What Iran Can Teach Us about Selling Kidneys

23743546_ML (1)A few weeks ago, I had the opportunity to participate in a debate on the PBS program, Point Taken with Carlos Watson. The program brings together four experts in different fields to debate relevant and controversial topics. The goal of the show is to inform, to present viewers and the live audience with different perspectives. I can honestly say it was a great experience, one I hope to be able to do again.

We were discussing the sale of human organs, particularly kidneys.

I (probably not a shock to readers of this blog) am a strong proponent of legalizing organ sales. I’ve written on this topic, and it’s one I cover with my principles students when discussing the economics of price controls.

During the show, both my opponents and I used one particular example to make our points about how well a market for kidneys might work.

So where is this market for kidneys? In practically every country on the planet, it is illegal to buy and sell kidneys. It is legal in one place, however. It’s legal in Iran.

As I pointed out on the show, Iran didn’t adopt this system because the Iranian government worships at the altar of free market principles. They did it out of necessity. After the revolution in 1979, Iran’s assets were tied up and frozen. They used additional money to fund the Iran-Iraq war. To put it bluntly, Iran was broke. The realized that they couldn’t afford to pay for expensive treatments for kidney diseases, particularly dialysis. So they started to send citizens abroad (mainly to England) for transplants. But soon, that likewise became financially unfeasible. So what did Iran do? They decided to let people legally sell their kidney.

The government of Iran would pay several thousand dollars (approximately $3,500-$5,000 USD) to sellers for their kidney and recipients could offer additional cash to thank the seller for their “altruism.”

What happened this this system? Did Iran see a manifestation of all the concerns of those who oppose organ sales? Does Iran have a problem of illegal organ harvesting, exploitation, etc.?

In short, no.

In fact, within a brief period of time Iran cleared its kidney market. That is, there was no one on the waiting list for a kidney.

Today, there is indeed a waiting list in Iran with regard to kidneys. But it’s sellers who are waiting as opposed to would-be recipients! Those in need of kidney are matched remarkably quickly to donors.

The current system in Iran has changed from its original form. Each province has an agency dedicated to kidney market. Their job is to match buyers and sellers, set up the appropriate preoperative and postoperative care, etc. The government will now pay around $350 of the set $5,000 price (buyers and sellers can negotiate other prices, however). Patients are left to make up the difference. In the event patients cannot afford the procedure, the agencies are tasked with providing the funds. Shortfalls in some regions have led to a legal market in deceased donor kidneys and other incarnations of kidney sales, but the general idea remains the same.

This is not to say the Iranian system is perfect. It’s far from ideal. Journalist Tina Rosenberg and others have pointed out that donors in Iran tend to receive poor postoperative care. Although, it’s not clear that this is a result of the system as much as the patients themselves. It’s not uncommon, for example, for donors to offer false addresses and phone numbers to the coordinating agency, suggesting they are not interested in follow-up care (why remains unclear, though cultural stigmas are a plausible culprit).

In addition, budgetary constraints have and continue to present serious problems. Agencies in some provinces, for example, run out of money about half way through the year, making it difficult for many to afford the procedure. But these are what we would call “poor country” problems as opposed to a “market failure.”

Despite all its problems, how well this system works should shock anyone looking at this objectively, even taking into account the problems. Iran has effectively done what every other country on the planet has failed to do—clear its kidney market. Moreover, they’ve done with a lot of things working against them. Iran’s political unrest, economic problems, and the fact it has and continues to contend with an impressive portfolio of international sanctions stacks the deck against the country in general, but especially with something like a kidney market. Despite all of this, however, we have some clear measures of success.

Iran’s system should serve a teaching tool for other countries. Here you have a poorer country, with lots of problems, less sophisticated healthcare and other public programs, and yet, they’ve figured out a solution for a major health problem, one that is cheaper and results in better health outcomes than the alternatives, namely, dialysis.

For a country like the United States, who currently has over 100,000 people waiting for kidneys, who spends nearly a third of the annual Medicare budget on dialysis and treatment for kidney disease, we should seriously consider the alternatives to our current system of only altruistic or deceased donation. We could save billions of dollars and, more importantly, thousands of lives.

Abigail R. Hall is a Research Fellow at the Independent Institute and an Assistant Professor of Economics at the University of Tampa.
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