Ike Brannon, former economic advisor to the U.S. Treasury and Senior Fellow at the Jack Kemp Foundation, joins us this week to discuss disaster relief, FEMA, insurance, and the future of disaster policy in the United States.
Ike Brannon is an economist in Washington DC who writes primarily about public policy. He is President of Capital Policy Analytics, a consulting firm that does research on issues related to public policy and financial markets. He is also a Senior Fellow at the Jack Kemp Foundation and helps run the Savings and Retirement Foundation. He is also a member of The Prosperity Caucus. He is a contributing editor to Regulation Magazine and a writer for Forbes, and his work occasionally appears in Real Clear Markets and The Hill. He occasionally blogs on non-policy-related items at his Pro Bowl Blog. He was born and raised in Mossville, IL and attended Augustana College and Indiana University.
Juliette Sellgren: Welcome back. Today I’m excited to be interviewing Ike Brannon. He is the former Economic Advisor of the Treasury and now he is a Senior Fellow at the Jack Kemp Foundation. His focus is fiscal policy, tax reform, and regulatory policy. Today we’re going to be talking about the disaster relief. Welcome to the podcast.
Ike Brannon: Thanks for having me on. I appreciate it.
*Special Note: There were some technical difficulties during the first few minutes of recording, therefore Juliette’s typical first question and Mr. Brannon’s response are not included on this episode. Thank you for your understanding.
Juliette: Let’s talk about your article called “Privatizing Disaster Relief” that appeared in Regulation magazine at the Cato Institute. You start by writing that “Natural disasters have become more frequent in the United States over the last 15 years. They have also become more costly: from 2014 to 2018, the United States average 13 natural disasters per year that did more than $1 billion in damages.” Why is this happening? Why is it costing us so much money?
Ike: There’ are a couple of different things. First of all there’s just general inflation. Prices are 15 or 20% higher. So we just seen this natural increase in the cost of everything. We might not notice it from year to year because inflation is generally quiescent, but that’s going on. But the other thing that is happening is that we are seeing a disproportionate amount of development in population going into places that are more prone to disaster. So Miami is booming and the development along Miami Beach is astounding. Miami happens to be very susceptible to hurricane. In fact, Florida will gain maybe two million in population this year. So a lot of people are moving there. A lot of people are moving to the Atlantic coast. A lot of people are moving to California which has their own issues with wildfires and earthquake. So, we’re just seeing a disproportionate amount of economic development happening in places that are more susceptible to this. Why is it happening besides it’s being nice places to live is that the federal government has set up this infrastructure that implicitly subsidizes such development.
Juliette: Let’s talk about that sort of thing. Which programs and agencies in the federal government are in charge of responding to disasters? Just kind of to break it down from the beginning.
Ike: FEMA is in charge of responding if there is a disaster. They provide disaster relief and to some degree they try to get out there before the fact and do what they can to help evacuate people and minimize loss of life and damage to property. But we also have a couple other programs that I may can think of that. One of which is flood insurance. The United States has largely federalized flood insurance. The federal government is the main seller of this and most years it takes a loss. The Federal National Flood Insurance Program is over $20 billion in the red, so that amounts to basic subsidies going to people who build in floodplains. The federal government has made attempts to rectify this to try to end this subsidy, which is very unequal. Most of the subsidy goes to wealthy people who build in places like Miami Beach or the South Carolina coast. But those people happen to be particularly political and very loud and vocal. So, it’s difficult to achieve.
The federal government did pass a milder form of National Flood Insurance and it was quickly repealed back about almost a decade ago. When they did that, it was very telling. One of the things that is problematic with the current setup is that when they are assessing the risk of a major disaster, they have flood maps that layout the risk probability for all these various regions that are put together by the corps of engineers and they are decades out of date. So one of the things they wanted to do with this reform back a decade ago is let’s just update the maps so we have a better analysis of what the actual risk is, and that actually got beaten down in most places. I’m from a town in Central Illinois that sits close to the Illinois River. Places like that did get a modified flood insurance map.
