The Fiscal Consequences of Banning Compensation for Organ Donors

By Caleb Petitt of The Independent Institute.

"Could lifting restrictions on organ sales help ease the burden of America’s current fiscal crisis? Surprisingly, allowing kidney donors to get paid for their donation, even through the form of tax benefits, could have a significant impact on federal spending. The federal government pays a significant share of the costs involved in providing dialysis, and nearly half of all patients on dialysis use Medicare.

In 2019, nearly 395,000 Medicare beneficiaries were dialysis recipients who had their treatment covered by fee-for-service (FFS) plans. The average cost per patient for Medicare/Medicaid FFS patients with end-stage renal disease was $98,985 annually. That means that American taxpayers spent about $39 billion on dialysis alone in 2019, making up 4.9 percent of Medicare’s expenditures and roughly 0.9 percent of total federal expenditures in 2019. Dialysis has not been cheap for the American taxpayer.

The only way to get someone off of dialysis is for them to get a kidney transplant. Chronic Kidney Disease (CKD) patients with a successfully transplanted kidney can stop dialysis and begin living a normal life.

Kidneys, however, are in very short supply. There were nearly 90,000 people on the organ transplant waiting list for a kidney as of September 2024, but just over 27,000 kidney transplants were performed in 2023. The average wait time for a kidney transplant is between three to five years. That means nine to 15 hours a week of being reliant on a machine for three to five years for each person on the waitlist, and the average cost to the federal government of $296,955 to $494,925 per patient. Our current system of getting kidneys for people who need them is incredibly costly for patients and taxpayers.

Increasing living kidney donors would help CKD patients and taxpayers. If a patient finds a willing living donor, they can get a transplant within 6 months, assuming the donor’s evaluation shows they can safely donate. Living kidney donations are also more effective at helping the patient, since doctors can run more tests and screen for more potential problems with a living donor compared to a deceased donor.

But finding living donors is very difficult. Of the 27,500 kidney transplants that were performed last year, fewer than 6,500 were from living donors. Of living kidney donors, about 96 percent of the donations are directed to a specified friend or family member. Since family and close friends of someone who needs a kidney are often already willing to see if they are a viable donor, the way to increase living kidney donations is to increase donations from strangers.

Many economists have proposed a free market for organs to increase their availability, but such proposals are frequently dismissed as being radical, unrealistic, or unethical. Fortunately, such a dramatic step is not the only way to improve our current system.

In 2024, the bipartisan End Kidney Deaths Act was introduced to Congress, and the bill was reintroduced this year. If passed, it would grant a fully refundable $50,000 tax credit to undirected living kidney donors (meaning that the recipient is not specified) in 5 annual $10,000 increments, which could go a long way in encouraging living kidney donations. As long as the average wait time for a kidney fell by just six months, the program would pay for itself.

Medicare and Medicaid made up 20 percent of federal expenditures last year, and it is nearly impossible to cut funding for those programs. If the federal government is trying to improve its fiscal health, and it desperately needs to, it needs to look for ways to make those programs run more efficiently. Allowing for financial compensation for living organ donations, especially kidneys, would improve the lives of people on dialysis and improve America’s fiscal health."