This paper updates and expands the path‐breaking work of Matas and Schnitzler 6 . The major differences are that this study (a) uses cost‐benefit rather than cost‐effectiveness analysis, (b) uses a consensus monetary value of the extra years of life gained from a transplant, (c) includes patient obligations (copays) in the costs, (d) uses consensus values of the quality of life before and after transplantation, (e) analyzes compensation of deceased donors as well as living donors, (f) uses more recent data on outcomes from dialysis and transplantation, and (g) is more transparent in methodology (Supplement 4 provides a detailed comparison of the two papers.)

Given the controversial nature of the subject matter of this paper, we have written 12 supplements to explain, justify, and document our key estimates and calculations (which are summarized in Table 1 ).

This paper is a response to that invitation. It provides a comprehensive cost‐benefit analysis of a proposed change to NOTA, that is, moving from our current kidney procurement system in which compensation of donors is legally prohibited to one in which the government (not private individuals) compensates living kidney donors $45 000, and deceased donors $10 000. Such compensation would be considered an expression of appreciation by society for someone who has given the gift of life to another. It could include an insurance policy against any health problems that might develop in the future as a result of the donation, including disability and death. Compensation for living donors could be paid in a delayed form, such as tax credits or health insurance, so people who are desperate for cash would not be tempted to sell a kidney. Compensation for deceased donors would be paid to their estate. All other aspects of the kidney procurement and allocation process would continue exactly as they are under the current system. In particular, living donors would continue to be carefully screened and informed of possible hazards associated with kidney donation. Kidneys would be allocated as the organs from deceased donors are now—by the federally funded and managed Organ Procurement and Transplant Network (currently administered under contract by United Network for Organ Sharing). (Satel 3 and Beard et al. 4 have made similar proposals for government compensation of donors.)

In June 2014, the American Society of Transplantation and the American Society of Transplant Surgeons held the joint Workshop on Increasing Organ Donation in the United States. They recently released a meeting report 1 on the workshop that concluded, “…we should be working together along the arc of change to remove remaining disincentives, explore opportunities to either change or modify NOTA (National Organ Transplant Act 2 ), and lay the groundwork for the next steps with our professional colleagues, experts in economics, law and ethics, our partners in Congress and agencies responsible for US health policy and the American public.”

We use a consensus estimate of the value of a year of life of $200 000. (See Item 1 of Supplement 1 3 , 11 , 13 . See also Item 2 of Supplement 8, which provides a sensitivity analysis using $100 000 and $300 000 per year of life.) We follow Whiting 12 in concluding the quality of life—on a scale of 0.0 for death to 1.0 for perfect health—of a dialysis patient is about 0.52 before a transplant and about 0.75 afterward (see Item 2 in Supplement 1).

All statistics on survival and costs originated with Medicare, which provides this information through both the US Renal Data System (USRDS) 7 and the Scientific Registry of Transplant Recipients (SRTR) 8 . Our half‐life estimates were validated by comparison with published information and actual survival statistics. (See Supplements 5 and 12 for details on our cost estimates.)

Whenever the literature provided a range of estimates of a variable, the midpoint was used (which we will refer to as the consensus estimate). Our own estimates deliberately err on the side of conservatism; i.e. they tend to reduce the net benefits from having the government compensate kidney donors. (If we had made more realistic estimates, the net benefits from the government compensating kidney donors would have been even greater.)

This analysis focuses on average (median) ESRD patients. It traces their years of life after starting dialysis or receiving a kidney transplant (see Supplement 12). The median lifetime (half‐life) for a patient group is the time it takes for 50% of them to die, and for kidney grafts, the time it takes for 50% to fail. The median is a good representative statistic for right‐skewed distributions such as survival. Our half‐life estimates are based on 10‐year survival statistics. Our cost estimates are based on the costs of the median dialysis patient and the median transplant patient.

Cost‐benefit analysis is a tool for analyzing public policy issues. It helps clarify who wins and who loses from a given policy, by how much they win or lose, and whether the policy makes society as a whole better or worse off. The costs and benefits are conceived of in the broadest possible sense and include the value of the longer and higher‐quality lives that kidney transplant recipients enjoy. These costs and benefits are calculated in greater detail in Supplement 2. As is standard in cost‐benefit analysis, costs and benefits in the future are discounted back to the present. A consensus real (i.e. zero inflation) interest rate of 3% per annum is used.