And so, what ended up happening was that low-income people that live in floodplains ended up paying more of their cost of flood insurance, paying closer to what it really did cost, while the wealthiest people saw very little change.
Juliette: Why did the proposal to update these maps get beaten down? Why didn’t it pass in some places?
Ike: The members of Congress and the Senators from States whose constituents were most affected shouted the loudest at this. And there were enough of those people together to form a coalition that prevented it from happening. So North Carolina, South Carolina, Georgia, Florida, California. California is not really affected by this but it’s those ones along the Atlantic coast that were most affected. They’re the ones who banded together. Remember, because Florida has so many congressmen, it’s really easy for them to mobilize a lot of people.
Juliette: How does it benefit them to not update the map?
Ike: Basically it means that the rest of the country is subsidizing development in low-lying areas of Florida. So it means that more people move into Florida. They’ll be more development in places like Miami Beach and in general they will get wealthier. And then if there’s a disaster, they will pay less of the cost of building from that disaster and more of it will be socialized across the rest of the citizenry of the United States.
Juliette: I see. Okay, backing up really fast, what does FEMA stand for again?
Ike: Federal Emergency Management Agency.
Juliette: All right. And what is the main thing that they do?
Ike: Their main thing is that if there’s a disaster looming… So think of like 9/11, a major hurricane, the major power outage that happen in Texas earlier this year. Their job is to get on the ground and figure out a way to help those who are affected, either evacuate them or get them food or drink or something like that. Whatever it is to mitigate their inconvenience, discomfort and risk of loss of life.
Juliette: When did the federal government become such a big player in disaster relief? Because most disasters are local or centralized to one location like Florida, that’s not necessarily a county but that’s a state, or California. That makes me think that the state government would be better equipped to handle it. So, how did it get to be the federal government’s job?
Ike: It’s a long story, but let’s say that in general a lot of these services provided by city or state or counties, all manner of services are becoming increasingly federalized. I think that it might not have been anyone’s plan, but it just eventually happened. For most disasters, I would say, counties and cities, if they’re run-of-the-mill things they can deal with those on their own. But every so often there are major disasters where the local government simply is overwhelmed. That’s especially true if you think about something like a hurricane or a tornado, which might do a lot of damage everywhere across the county, including the government entities that are supposed to be there to help. So I think just kind of a natural evolution. Places like Florida, maybe we should centralize such disaster services and then the federal government decided that we should have some kind of service if we have some major national emergency and it just kind of grew up.
When I was growing up, Central Illinois has a little bit of flooding. Nothing that I would say like a genuine emergency disaster where people need to be evacuated right away. But the big problem there are tornadoes. So local FEMA administrator emergency did a lot of stuff and is helping people think about response to tornadoes, making sure that everybody lived in a spot where they could hear a tornado siren. The other thing in the 70s and 80s is they spend a lot of time thinking about nuclear preparedness. What should people do if they’re a nuclear war? And so they spent a lot of time making sure that these little signs saying that this was a fallout shelter were still in place and people knew where to go. I know it sounds antiquated, but that was what they did.
I’ve never really thought about a long history of FEMA, but I think part of it is when that seemed to go by the wayside. Think about the [inaudible] of the world. These guys thought what we needed something else to do, and I think part of it was they said maybe we should get more involved in thinking and helping out on natural defense.
Juliette: That makes sense. I feel like when I think about federal disasters is disasters that federal governments take care of. I think usually about terrorist attacks, nuclear war would be a good one, a pandemic perhaps. But how does a hurricane, or a tornado become… I guess this is kind of similar to what I was saying before, but what is the argument for that being similar and being a national problem like a terrorist attack is?
