NY State Governor Kathy Hochul speaks during the Martin Luther King Jr. Day national holiday and celebration at the National Action Network on January 16, 2023 in the Harlem section of New York City, USA. Hochul recently signed the Living Donor Support Act, a bill that reimburse organ donors. (Photo by John Lamparski/ Sipa USA)(Sipa via AP Images)

New Yorkers who want to donate a kidney or part of a liver to other New Yorkers will no longer have to lose an arm and a leg in the process. Governor Kathy Hochul recently signed a bill that reimburses donors who give an organ to a friend, loved one, or stranger—a life-saving deed that often costs thousands of dollars in lost wages, travel costs, and out-of-pocket expenses. By eliminating financial barriers to organ donation, the Living Donor Support Act should inspire more donors and reduce often-deadly wait times for organ transplants.

When I got my two new kidneys from two dear friends, one in 2006, and when that gave out earlier than expected, in 2016, I was able to pay for their travel from Dallas and Seattle, respectively. I also covered their hotel costs for a week of recuperation before they flew home. Both had their own good insurance coverage and sick leave, and my private insurance covered their big-ticket items—medical screening, surgery, and hospitalization. Medicare and Medicaid routinely do so as well.

Even though my donors could have afforded to pay their way, it was unthinkable to me that they should be out a cent. But not all potential donors and recipients can afford the outlay.

While state-level reimbursement for such costs is not new, it is rarely sufficient to pay the bills. Most offer tax deductions (a handful offer tax credits) for expenses up to $5,000 or $10,000. Due to low state income tax rates, though, reimbursement covers only a small portion of their costs. For example, a taxpayer in a 5 percent state tax bracket who incurs $10,000 in costs gains only $500 by deducting them. Unsurprisingly, these tax policies exert only a modest impact. The federal government also has a reimbursement program. But donors only qualify when both they and their organ recipients make less than 350 percent of the poverty line or $47,565 for a one-person household and $80,605 for a three-person household in 2022. In addition, donors are on their own under the federal regime for out-of-pocket costs above $6,000.

Considering that the government saves roughly $90,000 per year for every kidney transplant patient who exits Medicare-funded dialysis, the feds can afford to and should offer more.

New York’s new law, in contrast, directly reimburses donors up to $14,000. And donors who earn up to $125,000 a year are eligible, no matter the recipient’s income. This should make it easier for people without significant resources to donate. After all, low-income donors often have fewer job protections and may need unpaid time off from work. If their job requires heavy labor, they may be off work for six weeks or more.

Higher-paid workers are usually back on their computers within two to four weeks and often have better workplace policies that allow time off to recover. But they also deserve reimbursement for out-of-pocket expenses and time off work not covered by their employer.

Malka Stroh will not be relying on a friend to cover her costs, as my donors were able to do. The 24-year-old emergency medical tech from Brooklyn plans to use the new state benefit. A medic in the U.S. Army Reserves, Stroh is a rare breed of “Good Samaritan” donor who plans to give a lobe of her liver to a stranger. She already donated a kidney—“I have two working kidneys, and others have not? How could I not?”—and remains generous beyond all measure.

As for her next (and final) donation, the financial barrier will be higher. “I absolutely could not do this without my expenses covered,” Stroh told me, because her recuperation will be longer this time—at least six weeks. It could take three months before she could return to her vigorous work as an EMT. For the person who will get her liver, the new law will be lifesaving.

The New York program isn’t very expensive, only about $3.5 million per year, and it’s expected to recruit 20 percent more living donors annually, according to Josh Morrison, executive director of WaitList Zero, whose organization helped draft the legislation.

The new law operates on a modest principle. In the words of Elaine Perlman of New York City, who donated a kidney to a stranger, “Donors should not be debtors.”

But will it work?

We know from experience it pays to treat donors well. Israel compensates donors for costs incurred due to donation, recovery, or related expenses for up to five years. Today, Israel leads the world in living kidney donation.

Other states should watch New York. If donations increase, as expected, they should pass a similar law. Ideally, though, the federal government should assume responsibility for reimbursement as it stands to save hundreds of millions in Medicare costs. The feds can afford to be more generous and make it easier for would-be donors to save lives.

I applaud New York State and any states (and the federal government) that may follow its lead, but it’s not the final answer to the organ shortage. With a new person added every 10 minutes to the national transplant list—most are those in need of a kidney—even an uptick in donors is almost sure to fall short of what’s needed to abolish a years-long waiting list.

To do that, we need to go beyond making loved ones—and the handful of Malka Strohs out there—financially whole by reimbursing them. We need to enrich them.

It is time to change the 1984 National Organ Transplant Act, which forbids donor compensation of any kind, because our long-standing reliance on altruism—and I say this as a shining exemplar of its virtues—is just not enough.

Polls, like this recent one, reveal the public favors rewarding people, especially those willing to save a stranger’s life. Many loved ones are already highly motivated to begin with, but in some cases the promise of compensation might nudge them to donate.

One possible reward could be a refundable tax credit valuing $50,000 (others suggest a higher value, which is acceptable to us.) My colleague at AEI, Alan Viard, and I devised such a plan. This is a large number but with a logic behind it.

Under our plan, once prospective donors have been medically cleared, they would enter a waiting period of at least six months to ensure that they did not act impulsively and that they had offered fully informed consent. As an additional safeguard against ill-considered donations by financially desperate individuals, the first disbursement of the credit would be only $5,000. It would occur in the tax year following the year in which the organ donation occurred. Finally, the government would allow $5,000 in each of the next four years, with the remaining $25,000 allowed in the following year. For any out-of-pocket expenses related to the transplant, we also propose a 100 percent refundable credit to taxes for the year they donated.

How can we be positive it will work? Paid donations for ova and plasma already yield ample supplies. One might even look to Iran, which is, shall we say, rarely a model for social policy. Although the Islamic Republic has an arrangement that would be unpopular in the U.S. (e.g., the sick recipient gives cash to the donor as a supplement to payment from the government), there are waiting lists of people to donate rather than to receive.

At the very least, donor compensation is a public health experiment worth undertaking, perhaps in the form of pilot programs, as proposed by Representative Matt Cartwright, a Pennsylvania Democrat. A study by the economist Frank McCormick and his colleagues estimates that a reward of $77,000 could encourage sufficient donations to save 47,000 patients annually.

No one wants a dystopian world where a poor class is being harvested for their organs, like in the book (and later a film) Never Let Me Go by Nobel laureate Kazuo Ishiguro. But that’s completely different from what my colleagues and I promote.

The freedom to donate for a reward is humane. It respects the autonomy of people to decide what is in their best interests, rewards them amply, protects their health, and provides a rare opportunity to save a life. It will likely help chip away at the kidney waiting list of about 90,000 people in the U.S. who are disproportionately poor and minority. To save many more lives, we need a dramatic move—an acknowledgment that altruism—which saved me—is not enough to save so many others.

Sally Satel

Sally Satel is a resident fellow at the American Enterprise Institute.