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Not Enough Hearts

And when your heart begins to bleed,


Youre dead, and dead, and dead, indeed.
..Mother
Goose


You gotta' have heart. A liver, lungs, and kidneys help, too. Some
of us are blessed with healthy organs ready to carry us through a long and acti
ve life; some of us are not. For most of human history, the consequence was str
aightforward: diseased organs meant death.

That no longer is true. Modern medical maestros transplant thousan
ds of organs annually. Just as your auto mechanic can replace a damaged carbure
tor; your surgeon can replace a damaged heart -- if one is available. Ah, there
's the rub.

In June 1993, Pennsylvania's then-Governor Robert P. Casey announced
that without a double transplant, he would soon die from amyloidosis, a rare, a
nd typically fatal, genetic disease. Within days he was recuperating in the Uni
versity of Pittsburgh Medical Center with a new heart and new liver -- complimen
ts of Michael Lucas, a 34 year-old man who had just died from a gang beating in
nearby Monesson, PA.1

Controversy erupted immediately. The average waiting time for heart
s exceeded six months. For livers, it was over two months. How did a governor
beat the odds and get both in two days? Was it favoritism for the rich and famo
us? No apparent improprieties occurred, but eyebrows were raised from Fairbanks
to Fort Lauderdale.

Shortages

To economists, the curious issue is not the Byzantine set of rules u
sed to allocate scarce organs; it is that there is a shortage of organs at all.

The shortage is real. Over 115,000 Americans were waiting for assor
ted organs in 2013. Those waiting for kidneys survive on dialysis, a painful pr
ocess even more expensive than kidney transplants. Those waiting for other orga
ns often die. In 2012, more than 6,000 died while waiting; more than twice as m
any as died in the 9/11 attacks. And the gap between quantities supplied and
demanded is growing. Dramatic strides in medical technology continue to make tr
ansplants safer and more successful. With insurance covering much of the bill,
the demand keeps growing. But supply does not. Despite educational programs an
d impassioned pleas, organ donations simply have not kept pace.2 Recent studies
estimate that almost 200,000 Americans will have died as a result of organ short
ages by the year 2015.3

Prices eliminate shortages in most markets. Excess demands drive up
prices. The higher prices elicit increases in quantities supplied and dampen q
uantities demanded until shortages disappear. Is there a shortage of minivans?
No problem. Competition for the scarce vans will raise their price. The highe
r price both discourages consumption and encourages extra production. The proce
ss continues until the quantity supplied meets the quantity demanded and the sho
rtage disappears.

But the market price of organs cannot rise. The National Transplant
Act of 1984 prohibits any compensation for those who supply organs. The price
for organs, by law, is kept at zero. A policy of free minivans would surely cre
ate a shortage of minivans. That a policy of free hearts and kidneys might crea
te similar shortages should be no surprise.

The impact on costs and quality is less obvious. Given the excess d
emand for organs, access to them can be very profitable for hospitals and surgic
al transplant teams. In fact, transplants are so profitable that hospitals all
over the country have crowded into the market seeking a piece of the action.4 H
owever, the entry of new transplant centers has not been accompanied by an incre
ase in the number of donated organs available for transplant. The result is few
er transplants per center. Transplant centers must invest in sophisticated and
expensive technology. When the fixed costs of these assets are spread over many
transplants, the cost per operation is low. But, when the number of transplant
s per center fall, the cost per transplant rises.5 More important, the success
of a transplant often hangs on the experience of the transplant team. With few
er transplants per center, experience levels drop and success rates are jeopardi
zed.6

Here's the summary. Voluntary donations have not kept pace with the
demand for transplantable organs. Large and increasing shortages exist. We en
d up with fewer transplants, poorer-quality transplants, more costly transplants
, more dialysis, and more deaths. Not a pretty picture.

Markets for organs

Can we fix it? Can we generate more organs for transplant? When we
want more minivans produced, we need only raise the price. Why not do the same
for hearts and kidneys? That's right. Sell them. Create a market in human or
gans. Despite legal obstacles and international pressures, open trade in human
kidneys flourishes in many poorer areas of the world. Humans need only one heal
thy kidney to survive and in 2006 a living donor in Iran could expect to sell a
spare kidney for $3,000 to $4,000.7

Living donors are not possible for many organs, but payments to surv
iving relatives might elicit additional donated organs. Or, for a lump sum, ind
ividuals could sell contracts to brokers for permission to harvest any usable or
gans at their death. Individuals who change their minds later in life could rep
urchase the contracts. Even modest prices might dramatically increase the quant
ity of organs supplied.8

Are you ready for the graph? The graph below pictures supply and de
mand curves for transplantable organs. The demand curve is likely to be relativ
ely inelastic (can you explain why?). The quantity supplied is more likely to b
e responsive to changes in price. At the market equilibrium, organs would sell
for a price of P0 and a total of Q0 organs would be bought and sold. However, b
y restricting the market price to zero, the quantity supplied falls to Q1 , well
below the quantity demanded, and a shortage appears.

