This paper examines the role of the federal and state governments in paying for organ transplants. The first section, descriptive in nature, presents data on the past, current, and projected payment patterns for different kinds of organ transplants under various federal and state programs. The second section, which is normative, considers the three principal arguments for and against government payment for organ transplants. These arguments revolve around efficiency, equity, and communitarian claims, and none of them is wholly satisfactory. The final section, which is policy-oriented, assumes that government financing of organ transplants will continue but will be fiscally constrained, and goes on to analyze a number of important payment policy issues in the light of broader principles. These issues relate to eligibility, comprehensiveness of benefits, reimbursement formulas, entitlement, and level of government. The paper concludes by predicting that as transplant procedures become less constrained by organ supply and more routinely performed, they will lose the privileged political position that they now enjoy and will instead be obliged to compete for scarce governmental resources with other social goods on more equal terms. Government policy should be designed to encourage this competition.

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