person per year for transplant patients ($34,780) is less than half the spending for the two types of dialysis, peritoneal dialysis ($76,177) and hemodialysis ($90,971). Though these savings must be weighed against (a) the initial upfront costs of transplantation and (b) the fact that transplanted patients live longer and so ultimately require medical care for more years of life than patients who do not receive a transplant. Matas and Schnitzler (2004) used a Markov model to estimate that, over a twenty-year period, the present value of medical costs associated with a living unrelated donor (LURD) kidney transplant were $94,579 (USD 2002) lower than remaining on dialysis, while Held et al. (2016) estimated that kidney transplantation was associated with $195,000 (USD 2015) in lifetime savings. The second source of societal benefit is the value of the increased longevity associated with kidney transplantation, with previous studies estimating that kidney transplant is associated with a gain of 3.5 to 4.7 discounted quality-adjusted life years (QALYs). The Office of the Assistant Secretary for Planning and Evaluation (ASPE) at the Department of Health and Human Services estimates that the value of QALY is $490,000 when using a value of statistical life of $9.6 million (USD 2014) and a 3% discount rate (ASPE, 2016). If we inflate these estimates to 2018 dollars15 and use the lower range of the two previous 15 We inflated ASPE’s value of statistical life/quality adjusted life year estimates using the Gross Domestic Product: Implicit Price Deflator. We inflated the value of medical cost savings using the chain-type price index for personal consumption expenditures on health care services. CEA • Increasing the Number of Kidney Transplants to Treat End Stage Renal Disease 18 estimates16, then the economic value of health gains from a kidney transplant is $1.8 million. When added to nearly $136,000 in medical cost savings this means that the total societal benefits of a kidney transplant is nearly $2 million. Thus, an additional 8,200 kidney transplants per year would have an annual net present value of $16 billion. 16 Though Matas and Schnitzler (2004) focuses on the benefits of living unrelated donor kidney transplants as opposed to deceased donors, which generally are inferior, we use their estimate as a lower bound. As discussed in Held et al. (2016) and observable in OPTN data, decades of medical improvements have increased outcomes of both living and deceased kidney transplants suggesting that using newer estimates—deceased or otherwise— would likely increase the societal benefits generated with each additional transplant. CEA • Increasing the Number of Kidney Transplants to Treat End Stage Renal Disease 19 Conclusion Chronic kidney disease is an important disease for policymakers to confront for several reasons. First, it imposes a significant morbidity and mortality burden, as it affects hundreds of thousands of patients and is a leading cause of death in the United States. In addition, treatment is costly and—unique among chronic diseases—the vast majority of the costs are borne by the Federal Government. Moreover, as discussed in this paper, there is significant room for policies to improve the treatment of people with failed kidneys, particularly with respect to kidney transplantation. While HHS issued several regulations that aimed to improve the care of ESRD patients, with the overall goal of doubling the number of kidneys available for transplantation by 2030.17 CEA estimates that if the United States just matched Spain’s best in the world rate of deceased donor kidney transplants on a per million population (pmp) basis—an increase of roughly 7,300—and increased the number of living donors by 900, then the additional transplants would yield societal benefits with a net present value of $16 billion per year. 17 Medicare Program, Specialty Care Models To Improve Quality of Care and Reduce Expenditures, 85 FR 61114 ; Removing Financial Disincentives to Living Organ Donation, 85 FR 59438; Medicare and Medicaid Programs; Organ Procurement Organizations Conditions for Coverage: Revisions to the Outcome Measure Requirements for Organ Procurement Organizations, 85 FR 77898 CEA • Increasing the Number of Kidney Transplants to Treat End Stage Renal Disease 20 References Agarwal, R. 2016. “Defining End-Stage Renal Disease in Clinical Trials: A Framework for Adjudication.” Nephrology Dial Transplant 31, no. 1: 864–67. ASPE. (Office of the Assistant Secretary for Planning and Evaluation.) 2016. “Guidelines for Regulatory Impact Analysis.” https://aspe.hhs.gov/system/files/pdf/242926/HHS_RIAGuidance.pdf. Barnieh, L., D. Collister, B. Manns, N. Lam, S. Shojai, D. Lorenzetti, J. Gill, and S. Klarenbach. 2017. “A Scoping Review for Strategies to Increase Living Kidney Donation.” Clinical Journal of the American Society of Nephrology 12, no. 9: 1518–27. Barone, R., M. Campora, N. Gimenez, L. Ramirez, S. Panese, and M. Santopietro. 2014. “Peritoneal Dialysis as a First versus Second Option after Previous Haemodialysis: A Very Long-Term Assessment.” International Journal of Nephrology 2014, 693670: 1-7. Bilgel, F., and B. Galle. 2015. “Financial Incentives for Kidney Donation: A Comparative Case Study Using Synthetic Controls.” Journal of Health Economics 43: 103–17. Blake, P., R. Quinn, and M. Oliver. 2013. “Peritoneal Dialysis and the Process of