Kidney donors in Israel to be paid by HMOs

Not long ago we wrote about organ donation and how the current shortages could likely be solved if we let the market work. The most obvious way to accomplish this is by paying organ donors. Governments have been quite hostile to this idea around the globe.

On Monday, Israel took some halting steps in this direction. As reported in a story on haaretz.com (full text here):

“The Jerusalem District Court instructed health maintenance organizations to pay kidney donors NIS 63,000 to cover their expenses, but did not rule on the issue of whether it’s allowed to pay for a kidney. “

So donors aren’t technically getting “paid,” but they do end up with an extra $13,000 in their pocket. Label it what you will, but if you inflate the expense enough, I’d call that getting paid. Not that $13,000 is full payment. My guess is that the market clearing price, at least in the United States, might be more like $30,000-$50,000. Even at that price, the payment to the donor would represent a relatively small fraction of the overall price of the operation.

Recently, in Haaretz, that same newspaper, the renowned economist Ariel Rubinstein wrote a book review of Freakonomics. All I can say is that I have seen the English translation and that I am glad that it is only available in Hebrew online! Despite (or perhaps because of the review), Rubinstein himself told me that Freakonomics jumped to #2 on the bestseller list in Israel the week after his review was published.

(Thanks to Judith Ronat for sending me the link on organ donation.)


kazulanth

I work in transplant, and off the top of my head there are three major reasons why it's a great cost-saving move for insurance companies to pay donors. First, the cost for just finding and getting a cadaveric kidney is billed to the insurance as $25,000 flat fee. So right there, having a living kidney donor is much cheaper for the HMO, which is a good reason to pay living donors. Also, often people wait so long on the list that they become sicker and are more expensive, so if they've got a living donor and can be transplanted earlier, so much the better. Third, dialysis is EXTREMELY expensive, and transplant is a really cheap option comparatively, even when you factor in the lifetime of drugs. $800 a month of drugs versus $3000 per week of dialysis.

LucyEllenH

Notice the monetary units, please. That's not $13,000, but 13,000 New Israeli Shekels. (Since I know you're a big fan of Wikipedia, the link is here.)

Apparently, as of May of this year the exchange rate was approximately 4 1/2 NIS per dollar, which would make the kidney payment rate closer to $2900. Doesn't change the substance of your point, but there is a different visceral (pardon pun) impact of payment under 3K vs. over 10K.

Craig

Lucy, it IS over 10K...the amount is NIS 63,000, not 13,000. This value converts to $14,342.96 (conversion of 1 : 4.39).

Scrappy

Does it matter that Israeli HMOs are government-owned and government-run and so this isn't as much of a market reaction as it is a tax (10% of gross income supports the health system)?

Alon

I guess one good reason for this is the black market. as you guys wrote about blood donations, if the payment was high enough, a black market of human blood would rise. this is of course a result of the most basic rule in economics - if the price is right, supply and demand would meet. what should be said is that in the past few years there's been an under-world black market for organs. people in deep debts would contact, or be contacted by some pretty dubious folks. since it's illegal to sell human organs in israel, those people would be flown to places like brazil and such to undergo the operation.

i guess this move is just one measure of dealing with this phenomenon.

Peeved Michelle

There is an analogous situation in the US already. In the case of independent adoption, the adopting couple can pay the pregnant woman for expenses related to the pregnancy and birth of the child but cannot pay the woman for anything in such a way as to appear to be buying the baby.

GamblingEconomist

Somehow I got an e-mail from Ariel Rubenstein with his english review. He seems to be spamming it to strangers.

MM01

If someone is still watching, it is now available on-line in English.
http://arielrubinstein.tau.ac.il/articles/FreakFreakonomics.pdf

heidi

hi! i dont mind selling one of my kiddneys.than i help someone,and they help me.if it was not the need of money to help some of my family member,i would even give one of my kidneys away for free to help someone.

heidi -norway

J.STEPHEN

I AM FROM INDIA. ONE OF MY SISTER IS GOING TO KIDNEY TRANSPARENT OPERATION IN COIMBATORE,TAMILNADU, SOUTH INDIA. IN THIS CONNEXTION WE NEED SOME MONEY FROM YOUR END. IF IT IS POSSIBLE KINDLY CONDUCT ME TO FURTHER DETAILS.
THANKS

kazulanth

I work in transplant, and off the top of my head there are three major reasons why it's a great cost-saving move for insurance companies to pay donors. First, the cost for just finding and getting a cadaveric kidney is billed to the insurance as $25,000 flat fee. So right there, having a living kidney donor is much cheaper for the HMO, which is a good reason to pay living donors. Also, often people wait so long on the list that they become sicker and are more expensive, so if they've got a living donor and can be transplanted earlier, so much the better. Third, dialysis is EXTREMELY expensive, and transplant is a really cheap option comparatively, even when you factor in the lifetime of drugs. $800 a month of drugs versus $3000 per week of dialysis.

LucyEllenH

Notice the monetary units, please. That's not $13,000, but 13,000 New Israeli Shekels. (Since I know you're a big fan of Wikipedia, the link is here.)

Apparently, as of May of this year the exchange rate was approximately 4 1/2 NIS per dollar, which would make the kidney payment rate closer to $2900. Doesn't change the substance of your point, but there is a different visceral (pardon pun) impact of payment under 3K vs. over 10K.

Craig

Lucy, it IS over 10K...the amount is NIS 63,000, not 13,000. This value converts to $14,342.96 (conversion of 1 : 4.39).

Scrappy

Does it matter that Israeli HMOs are government-owned and government-run and so this isn't as much of a market reaction as it is a tax (10% of gross income supports the health system)?

Alon

I guess one good reason for this is the black market. as you guys wrote about blood donations, if the payment was high enough, a black market of human blood would rise. this is of course a result of the most basic rule in economics - if the price is right, supply and demand would meet. what should be said is that in the past few years there's been an under-world black market for organs. people in deep debts would contact, or be contacted by some pretty dubious folks. since it's illegal to sell human organs in israel, those people would be flown to places like brazil and such to undergo the operation.

i guess this move is just one measure of dealing with this phenomenon.

Peeved Michelle

There is an analogous situation in the US already. In the case of independent adoption, the adopting couple can pay the pregnant woman for expenses related to the pregnancy and birth of the child but cannot pay the woman for anything in such a way as to appear to be buying the baby.

GamblingEconomist

Somehow I got an e-mail from Ariel Rubenstein with his english review. He seems to be spamming it to strangers.

MM01

If someone is still watching, it is now available on-line in English.
http://arielrubinstein.tau.ac.il/articles/FreakFreakonomics.pdf

heidi

hi! i dont mind selling one of my kiddneys.than i help someone,and they help me.if it was not the need of money to help some of my family member,i would even give one of my kidneys away for free to help someone.

heidi -norway

J.STEPHEN

I AM FROM INDIA. ONE OF MY SISTER IS GOING TO KIDNEY TRANSPARENT OPERATION IN COIMBATORE,TAMILNADU, SOUTH INDIA. IN THIS CONNEXTION WE NEED SOME MONEY FROM YOUR END. IF IT IS POSSIBLE KINDLY CONDUCT ME TO FURTHER DETAILS.
THANKS