FREE ESSAY ON SUPPLY AND DEMAND

SUPPLY AND DEMAND

Recent medical advances have greatly enhanced the ability to successfully transplant
organs and tissue. Forty-five years ago the first successful kidney transplant was
performed in the United States, followed twenty years later by the first heart
transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in
1998 a total of 20,961 transplants were performed in the United States. Although the
number of transplants has risen sharply in recent years, the demand for organs far
outweighs the supply. To date, more than 65,000 people are on the national organ
transplant waiting list and about 4,000 of them will die this year- about 11 every day-
while waiting for a chance to extend their life through organ donation (Yoakam 1). This
figure, when looked at from an economic standpoint, exemplifies a case of supply and
demand between organ donors and patients "with a diseased organ". Just as there is a
supply and demand in any given market, there are also complementary and substitute goods.
Who decides who gets transplants and who doesn't? This question implies that the organ
market also needs to have various, effective allocation mechanisms. The organ market has
complementary and substitute goods and can use various effective allocation mechanisms.
A person that receives an organ transplant almost always requires several complementary
goods. One obvious good is the medical care received for the actual transplant and for
follow-up doctor's visits. For most people who undergo an organ or tissue transplant the
quality of their life and general overall health improves following the transplant.
Persons who receive a transplant are frequently required to take a series of medications
that suppress their immune system and prevent their body from rejecting the newly
acquired organ. They often will need to undergo frequent medical visits and testing to
monitor the transplanted organ. At times, the organ transplant will be unsuccessful and
the organ may need to be removed. These people will be placed back on the waiting list
for another organ (Yoakam). Two more goods are the medication to prevent rejection and
(assuming the patient has insurance) payments made by the patient's insurance company for
the patient's care. The donor's family is not responsible for the costs incurred through
organ donation. The recipient, most times through their insurance carrier or Medicare
pays for all of the costs related to the donation of organs and tissue. If the "price" of
organs increases (whether due to an increase in demand or decrease in supply) the demand
for the complementary good will decrease.
The converse of a complementary good is a substitute good. In the organ market, a
substitute good really depends on what organ is being considered. "People with diseased
livers [are] particularly at risk because there is no medical alternative to
transplantation for keeping a patient...alive." The only two obvious substitute goods for
a liver transplant would be extensive medical care and pain medications. On the other
hand, someone with diseased kidneys has more options. One obvious option would be
dialysis. But, when looked at as a whole, the organ market does have substitute goods. If
the "price" of organs increases (whether due to an increase in demand or decrease in
supply) the demand for the substitute good will increase.
Since the National Organ Transplant Act of 1984 prevents a monetary price from being
placed on a donated organ, effective allocation mechanisms must be utilized. Allocation
mechanisms must be accessed because the shortage of supply compared to the demand. In any
market, allocation mechanisms rely on many factors but some include friendships, "under
the table" payments, predicted profit, and personal biases.
In the organ market, several allocation mechanisms come to mind. There is always the
possibility that a particular patient has a family member or friend that is in the organ
transplantation profession, and/or the family of the patient is able to "pay-off" someone
in charge of the distribution of organs. In reality, these two mechanisms are frowned
upon for their "lack of morality." One real possibility for an allocation mechanism is to
make a "waiting list" on a first-come first-served basis. This method would only be for
those who, in a panel of doctors' professional opinions, had a chance to survive after
the transplant. In other words, those dying with cancer along with a diseased organ would
not be on the list. During the week of April 14, 2000, National Oragan and Tissue Donor
Awareness Week, the President of the United States gave a proclomation. In this he
stated, "To address this critical and growing need, Vice President Gore and Secretary of
Health and Human Services Shalala launched the National Organ and Tissue Donation
Initiative in December of 1997. This public-private partnership was designed to raise
awareness of the success of organ and tissue transplanta-tion and to educate our citizens
about the urgent need for increased donation. Working with partners such as health care
organiza-tions, estate planning attorneys, faith communities, educational organizations,
the media, minority organizations, and business leaders, the Initiative is reaching out
to Americans of all ages, backgrounds, and races, asking them to consider donation. In
its first year alone, the Initiative made a measurable impact, as organ donation
increased by 5.6 percent."
Although morals can play a part in the organ market, economic principles are definitely
present. All of the aforementioned material is based on ceteris paribus. Complementary
and substitute goods are associated with the organ market. These goods, although varying
with different organs, are affected by the "price" of organs just like any other market.
Since there is a shortage of supply compared to the demand, allocation mechanisms are
necessary. Some of these mechanisms can be "morally bound." Since a person's life is on
the line in this market, any dead-weight loss at all is a serious matter. One can only
hope this market is more concerned for life than it is for economic benefits.
Works Cited
Yoakam, Diane M. "Organ Donation: The Gift of Life." 1999. 
http://www.healthatoz.com/atoz/readingroom/Organ.asp