Ike: I guess one of the arguments would be that some tornadoes… Let’s a hurricane. That’s probably the garden-variety one. When hurricanes affect several states, they can involve the necessary evacuation of millions of people from low-lying areas and they could ultimately result in such widespread damage that county or city authorities in the affected places are literally unable to do things. I guess you can think about it as pulling the risk. So if we decide that the government should have a central role in this, maybe the federal government should be the one that respond to this rather than the state and local if it’s severe. In that way we are putting the federal government in a spot where they can help if the city and local governments can’t. So that’s the rationale and then you know the reality is. There’s been mission agreement and now there are places where maybe it’s not really necessary for that.
Juliette: Do the state and local legislators like or want the federal government to be there and help, or do they resent the federal government’s presence in these issues?
Ike: I think if you were to talk to a state legislator, they’re fine with the federal government coming in because they see this as a way to federalized damages that would otherwise need to be paid for the state or local level. In terms of coordinating these things, my sense is… I’m an economist. I’m not somebody who deals with disaster relief. The local people tend to resent the federal government because they think the federal government tends to take over these things and run up themselves even if the city and the county and the state have some kind of adequate plan and know what they are doing. And I think because of the nature of the beast, if it’s a state that has its act together, the federal government probably just doesn’t have the knowledge and capability to deal with this as well as it’s the state is a little bit of waste and duplicity and slow things down.
Juliette: Let’s talk about that sort of thing, the government failure or the bureaucracy, all that. First, I want to ask about the incentives that have been created by the federal government for homeowners. You mentioned this already a bit, but how does National Flood Insurance work in incentivizing people to move to those areas?
Ike: Well, basically, people buy flood insurance and they have to buy it from the federal government. For a long time the federal government did not charge these people in actuarially fair rate. That’s they were charging them less than you’d expect these people have to pay in a 20 or 30-year period to break even on the cost of helping these people rebuild. By giving them artificially cheap insurance, people didn’t internalize the entire cost and so they were getting an implicit subsidy. After these reforms and the NFIP reforms in 2012-2013 were undone, the National Flood Insurance Program has raised their insurance somewhat. So, in some places that, I’m not sure, it’s actuarially fair everywhere, but it’s higher than it was way back a decade ago. Since it’s on the news, you’re talking about buying a condo in Miami Beach. Well, a $2 million condo in Washington, D.C, a $2 million condo, a 3-bedroom place. Your insurance, if you’re going to buy some kind of insurance, is probably a couple hundred a month. But in Miami Beach because of the hurricane now you’re probably paying four or five times. I’m not quite sure it’s still the right chance. There’s still a 1 in 50 chance that your building is going to be swamped and destroyed, then that cost is going to be enormous. But at least we’re getting within spitting distance of it being actuarially fair.
Juliette: That makes sense. What are some other significant government failures that brought us to where we are with natural disaster relief?
Ike: Here’s other one that I worked on a while ago. I came to Washington, D.C in 2001 after being a professor for about a decade and my first job with the Office of Information and Regulatory Affairs, which is a little agency within the Office of Management and Budget that’s tasked with reviewing cost-benefit analysis of major rules promulgated by federal agencies. One of the things that the US Department of Agriculture was working on the time was expanding their crop insurance. One of the things that we looked at the time was the private market for crop insurance. So it turned out that at one point in time there was a very robust private market for crop insurance. A farmer could buy this for five or ten percent of whatever their annual revenue is. They could buy this thing. If their crops were wiped out by disease or drought or something like this, they could have a decent payday after all. For a variety of reasons a couple of of droughts in places where not everybody had their crop insurance, the federal government essentially took it over.
There is a famous paper by Finn Kydland and Ed Prescott both of whom won Nobel prizes for this. Well, they talked about optimal consistent policy. They were talking about in the context of the Federal Reserve adopting an inflationary approach. But the example they use which I think is incredibly more relevant perhaps now than their other one is you think about a situation in which people build in a floodplain. So the federal government can make every promise in the world that if you build in that floodplain and there’s a chance of you getting flooded and that happens, we’re not going to bail you out. We’re not going to do it absolutely cross our heart and hope to die. But once people build in that floodplain the political economy basically forces the government to bail those people out.