Results

Costs and benefits at the current time when compensating donors is prohibited (Note: The analysis of costs and benefits presented in this section is abbreviated; greater detail is provided in Supplement 2.) The left column of Table 2 shows statistics for the current situation when donors are not compensated. The top row indicates a typical patient receiving dialysis can expect to live 12.3 years, while the second row shows he or she can expect to live 19.3 years if the patient receives a kidney transplant. (The latter half‐life is the weighted average of the half‐lives of patients who have received kidneys from deceased and living donors, as explained in detail in Supplement 12, particularly Figure S12‐5.) The third row shows the difference (i.e. the transplant recipient can expect to live an additional 7.0 years). Table 2. Increase in life years from receiving a transplant compared with remaining on dialysis on waiting list No donor compensation (current situation) (2015) If donors are compensated (steady state after first 5 years) (2020) Expected remaining lifetime (half‐life in years) If remain on dialysis on waiting list 12.3 15.0 If receive a transplant 19.3 24.9 Increase in life years from receiving a transplant (vs remaining on dialysis on waiting list) Increase in life years (unadjusted) 7.0 9.9* Increase in discounted QALYs 4.7 6.7 Half‐life of transplant kidney graft 12.6* 15.7 Since (as discussed above) the quality of life of a dialysis patient is 0.52 before a transplant and 0.75 afterward, the gain in QALYs for a typical kidney transplant recipient is 0.75 times the life expectancy after receiving a transplant minus 0.52 times the life expectancy if the recipient had remained on dialysis. After discounting, this yields a gain of 4.7 discounted QALYs as a result of the transplant (row 4 of the left column of Table 2). And valuing each of these years at the consensus estimate of $200 000 produces a lifetime welfare gain of $937 000 per kidney recipient (top row of the left column of Table 3). It is well known that kidney recipients benefit greatly from receiving a transplant, and this puts a credible monetary value on it. Table 3. Present value of benefits and costs over a kidney recipient's lifetime (per kidney recipient) No donor compensation (current situation) If donors are compensated (steady state after first 5 years) Benefits Welfare gain for kidney recipient (over a lifetime) $937 000 $1 335 000 Savings from stopping dialysis (over a lifetime) $735 000 $1 454 000 Costs Cost of transplant (everything at time of transplant except compensation to donors) $145 000 $236 000 Compensation to donors $0 $73 000 Medical costs after transplant (including cost of kidney graft failure) $395 000 $607 000 Net welfare gain for society per kidney recipient $1 132 000 $1 873 000 Addendum Taxpayer savings per kidney recipient $146 000 $403 000 A second benefit of kidney transplants is the savings from kidney recipients no longer requiring dialysis and other medical treatments, which cost about $121 000 per patient‐year and would have continued for the 12.3‐year expected life of a dialysis patient on the waiting list. But the half‐life of a kidney transplant is only 12.6 years (bottom row of left column of Table 2), after which a typical kidney transplant recipient has to return to dialysis for their remaining 6.7 years of life. Consequently, the lifetime net savings from temporarily stopping dialysis would be $735 000 (row 2 of the left column of Table 3). Turning to the other side of the ledger, the cost of the transplant itself (i.e. payments at the time of the transplant to all parties except the kidney donor) is about $145 000 (row 3 of the left column of Table 3). And compensation to kidney donors is zero because it is currently legally prohibited (row 4). Medical costs following a transplant are about $32 000 per year for the 12.6‐year expected life of the kidney graft, plus an additional $88 000 when the graft of the typical patient fails in 12.6 years. Thus, the lifetime total costs are $395 000, as shown in the fifth row of the left column of Table 3. The net welfare gain for society over the lifetime of a kidney recipient (row 6 of the left column of Table 3) is just the net of the rows above it, or $1 132 000. The bottom row of the left column of Table 3 shows taxpayer savings over the lifetime of the kidney recipient. Because taxpayers currently bear about 75% of the cost of both dialysis and kidney transplants (see Supplement 5), taxpayers would reap 75% of the benefits from patients stopping dialysis after receiving a transplant. Specifically, taxpayer savings are equal to 75% of the savings from stopping dialysis, minus: (a) the cost of the transplant, (b) compensation to donors (when allowed), and (c) medical costs after the transplant. This comes to $146 000 per kidney recipient. Aggregating the per‐recipient costs and benefits of the left column of Table 3 over all of the kidney recipients in a given year yields the left column of Table 4 (the top seven rows of which have the same arrangement as Table 3). For example, if the $146 000 taxpayer savings per kidney recipient (from the bottom row of the left column of Table 3) is multiplied by a conservatively high estimate of 17 500 kidney recipients each year, the result is the total taxpayer saving from all kidney recipients each year, which is $2.6 billion per year (row 7 of the left column of Table 4). Table 4. Present value of benefits and costs for all kidney recipients in a given year (per year) No donor compensation (current situation) If donors are compensated (steady state after first 5 years) 17 500 kidney recipients per year 35 000 kidney recipients per year Benefits Welfare gain for all kidney recipients in a given year $16.4 billion/y $46.7 billion/y Savings from stopping dialysis for all kidney recipients in a given year $12.9 billion/y $50.9 billion/y Costs Costs of transplants for all kidney recipients in a given year (everything at time of transplant except compensation to donors) $2.5 billion/y $8.3 billion/y Compensation to donors for all kidney recipients in a given year 0 $2.6 billion/y Medical costs after transplant for all kidney recipients in a given year (including cost of kidney graft failure) $6.9 billion/y $21.2 billion/y Net welfare gain for society from all transplant recipients in a given year $19.8 billion/y $65.6 billion/y Addendum Taxpayer savings from all transplant recipients in a given year $2.6 billion/y $14.1 billion/y Benefit‐cost ratio for society 3.0 Benefit‐cost ratio for taxpayers 1.7