Is a market for organs abhorrent? Is it morally reprehensible? Som
e believe it to be. Does it devalue life if we allow organs to be bought and so
ld? Maybe. But might it devalue life even more to let patients die on a waitin
g list? Will not such markets prey on the desperately poor who see selling thei
r organs as their only escape from wretched deprivation? Maybe. Will LeBron J
ames and Bill Gates be first in line to trade their kidneys for $1,000? Don't h
old your breath. Low-income individuals are more likely to sell hearts and kidn
eys, just as they are more likely to sell blood in current markets. But these a
re voluntary transactions. Assuming individuals can make rational choices, they
will sell organs only when convinced that such sales are in their self-interest
; when the benefits they will receive exceed any costs they must bear. The sham
e, if any, is not in the transaction. The shame, if any, is in allowing citizen
s to reach such desperate conditions in the first place.

What about costs? Will an open market drive up the cost of transpla
nts and make transplants less accessible to low-income patients. Probably not.
Under the current system, shortages make transplants inaccessible to the rich a
nd poor alike. If markets increase the quantities of organs supplied, the numbe
r of transplants going to both the rich and the poor can increase. Even if the
price rises, there is no necessary need to ration poor patients out of the marke
t. Since kidney transplants are cheaper than dialysis, society's savings could
be redirected into subsidies to low-income recipients. Moreover, economist David
Kaserman, himself a kidney-transplant recipient, estimated that the organ short
age could be eliminated with a price as low as $1,000, a mere fraction of the ov
erall cost of a transplant operation.9

On the other hand, free markets are not always efficient. Consumers
sometimes make irrational or uniformed choices. Might that occur in organ mark
ets? And the decisions of some might harm others. Might relatives "pull the pl
ug" prematurely on Uncle Fred to get a crack at potentially valuable organs?10
Philosopher Simon Rippon suggests that depriving even rational people of an opti
on sometimes can benefit them. For example, if legal markets were available, ki
dneys might become viewed as any other economic asset. Perhaps those in poverty
be expected to sell their kidneys in order to pay their rent; perhaps they be e
xpected to sell their kidneys before being elgible for government safety-net pro
grams.11 No system is likely to be perfect. Interestingly, the prohibition of
payment for organs does not apply to blood for which local blood banks routinely
pay a fee. Such payments have increased the quantities supplied enough to elim
inate domestic shortages and allowed the U.S. to export plasma to other countrie
s that provide no compensation to their donors.12

What do you think? Anyone want to bid on my heart?

__________________________________________________

Notes:

1. The transplant afforded Gov. Casey seven more years of life. He died
in June 2000. His son Robert Casey, Jr. currently serves as a U.S. Senator from
Pennsylvania.
2. See Beard, T. Randolph; Kaserman, David L. and Saba, Richard P., "Lim
its to Altruism: Organ Supply and Educational Expenditures," Contemporary Econo
mic Policy, volume 22, number 4, October 2004, pp. 433-442. Up-to-date data can
be found at http://organdonor.gov/about/data.html.
3. Beard, T. Randolph, John D. Jackson and David Kaserman, "The Failure
of U.S. Organ Procurement Policy," Regulation, Winter 2008, pp. 22- 30.
4. See Barnett, A.H. and Kaserman, David L., "The 'Rush to Transplant' a
nd Organ Shortages," Economic Inquiry, volume 33, July 1995, pp. 506-515.
5. Ibid. pp. 507-508.
6. Ibid. pp. 508-509
7. "Your part or mine?" The Economist, November 18, 2006, pp. 60-62.
8. See Blair and Kaserman, op. cit., pp. 422-424.
9. Kaserman, David L. and Barnett, A. H., "The U.S. Organ Procurement Sy
stem: A Prescription for Reform," AEI Evaluative Studies, June 2002. Also, reme
mber, shortages have driven the cost of transplants up. It is plausible that a
free market for organs could lower transplant costs enough to offset the additio
nal expense of having to purchase the organ.
10. Although he later was aquitted, a California surgeon once was charged
with speeding a patient's death to harvest his organs. See "Doctor Cleared of H
arming Man to Obtain Organs," NYTimes.com, December 19, 2008, http://www.nytimes
.com/2008/12/19/health/19doctor.html?_r=0
11. Rippon, Simon,"Imposing options on people in poverty: the harm of a li
ve organ market", Journal of Medical Ethics, 2014 (40), pp. 145-150.
12. Sablik, Tim, "Money for Marrow?" Region Focus, Federal Reserve Bank of
Richmond, 2012(1), p. 9

_______________________________


Testing Yourself

To test your understanding of the major concepts in this reading, try answering
the following:

1. Explain why there is a shortage of human organs available to be trans
planted and illustrate with an appropriate graph.
2. How has the shortage of organs affected the cost and quality of trans
plants? Explain.
3. Discuss the pros and cons of allowing human organs to be bought and s
old.