Medical Economics

Kicking Hepatitis C Down The Road

Hepatitis C has exposed one of the larger cracks in American healthcare financing. In particular, the drug Harvoni (ledipasvir-sofosbuvir) has shown us the inherent conflict between private health insurance (commercial insurance companies) and public health insurance (Medicare, Medicaid, etc.).

Hepatitis C is an enormous problem in the United States. There are about 2.7 million Americans with chronic hepatitis C – thats 1% of our population. Worldwide, there are about 200 million people infected with the virus. It is the #1 cause of liver transplant in the United States and it causes around 10,000 deaths per year. Half of the people infected don’t know that they are infected and there is no vaccine to prevent it. The most recent cost estimate for the virus in the United States is $6.5 billion per year. That is $21 for every man, woman, and child in our country. In other words, this is a big public health problem and big cost to our nation.

But things are changing for hepatitis C. Patients can now be essentially cured of the infection with Harvoni. The problem is that Harvoni costs $90,000 for a 12-week course.

So, here is what happens. A person acquires hepatitis C as a relatively young adult (when they have commercial insurance) and then the hepatitis C manifests itself 20-40 years later with cirrhosis or hepatocellular carcinoma as an older adult (when they have Medicare).

The commercial insurance company is financially motivated to prevent conditions that would arise when a person is relatively young and still covered by that insurance company, because those conditions are costly to treat. Therefore, it is cheaper for the insurance company to prevent a disease that is going to show up in 3-4 years than to have to treat that disease 3-4 years later. A example of this is an insurance company paying to treat high cholesterol with a statin in a 40-year old so that they don’t have to pay for the person’s myocardial infarction when they are 44-years old.

For hepatitis C, the insurance companies have little financial motivation to treat since the company isn’t going to be paying for the liver transplant or hepatectomy when the disease finally manifests itself – Medicare will. The insurance company is incentivized to get you to 65 without any expensive medical problems. There is no incentive for anything that happens to a person after age 65 – that’s Medicare’s problem.

On the other hand, Medicaid is incentivized to treat hepatitis C. The prevalence of hepatitis C is 7.5 times higher in the Medicaid population than in the commercially insured population and persons with hepatitis C on Medicaid are much younger than those who are commercially insured. Medicaid’s goal is to keep the person healthy enough that they can eventually become gainfully employed and therefore get off of Medicaid and onto a commercial health insurance plan. If that person develops cirrhosis, they likely won’t be working and will stay on Medicaid until they die, racking up higher costs for Medicaid.

Somehow we need to change the incentives so that all insurers are motivated to keep people healthy not just to age 65 but beyond. This will not only ultimately reduce healthcare costs in the United States by reducing the costs incurred by older Americans covered by Medicare but it will also keep Americans healthy enough that they can continue to work after age 65 which will reduce poverty among older Americans and put less financial burden on our nation in the form of Social Security. When the commercial insurance company denies coverage for Harvoni, it is not because the insurance company doesn’t think Harvoni will improve your health, it is because by not covering it, it will improve the company’s financial health.

We as Americans like to think that we have the best healthcare in the world. And as a Cleveland Brown’s fan, I keep thinking that this year we’re going to have a winning season. Somehow, reality always catches up.

November 3, 2016

By James Allen, MD

I am a Professor Emeritus of Internal Medicine at the Ohio State University and former Medical Director of Ohio State University East Hospital

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