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Some simple organ maths

We this week released Elizabeth Prasad’s report looking at the economics of properly compensating live organ donors. Each transplant saves the Ministry of Health about $125,000 because dialysis is very expensive, but the maximum compensation for lost wages paid by Work and Income currently is $350 per week for 12 weeks: $4200. It looks like the government is saving pennies while losing hundreds of thousands, and killing people in the process.

We consequently recommend the government provide proper compensation for live donors. We also recommend that live donors receive a guarantee that, should they ever need an organ, they should be at the front of the queue.

If the policy results in zero new donors, and if the government provided donors compensation to 100% of their lost wages, and if donors earned the average wage, and if donors took 8 weeks’ recuperation, the government would spend about $400,000 more under this policy than it would otherwise. The money would go to properly compensating current donors, and really isn’t all that much in the grand scheme of things.

If the policy resulted in three new donors per year, that would be about the break-even fiscal point for the government. Three lives would be saved for no particular net cost. Every additional donor past that point would provide over a hundred grand in fiscal savings for the government, and each would save a life. And note that the break-even point is lower under Bishop’s Member’s Bill, which only compensates to 80% of the donor’s wage.

I talk about this, and related issues, in this week’s NBR. I also talked about it on Nights at Radio New Zealand. You can find Liz’s report, and her full Masters thesis on the topic, at the link up at the top of the page.

About Eric Crampton (88 Articles)
I'm Head of Research with the New Zealand Initiative.

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