So that’s what happened with flood insurance, and that’s kind of what happened with crop insurance. For a while you had two different groups of farmers: one with a private crop insurance and one without. And what happened was the people without would find the government. We’re going bankrupt, can’t you do something? The federal government came in and basically ex-post, provided them some kind of bail out to make sure that they don’t go bankrupt. So then after that happens a little while, the people who were buying crop insurance will start asking why the hell am I doing this when I’m going to get bailed out, regardless. So, once the federal government basically pushes the private market out of the way, they set up their own. We might as well charge you guys something and they charge them something but nothing close to what would be the actuarially fair rate just like flood insurance.
Juliette: Is there any sort of… I don’t know if error is the right word, maybe redundancy or confusion with having something happened locally like a natural disaster and then having the federal government intervene. Does the local or state government then continue aiding the people as well? Does that cause problems?
Ike: Juliette, I think what we’re getting is there’s some kind of problem between all these different entities that are trying to provide aide in a critical time and there’s some kind of conflict. It’s something I haven’t studied in depth. I’m not quite sure how to think about it using my training as an economist, but my one observation is that the federal government tends to trump state and local governments on all matters. And part of it is on average the people who work for the federal government and to be better educated and better trained and they’ve seen more things than people of the state and local government who often are not only doing disaster relief but they have three or four other jobs or for other hats that they have to wear.
And then the other thing, of course, is that if we’re dealing with a problem with saying my hometown to Moscow, Illinois, the local township will show up and they have some money and then the county will show up and they have some money. But then the federal government comes in and they have basically unlimited resource. So it’s perfectly a rational response for the people of Medina Township in Moscow, Illinois in Peoria County. If the federal government shows up to help that they’d simply vow to the federal government and allow them to take over and take their orders from there because they’re going to have the money and the resources and probably the know-how to figure out what to do. All they really need is kind of a sense for whatever the intrinsic local angles are.
Juliette: Some legislators have joined forces with the private sector after struggling, failing, making a bit of a mess on their own. Can you describe maybe some examples but also what they’re doing in partnering with the private sector?
Ike: This started about 10 or 15 years ago with Mississippi, right? They had a very pro-market governor who realize that Mississippi doesn’t have any particular expertise in doing disaster relief. And so what they did is they partnered with a couple of basically accounting firms. We’ll look whatever contract with you so that you guys will coordinate our disaster relief if something happens. You can think about going in what our plan should be, but part of it also is just helping Mississippi deal with the federal government. Federal government comes in if there’s a disaster like Katrina and they decide, okay, we’re going to spend this money here. Here’s how we want to allocate it. Mississippi doesn’t have any particular expertise in kind of keeping track of these things, making sure that they go through all the federal hoops to ensure that that’s done. And so Mississippi just said, okay, all this stuff like helping us deal with the federal government, having things ready before the fact so that when there is a disaster we can quickly help these people, we’re going to sign this to the private sector. So they contracted out this accounting firm.
The article that I wrote in Regulation just looked at a couple of examples where this happened, and it seems to be that when a state assigns some basic task to private sector with regard to disaster relief, things tend to get done a lot quicker than if it’s kept totally internal within the state.
Juliette: You say in the article that private sector and state collaboration, not only federal collaboration, works better than a federal response. Can you make the case for that with economics and things?
Ike: Yeah. Sure, I can. I’m a Libertarian minded person and so my perspective, especially given every work for the federal government for a decade is that it’s always better if you can have the private sector do something than the government entities. So, I think just being able to contract this out and having somebody who can fire people right away and hire people right away, I think that just works a lot better. One of the things I did when I was writing the papers is I talked to a couple people I know who used to work at FEMA. One of their complaints is that FEMA which has a fixed budget often struggles with hiring issues. So, if they might get a budget and if FEMA has a couple of years where things weren’t so bad, there weren’t so many disasters, then their budget doesn’t grow or their budget might even shrink a little bit.
