New Medicine and Old Health Insurance

We have all heard about amazing medical advances that might cure the diseases we and our loved ones might suffer.  To list but three often talked-about stories, there is the promise of:

This is all hugely exciting and when the news report about these breakthroughs, we all feel (understandably) quite hopeful.  But what do these breakthroughs really mean for you and me (assuming we are both middle class and can’t afford to pay for our treatment out of pocket)?

It turns out that these discoveries (exciting as they are) may not help us.  Consider what happened with hepatitis C.  According to Kaiser Health, approximately three million people have this curable disease.  Unfortunately, the drugs that can eradicate hepatitis C are very expensive and, as a result, patients face all sorts of obstacles when they try to seek the care that can save their lives.  That’s because most insurers (public and private) have issued guidelines which state that you have to be very, very sick before you can get the much-needed medicines.

The reason is simple.  Most Managed Health Organizations have a contract for a specific amount of money and they in turn pay physicians on a capitated system.  That is, a doctor gets a certain amount of money per patient, regardless of his/her health status and that amount has to reimburse the doctor for all the care the patient gets: from specialty drugs to X-rays to regular visits.  If any money is left over, the doctor (and the insurance company) keep it and the converse is also true.

So when people come in who have a curable disease but one that costs $95,000 or more for a 12-week course of treatment, health insurance companies have a built-in reason to limit treatment.  And when you are talking about specialty drugs, $95,000 is actually not a lot of money.  Some specialty, life-saving drugs cost $200,000 per year.  And who can afford that if even insurance companies can’t?

And we won’t be able to afford it for quite some time.  In 2001, the US Congress extended the time drug patents are protected (that is the time that a pharmaceutical company can charge specialty drug prices) from 15 years to 20.  So what does all this mean for you and your loved ones?

It means, quite simply that, while watching the news about the new medical discoveries is, indeed, quite exciting it is highly unlikely that these medical discoveries will benefit you or your loved ones.

Unless you become very wealthy or very lucky.  And preferably both.

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