Here’s a not-so fun fact: In the course of just four years – from 2013 to 2016 – the number of individuals with annual claims over $1M has increased by 68%. It’s hard to think of any other metric increasing at that rate – certainly not profits, or benefits budgets.
Increasingly, employers are being asked to cover new technologies, services and treatments. You might say, that’s not surprising, there’s always something new coming out—and you’d be right. Employers right now have to make choices as to whether to cover various types of infertility treatment, bariatric surgery and acupuncture, for example. Some employers offer coverage and others exclude it. We’ve also advised on transgender benefits more and more in recent years. All of these have known benefits, but also known costs. But are we reaching a tipping point, or even a breaking point?
Take the case of Hepatitis C. With 8 to 12 weeks of treatment, at a cost of roughly $100,000 in the US, 95% of people infected can be cured. One hundred million people in the world have Hepatitis C. We’re certainly reaching an ethical point-in-time in determining the price of a human life. To add to the complexity, there are different pricing schedules found around the world. What are the rules when a $100,000 treatment in the US costs only a few hundred dollars instead in other parts of the world? What patient safety protections are in place when patients take desperate actions because treatment here in the US isn’t a viable option due to high cost?
Those are issues that exist today. As we look towards the future, things get still more costly. Consider gene therapy, which is beginning to unlock even greater potential for eliminating disease. A 45-minute procedure can cure a certain type of inheritable blindness. What’s the price for the gift of sight? Apparently it’s $400,000. While the patient base for this is relatively small, there are an additional 60 million people in the world that have diseases that someday could be treated with gene therapy. It’s an exciting (and expensive) time to be alive.
So what does this mean for employers? The takeaway is that while many treatments and interventions now have lifetime value—meaning, we can cure people permanently – insurance plans and employer budgets are structured with annual limits and cycles. Even thinking somewhat shorter term, if the benefits for a treatment last 10 years (for example, a closed system artificial pancreas for managing diabetes), will employers be willing to pay those upfront costs if their average employee only stays for 5 years?
Certainly stop-loss coverages will need to be reexamined, but that’s only the first step. These scenarios suggest a whole new set of challenges that will redefine how the market provides insurance. Perhaps this will parallel tuition coverage? Employers will pay for a treatment if the employee agrees to remain employed for a 5-year term (just as an example). This may sound like a futuristic version of indentured servitude to you, but it’s time to get creative. Send in your ideas for solutions!
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