If doctors and patients take advantage of the steady stream of miracle treatments that restore function or save lives, the tab will be hideous. Can Medicare, Medicaid and The Affordable Care Act (ACA) accommodate these costly treatments, or will government decide on some “sacrifices” to be made?
Some organ transplants such as; heart ($658,000), lung, liver, cornea and kidney have been around for many years. They are very expensive. There are other costly treatments such as for cancer, maladies with increasing incidence and in the wings there are mind boggling organ replacements such as restoring sight (retinal implant), achieve hearing (cochlear implant at $75,000). Regenerative therapies via stem cell-grown organs (e.g. urethra, windpipe, blood vessel, vagina, and nostrils) will soon be widely offered.
There has been major progress in prosthetics such for hands and for legs partly due to the return of our wounded warriors from the Middle East. Technology has also been a stimulus through robotics and 3-D printing.
Pharmaceuticals are improving treatment of diseases, but often at astounding cost; hepatitis-C (Sovaldi at $84,000 for a typical course of treatment), cancer drugs (Rituxan at $1000/dose and Yervoy at $120,000 for the 4 dose regimen). Psychiatry has become mostly about prescribing drugs, and the progressive price hikes for psychoactive drugs have led Medicaid to restrict which drugs are acceptable for treatment.
These fabulous new treatments can do wonders for patients. Instead of enduring the illness or disability, patients can be made whole or at least have important functioning restored. Most Americans would be unable to pay for these treatments without insurance coverage. On the other hand, those who choose an ACA “Bronze plan” face 40% of the health care charges, but the out-of-pocket costs are capped at $12,700. That cap might insulate miracle treatment patients from financial ruin, but it rebounds all the biggest charges back at ACA.
What will these miracle treatments do to ACA finances? What will be the product of miracle illness treatment costs times the incidence of maladies needing those treatments? That tsunami of costs will ride atop the conventional treatment costs that ACA must cover. ACA will need to balance its books through higher premiums, higher subsidies (just a euphemism for transfers from taxes), forced treatment price reductions, or through rationing of treatments.
What will be the patient and politician reaction to significant increases in premiums? Tax increases to cover more ACA subsidies will be hugely unpopular.
Will ACA need to exclude some of the most costly treatments from its formulary of authorized care? Surely this leads to the “rationing panel” necessitated by keeping expenditures in line with funding. Rationing could be applied to especially costly treatments (e.g. hepatitis-C or heart transplants) or applied to some treatments for specific patient classes (e.g. knee and hip transplants for seniors).
If miracle treatments are excluded from coverage, cost-recovery will be denied to the researchers, device developers and pharmaceutical developers involved. Their best model for cost recovery has been through the private healthcare marketplace, but when the marketplace is taken over by government, the value of ingenuity plummets.
Alan Daley is a retired businessman who writes forThe American Consumer Institute Center for Citizen Research