Life expectancies when donors are compensated Now consider two subperiods after the government begins compensating kidney donors: (a) the first 5 years, during which we estimate the 94 000‐patient waiting list for kidneys will be gradually eliminated, and (b) the subsequent “steady state” situation that will obtain after the waiting list has been ended. We will first estimate life expectancies and then use them to estimate the costs and benefits of the government compensating kidney donors. We assume compensation of $45 000 per kidney will be sufficient to elicit an adequate supply of kidneys from living donors, which, together with some additional kidneys from deceased donors, will end the kidney shortage and eliminate the waiting list in 5 years (see Item 9 of Supplement 1). Thus, during the 5‐year transition period, the number of kidney recipients will increase to about 43 000 per year. This is the sum of the 31 000 patients currently being added to the waiting list each year, plus an additional 12 000 transplants per year needed to reduce the waiting list to zero in 5 years (see Supplement 11 for a discussion of the current capacity of the transplant community). To simplify comparisons of the current situation with the postcompensation period, we will focus on the steady‐state case after the waiting list has been eliminated. Because the supply of transplant kidneys will now be sufficient to meet the demand, transplant candidates will no longer have to wait about 5 years for a kidney. This has two important implications. First, the average age of kidney recipients will fall from 50 to 45 years. Second, kidney recipients will now be far healthier because they will no longer have to suffer the debilitating effects of several years of dialysis. We estimate these considerations will increase the life expectancy of the typical kidney recipient to about 24.9 years in the steady‐state case from 19.3 years in the current situation (shown in the second row of Table 2 and discussed in Supplement 12). In contrast, if the kidney patient had remained on dialysis, their life expectancy would have been only 15.0 years (top row of the right column of Table 2). This can also be seen in Figure 1, which shows the two treatment paths ESRD patients can take in steady state: dialysis or transplant. Note that the typical kidney recipient in steady state will receive a second transplant after the first graft fails in 15.7 years. Figure 1 Open in figure viewer PowerPoint Two treatment paths for ESRD: dialysis or transplant (with donor compensation, steady state, 2020). ESRD, end‐stage renal disease.