That is the budget allocated for them just to run their office and hire people and just train staff. They don’t have enough people to adequately administer these things. And then the next year there’s a giant disaster and they are way short of people. And then they say, “Okay, well, we definitely didn’t have enough people to do our planning. What do we do next? Well, okay, we got to hire people.” Because it’s the federal government, it takes a year to hire somebody and then it takes another year to train these people.
One of the things that happened in Mississippi when they did this is that when they contracted this out, they went to an accounting firm that had some experience in this and what they could do is they could throw a lot of bodies at it. They had a team devoted to thinking about how to do this and how to allocate disaster funds and how to work with the state to make sure that they can keep track of what people needed and when. But then that’s 200 people, they might have 5,000 people working for their accounting firm. They have all these other people, competent people, that they could bring in and throw at this thing for a week or two or three at a time, which is kind of work. If you think about it, that’s what utilities do. So, you have utility in Mississippi that’s in charge of maintaining all their wires but obviously they don’t have nearly enough people if some major disaster. So Mississippi and most other states have some kind of agreement where if they need more help, they contract out with these people who work at various utilities at other places across the country. And these people come in for one, two, three, or four weeks at a time and then they put these things up and then they go on.
One of the advantages of contracting this out is FEMA isn’t all that good at greatly expanding what it is they do and they’re not that great at quickly partnering with the private sector to get things done. One of the examples that I wrote about some time ago in Regulation is that one of the famous things is the very quickly enforce rules about people raising prices too much. You don’t want anybody trying to make too much money off these people. That sounds to the normal person, well, isn’t that good? You don’t want profiteering, but prices are how we efficiently allocate goods and services to where they are most needed.
I guess it was right before I get married almost 20 years ago, my wife and I were in Door County, which is Wisconsin, a wonderful vacation place, a peninsula going in the Lake Michigan. We were there, and a hurricane tore across the peninsula. And it’s so much damage. It basically cut it off. There’s so many trees down along the road that people who are on the northern tip couldn’t get past the southern tip, and all the power was out. And so, all this food was spoiling. So we went out the next day looking for food and there was this place selling ice and they had to sell ice for $1 a bag, which is what it cost before. So you have this bizarre situation where you had people in line were buying. We can only buy one or two bags of ice for a dollar.
You had all these people lined up and then you had these restaurants that had thousands of dollars of meat who’s about to spoil. They are trying to get more than one and just waiting for people to get out of line and then offering them whatever they could you get that ice in order to put it on their food to try to keep it lasting for a couple hours. And of course these people were just using their ice to make mojitos or something like this. Ultimately, what happened is that they couldn’t get enough ice and so all these firms are just trying to cook as much meat as they could and try to sell it that day and then the next day, they all threw away tens of thousands of dollars of meat.
My point is, if they were to let the gas stations that were selling ice just selling for whatever, the people making mojitos might have said, “Oh, $5 for this ice.” Screw it, but the restaurants would have thrown their checkbook at it to get it out. So sometimes just thinking these things through a little bit in a way that FEMA is not allowed to can save people a lot of work.
Juliette: That story is a little funny, but also it’s so wasteful that it’s… Well, not only that, but just that concept is just so sad. That’s awful. Well, I know it would be difficult to go back to a world where the federal government and agencies like FEMA were less involved or could be involved in a different way. I don’t know if that’s possible. But what would that world look like? Would it change the speed at which we respond to natural disasters? Would it change the way that we deal with it? What would that world look like?
Ike: I guess if I were president or dictator for a day, yeah, I think what I would do is I would have FEMA have a much smaller role and be more in charge of just trying to coordinate things between states and across states and making sure that the states themselves had enough resources to do what they need. I would encourage them to do what Mississippi and all other states have done. And for them to contract out with entities ex-ante than it was before when the storm happen and have those people in charge of not only trying to prevent damage before a disaster hits but also help them expedite recovery measures after a disaster happens.
