How to End America’s Kidney Shortage

In a recent article in Regulation, economist Frank McCormick and Stanford Medical School Professor explain how the United States could put an end to our persistent shortage of kidneys for transplant:

News stories abound of kind people—relatives, close friends, and even complete strangers—who donate a kidney to someone suffering from kidney failure. These stories usually explain that people whose kidneys have failed must either obtain a transplant, which enables them to live 10–20 years in reasonably good health, or suffer on dialysis for an average of four to five years as their health steadily deteriorates until they die.

Sometimes these stories explain that many kidney failure patients never receive the optimal treatment of a transplant because there is a drastic shortage of transplant kidneys. About 125,000 patients are diagnosed with kidney failure each year, but only about 22,000 receive a transplant. In a 2022 Value in Health article, we estimate that more than 40,000 additional kidney failure patients would be saved from premature death each year if they received kidney transplants….

Few if any of these news stories lamenting the kidney shortage or touting high‐​tech breakthroughs mention that we already have a solution to the shortage: compensating kidney donors to induce more supply. Frustratingly, the U.S. government is obstructing this solution.

NOTA is the problem / Virtually all economists who have studied the issue believe the basic cause of the kidney shortage is a provision in the 1984 National Organ Transplant Act (NOTA): “It shall be unlawful for any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration for use in human transplantation if the transfer affects interstate commerce.”

This sentence seems innocuous, but it imposes a price ceiling of near‐​zero on the market for kidneys. Both economic theory and abundant evidence have shown that whenever the government holds the price of a good below the market‐​clearing price, it causes a shortage of that good. Moreover, if the government holds the price far below the market‐​clearing price (our 2022 article estimates that price would be about $80,000 per kidney), then the shortage will be huge: more than 40,000 kidneys per year in the United States alone. For context, that is more deaths than from motor vehicle crashes each year.

It’s worth adding that, in a