The Government Monopoly on Donated Kidneys Is Killing Americans
Organ donations in the U.S. are controlled by a network of federally sanctioned nonprofits, and many of them are failing.
An estimated 12 people die every day while waiting for a kidney transplant. At least some of those deaths are preventable, and monopoly government contractors shoulder most of the blame.
"Monopolies don't work and government-funded monopolies are even worse," says Jennifer Erickson, a former Obama White House staffer who now works as a senior fellow at the Federation of American Scientists.
On the new season of Reason's podcast Why We Can't Have Nice Things, Erickson explains how Congress' good intentions produced a flawed system that has resisted reform for decades. In the 1980s, when the development of immunosuppressant drugs made organ transplants more workable, Congress passed a law creating about 50 regional monopolies where organ procurement organizations (OPOs) would have the exclusive right to collect donated organs and match them with needy recipients. Overseeing the regional monopolies is a national contractor, the United Network for Organ Sharing (UNOS).
Many of those OPOs don't do their job very well. A 2019 report by the public health nonprofit Organize found that just six of the regional OPOs managed to collect at least 50 percent of the donatable organs—that is, organs from deceased individuals who had agreed to be donors—within their territory.
All told, more than 17,000 kidneys (as well as thousands of other organs) are going to waste each year instead of finding their way to dialysis patients who need a replacement. That's a tremendous opportunity cost. And because there's no competition between OPOs, if you're unlucky enough to need an organ and you live in an area where there's a poor-performing OPO, you might never get one.
Increasing the number of available donated kidneys would save lives and also save taxpayers a lot of money. According to a report from the University of Pennsylvania, full utilization of the organ donor system would mean $13 billion in taxpayer savings and 25,000 lives saved or improved. A 20 percent improvement over the status quo would mean 6,000 lives bettered and $2.6 billion in savings.
Because there is no competition, underperforming OPOs have little incentive to improve. Federal oversight has been lacking: In 2012, Alabama Organ Center executives were convicted of scamming taxpayers by artificially inflating their costs and pocketing kickbacks. The organization changed its name to Legacy of Hope but never lost its exclusive contract.
The problems don't stop there. The same law that created the regional monopolies also made organ donation expenses fully cost-reimbursed by insurance companies and the federal government. OPOs thus have no incentive to control costs—even when those costs have little or nothing to do with their core mission.
OneLegacy, the OPO with a monopoly in southern California, got dinged by an inspector general report after it spent $327,000 on Rose Bowl tickets and other events in 2006. Some of those costs were billed to taxpayers via Medicare.
At a 2021 Senate hearing, the president and CEO of the Nevada Donor Network admitted that the group has season tickets for the NFL's Las Vegas Raiders and the NHL's Vegas Golden Knights and spent money on multiple board retreats to California wine country.
There is some hope that things could improve. New federal rules proposed during the Trump administration and implemented by the Biden administration mean that, for the first time in 40 years, poor-performing OPOs could lose their lucrative contracts.
"The federal government has to replace failing organ procurement organizations with high performers that are serving American people, and they have to do it now," says Erickson. "We should never be in a situation where there's this kind of unaccountable monopoly. There needs to be open, fair, competitive contracting, and if someone new comes in and they fail the American people, they should be kicked out too."
New developments in medical technology could also improve the supply problem for Americans who need a new kidney. In March, the world's first gene-edited pig kidney was successfully transplanted into a human.
But we'll still need human donors for the foreseeable future. Americans are a generous bunch—the overwhelming majority of us support organ donation and are willing to be donors when we die. Government contractors should not be the bottleneck preventing that generosity from being realized.