One of the other stories I talked about, places like Mississippi and Florida where they have used the private sector, is that they are able to get money to rebuild things in a matter of days and weeks. Whereas places that entirely do this via the federal government or the state government, it can take them months before they give the okay to people to go ahead and rebuild. I can’t remember if I included this in the final version of the article or not, but somebody was waiting for money to fix their home and it got held up three months, and no one could figure out why. It was because this guy had an unpaid parking ticket of $10 that he didn’t know about. Once they finally figured that out, they paid it. It took him another month to clear before he could get that money. Just having a system where it’s easy to diagnose and get past these things would help everyone. That’s why privatizing something like this would what I think save taxpayers money and it would improve the lives of people who are affected by disaster.
At the same time I would try to design a world where people had agency or incentive for them to take their own steps to make sure that they minimize the damage that would be done in a natural disaster. That is how we would try to make sure that these people had every incentive in the world to buy private flood insurance or hurricane insurance or whatever it is that they were encouraged to take steps to minimize the damage that happened at their home. And I think that would probably increase the cost of living in Miami Beach even more. That’s probably what should happen, right? The rest of us in the United States should not be subsidizing the people who have nice condos in Miami Beach, but that is what we are effectively doing in a world where inequality seems to dominate every single discussion we have. It’s frustrating.
Juliette: Are you optimistic at all that we will find a solution that works better and saves the rest of us money because we’re not subsidizing Miami Beach and also produces more efficient results in terms of response to disasters like this?
Ike: No, I’m not optimistic at all. I have no optimism. The reason I wrote the article is because when I read about that’s what Mississippi was doing and I got to talk to a couple people involved in it and I talk to my friends at FEMA who used to be at FEMA who thought this was a promising way to approach things, I just want to tell that story and get people thinking about it. Maybe at the state level you’ll see more states stop something like this, right? They are the laboratories of democracy. And I think this is one thing that seems to have worked in the lab and I hope it’s adopted elsewhere. It just seems like all of my life has been about the federal government trying to take power from the state government. The state government is taking power from the local government. The executive branch taking power from legislative branch. The House and Senate leadership taking power from the committees. The committee chair taking power from the individual members. Power keeps secreting upward and I’m not sure what’s going to stop.
I hope that at some point it will stop, but yeah, I don’t know. So far I’m 56 years old, I have yet to see any indication that that’s going to happen. It seems like when either party takes the White House, the first thing they do is try to figure out how to take power from Congress. Regardless of the party that controls the House and the Senate, the first thing their leadership does is try to take power away from the committee’s, right? It’s just everybody is trying to a quick power from other institutions.
Juliette: Yeah, I see that. That’s been my whole life of observing this too. I think especially with this issue since natural disasters are relatively infrequent compared to a lot of other things even though 13 a year on average is kind of a lot. It seems as though there’s less urgency to change it because there’s no chance for people to see the wrong or not effective parts of this response that we have.
Ike: I think that there’s something there. I think when you’re looking at things that happen very frequently, it’s tough to get people to plan adequately in the first place because they have trouble conceptualizing what might happen. And then the other thing is once it happens they don’t necessarily learn a lesson from it, right? They think this will never happen again. One of my professors when I was an undergrad at Augustana College did an economic analysis of the Quad Cities in terms of the flood zone and the cost of a hundred-year flood. Though in 1966 Quad Cities, which is bisected by the Mississippi River, had the largest flood. They were called a hundred year flood. That’s something three standard deviations outside the norm.
And so, he was trying to look at the cost of benefits if something else happened like that again. He did a lot of interviews with people in the floodplains and talked to them about it, and are they doing steps to mitigate flood relief and he said, “We need to tell them they’re in a floodplain.” A lot of people were surprised and he would explain to them it’s called a hundred year floodplain. We expect this to flood once every hundred years. The typical answer he said, almost universal answer, was when was the last year flooded like this? Well, 1966. They said, “Well, I guess I have 80 years or so until I have to worry about this.”
Juliette: That is not the response you would want to hear.
Ike: And then the punchline, of course, is the next hundred year flood happened in the early 1990s, which is more or less random. These things are like flipping a coin or something. So, people didn’t take the right things, and they didn’t have an incentive to take all the right steps because they knew that if this is wiped out that they’d be largely made whole by the federal government.
