regulated payments, the most obvious cost is the total cost of the payments themselves. The cost of each additional organ is not just the payment for that organ, however. Once a socially sanctioned payment system is in place, the payments will presumably be made to every organ donor family. For example, suppose there are 10,000 eligible organ donors, each donor can provide one transplantable organ, and initially, there is a 50 percent consent rate, producing 5,000 organs. If the consent rate increases to 52 percent in response to a $2,500 payment per organ, 200 more organs become available, to yield 5,200 organs. The total amount of the payments for all the organs would be 5,200 × $2,500 = $13,000,000, which means that the average cost of each additional organ is not $2,500 but $65,000 ($13,000,000 divided by 200). Of course it is important to consider that the real resource cost of a dollar spent on payments (which is transferred rather than consumed) may differ from the real resource cost of a dollar spent on other programs to increase donation (e.g., a print media campaign to encourage donation). Costs related to administering the payment system (establishing the payment levels for the organs, identifying the appropriate recipient, etc.) must also be incorporated into these figures.
Is an additional organ worth this amount? First, it is important to note that the question does not arise in a purely private market, or, more accurately, it does not arise as a policy question for society. The individual sellers and buyers in a market make their own individual decisions about what they are willing to accept or pay for a commodity, and the market price adjusts to equilibrate the amounts supplied and demanded. In a regulated organ market, however, the size of the administered price is a policy question. The government or a government-designated agent for society would have to establish the price, and collective resources from private and public insurance programs would be used to cover the payments. To determine whether this is the best use of these resources, their opportunity cost should be considered. What benefits to society result from this use of the resources? What societal benefits would the next best use of the resources produce?
Chapter 1 presented some estimates of the monetary value to society of increasing the supply of organs. These estimates suggest that increasing the organ supply would produce substantial benefits in exchange for the associated increase in healthcare costs; in the case of kidneys, increasing the supply may even produce a net cost savings because the recipients of successful kidney transplants no longer need dialysis, an expensive treatment that is covered under Medicare’s End-Stage Renal Disease program. If the estimates in the literature are accepted as correct, a payment of $65,000 or even more might be considered reasonable to obtain an additional transplantable organ.