In the United States, over 14 million people are living with cancer, and that number is expected to increase to 18 million by 2020. Thanks to many decades of advances in therapies, someone diagnosed with cancer today now has a 67 percent chance of living five years or longer. With the promise of immunotherapies and cancer moonshot efforts, a sense of optimism that we can defeat cancer is growing.
With cures on the horizon, now is the time to invest in preparing the health care system for the economic impact. While reimbursement strategies currently focus on costs and benefits of a treatment in the short-term, a year or two, we will need a long-term view to realize the true benefits of medical advances.
“We grossly underinvest in disease prevention and cures,” Dana Goldman, director of University of Southern California’s Schaeffer Center for Health Policy and Economics, said. “When viewed through a long-term lens, these treatments may be well worth the money, but people are focused on the cost per pill, which is hardly the right metric.”
This focus on immediate costs is what Goldman calls “short-termism” in health care. In a Harvard Business Review article, he and co-author Amitabh Chandra, the director of health policy research at the Harvard Kennedy School of Government, argue that the problem stems from the way patients, employers, health care providers and even the government are overly concerned with immediate costs and take a shortsighted view of benefits.
When viewed through a long-term lens, these treatments may be well worth the money, but people are focused on the cost per pill, which is hardly the right metric.
The reaction to breakthrough hepatitis C treatments is an excellent example of short-termism, according to Goldman. The newest treatments not only cure infected patients but also prevent the virus but being spread, reducing long-term medical costs for both the treated patient and everyone protected from future infection.
Health economists believe a value-driven system is needed to address this issue. For cancer, such a system would recognize the value of a cure while also taking into account the price of the therapy.
One way to move toward a value-driven system may be to lengthen insurance contracts. “There is nothing magical about a one-year contract; perhaps we could go to three years to start,” Goldman said. “To protect patients, we could provide a way for patients to change plans sooner if they believe they are being harmed by theirs.”
Other suggestions offered by Goldman involve side payments between plans. If a patient with cancer moved between plans after an expensive treatment, for example, the new insurer would pay the original for a portion of the cost of that treatment. Conversely, if the original plan denied the patient access to an expensive but valuable therapy, they would be required to compensate the new insurer.
Another idea involves insurers making a series of payments to pharmaceutical companies for as long as a patient remains in remission. “This annuitizes the high upfront cost and makes price dependent on performance,” Goldman said. “We are seeing the private sector take steps in these directions.” For instance, insurers Cigna and Aetna have both made similar deals for a new heart-failure treatment.
Regulatory issues regarding the length of insurance contracts and payments between insurers as well as the current inability of insurers to track treatment results over time are major roadblocks to revamping the health care system but can be overcome, according to Goldman. A far greater obstacle may be changing how we think and process information—and overcoming our tendency to favor emotionally driven short-term gains over more reasonable long-term goals.
“While we are starting to understand the biology behind decision-making, we can’t do much about it yet,” Goldman explained. “My rational brain—like everyone else’s—tells me that I shouldn’t eat doughnuts, but I always end up at the doughnut shop.”