Juliette: You’re totally right. Thank you so much. My final question to you is, what is one thing that you believed at one time in your life that you later changed your position on, and why?
Ike: I had thought a lot about kidney disease and dialysis until a few years ago. But, you know, until about five or ten years ago I thought that, like most people, that the way the federal government does things makes a lot of sense. The federal government, through the National Organ Transplant Act, does not allow anyone to receive any money for donating kidney. In fact, until the last few years, people cannot even receive compensation for any expenses that they undertook when they donated a kidney. So people who would go to GW to get an exam, to donate a kidney to somebody, could not get their parking validated. The more I studied the issue, the more I thought about it, the more I realized how heinous this is. About 44,000 people die each year because we have a shortage of kidneys. The bulk of these people, over 60% are Hispanic, African-American, or Asian. It’s not a diet thing. It’s not a lifestyle thing. Largely, it is a genetic thing.
The problem, especially for African-Americans who are three times as likely to need a kidney transplant as Caucasian, is that they’re much less likely to have a relative who’s healthy enough to give them a kidney because their African-American relatives have the same probability of having the same health issues, namely high blood pressure as they do. So if you’re an African-American and you go on dialysis, you need a kidney transplant, the odds are you will not receive one. However, if you’re a wealthy white person like me who understands the system, it’s really easy. The odds are I’ve never checked anyone. I’m a blood relative, but odds are that somebody, one of my daughters, my wife, my brother, my sister, is a match. And if not, I know how the system works. I would go down to a charter [inaudible] company. Give them a check for $80,000 to have a job on call. I would then go on every waitlist in every Opio in the country and I would almost assuredly get a kidney in the next year or so before I would have to go on dialysis.
So our status quo is wildly unequal and a typical white person doesn’t quite realize this. A group of people have been proposing that we change the National Organ Transplant Act to have Medicare compensate living kidney donors at about fifty to seventy-five thousand dollars, plus all their expenses if they donate a kidney. This proposal has been fought vigorously by a wide variety of people including things like the National Kidney Foundation and a lot of people who report to be advocates for low-income or minorities. And the irony, of course, is that the status quo is terrible for those very people.
A lot of what I write about has to do with Dry regulations and all this. But I spend a lot of my free time on this because there’s nothing out there right now that I can find that amounts to a free lunch like this. So, if we were to change the policy in Medicare which pays for almost everybody’s dialysis, Medicare we’re just say, “All right, anyone who donates a kidney, we would cover all your expenses and we’ll pay you 75 grand.” We would save 30,000 or 40,000 lives a year. We would save somewhere between 10 and 20 billion dollars a year as well. I spend a lot of time writing about this. I spent a lot of time visiting congressional offices, trying to explain this to them, and I get to respond.
Juliette: They probably don’t get it.
Ike: It’s kind of funny. I get you. If people will listen to me for five to ten minutes, they get it. In fact, if people really get it, they start asking if they can come to donate money or come to our meetings or something like this. The people who only give me two minutes usually kick me out of their office. Anyway, there’s nothing I’m more passionate about right now than trying to reform how we do kidney transplants. It’s something that could be literally life changing for hundreds of thousands of people in the next decade and mainly people who are minorities and low-income. The irony of ironies is that the people who are most opposed to this are opposed because they believe that somehow compensating this would be an exploit of the low-income people who they think would be the ones doing it.
Juliette: Wow, that is first, fascinating but also shocking. I don’t know. I’ve never thought about this issue, but it makes so much sense. I definitely will look into it more. Thank you so much for sharing all of that.
Ike: My pleasure.
Juliette: I don’t know. That for me, I get it now. I mean, I definitely could understand it more and do more research into it. But good job. Thank you. Thank you so much also for just being on my podcast and for giving the time. I learned a ton. I’m sure my listeners are learning a ton, so thank you.
Ike: It’s my pleasure. It’s a lot of fun. Thanks.