illustrated that the supply curve for

kidneys would have only a small negative impact of donors leaving the market because

they were offended. The survey indicated that 96% of the sample were not offended by

organ sales or were willing to donate despite being offended by the idea of the open

Free Kidney For Sale? 25

market, thus only a 4% supply intercept shift would occur (Adams et al., 1999) The

survey also provided an estimate of prices the surveyed students would be willing to

accept for donating after death. Below are the price findings.

Supply Schedule for Organ Donors

Price Number of donors Increase in

donors $0 138 $10 149 11

$250 165 27 $50 183 45

$100 221 83 $500 249 111

$1,000 299 161 $5,000 311 173

Over $5000 338 200 Source: (Adams et al., 1999)

The large increase in the number of donors willing to donate with a price of just $1,000

suggests that kidney suppliers would be price sensitive, thus a semi-flat supply curve.

With these two empirical findings, Adams, Barnett, and Kaserman believe that the supply

of kidneys would look like S’ in figure 1.4.

V. Ethical Concerns

The open market solution to the shortage of transplantable kidneys is one that has

been viewed by the American Medical Association and the American Hospital

Association as policy that is unethical and inappropriate for organ procurement. Yet the

current policy, as seen above, has failed to yield sufficient organs, so why has this policy

of altruism persisted? The answer to this question is based on the ethical arguments of:

Coercion of the Poor, Transplant Accessibility for the Poor, and Premature Termination

of Care.

Free Kidney For Sale? 26

A. Coercion of the Poor

The first argument against an open market for organs is the coercion of the poor

into donation. This ethical argument is based on the poor being enticed by the economic

incentive of donation that would help their current position in life but may supersede

various religious or moral convictions (Blair & Kaserman, 1991). The validity of this

argument in the above policy solution is quite flawed. Coercion of the poor assumes that

the price of the kidney would be high enough to make the poor act in such a manner. If

the price of the organ is kept low, which has been argued in the previous section, the poor

would not be inclined to donate because they hold their moral beliefs at a higher value.

One must also observe the current procurement system in which families of

patients are pushed, or coaxed into giving their kin’s kidney away free of charge. These

procedures are extremely coercive to those who are donating their organs. Also, since the

current policy cannot procure a sufficient amount of organs the poor from third world

countries are selling their organs to first world buyers because of the economic gains they

can achieve from such a transaction. Thus, coercion of the poor is occurring with the

current policy. With an increase in the number of organs obtained from an open market

policy, the number of the third world poor donating would decrease because the demand

for overseas organs would decline. Finally, those who argue for the altruistic policies

must take responsibility for the high social costs that occur to avoid this coercion.

B. Transplant Accessibility for the Poor

The second ethical concern is transplant accessibility for the poor, which states

that only the wealthy will be able to afford transplant (Blair & Kaserman, 1991). Once

again this argument assumes that the price for kidneys would be very high, Adam’s,

Free Kidney For Sale? 27

Barnett’s, and Kaserman’s results deter. Also, in speaking with multiple doctors, it was

revealed that the poor are the people that are most likely to suffer from End Stage Renal

Disease because they lack the resources to provide themselves with adequate healthcare

and nutrition. With this in mind, an increase in the number of organs procured would

benefit the poor more than any other group. Not only would the poor waiting for their

kidney have a better chance of transplant but those that did not make it on the waiting list

would be able to receive transplant because of the increase in supply of organs.

Finally, accessibility concerns do not take into consideration third-party-payers.

As mentioned, the amendment to social security in 1972 allows payment of 80% by the

federal government for kidney disease. When considering the cost of a kidney to be

$1000, the patient would only be paying $200. The increase in price of $200 is quite

insignificant in terms of the full cost of a transplant and the benefits to life received by

transplant.

C. Premature Termination of Care

The last ethical concern deals with the doctor impeding care though the patient

could benefit from sustained treatment (Blair & Kaserman, 1991). Once again this

argument assumes that the price of a kidney would be high enough to entice family

members or doctors to withdrawal care. In addition, it assumes that the doctor would

somehow gain from the procurement of their patient’s organ, which is not the case.

Under the open market policy the property rights of the organs would belong to the party

that entered into the contract with the donor, including the family or procurement firms.

This contract certifies that the practicing physician has no incentive to remove care from

the patient.

Free Kidney For Sale? 28

VI. Conclusion

The topic of open market operations to diminish the shortage of transplantable

organs is a very emotionally charged topic that must be addressed. In this paper I have

discussed the treatments and medical history of End Stage Renal Disease and shown the

substitutability of dialysis treatment and kidney transplant. Because of medical advances,

most importantly immunosuppressive drugs, coupled with the time consuming costs of

dialysis treatment, transplant has become the consumer’s preferable choice when treating

ESRD. Though patients demand transplants technological advances, third-party-payers

and the current procurement policy have created an extremely large shortage of

transplantable organs, which forces patients to consume dialysis.

This shortage has created significant social costs. Patients taken off transplant

waiting lists because of death have numbered over 6,000 for the past five consecutive

years. Medicare payments are far larger than they would be if enough organs were

available for transplant. Dialysis treatment renders its patients less productive than they

could be as a result of the hours they must be hooked up to a machine every week.

Finally, an overseas black market has developed for kidneys in which citizens of the

United States and other first world countries have bought organs for transplant.

These four costs could be diminished with the institution of an open market for

cadaver organs. Adams, Barnett, and Kaserman have helped further the debate for open

markets in the procurement of kidneys showing that the price of kidneys would be

relatively low, thus making it worthwhile to implement. However, in the real world will

the price of kidneys exceed their cost in this empirical model? The answer to this

question will not be fully answered until an open market is implemented and tested in the

Free Kidney For Sale? 29

real world. However, specific policy procedures and constraints would be needed to

prevent a large increase in price. If the price of kidneys became too high the ethical

concerns for the poor described in the previous section would be quite relevant, thus

making open markets the wrong choice for policy. Though economics is an analytical

science, one must never forget the impact policy has on those people who are most

vulnerable.

In conclusion, this open minded debate on procurement policy must persist if we

are to ever alleviate the shortage of kidneys and the large social costs that result from this

shortage. Policy makers must look at this issue from all angles and determine how best

to fix the problem. Though open market operations may not be the most popular solution

to the kidney shortage, it must be considered and pondered when approaching the

daunting task of alleviating the kidney shortage.

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