Month: July 2016

Rare diseases are the great case for UHC

The Economist’s article reporting on developments in gene therapy for rare diseases mentions something important:

The lessons from Glybera, the first gene therapy to be sold in Europe, still loom large. It cures a genetic condition that causes a dangerously high amount of fat to build up in the blood system. Priced at $1m, the product has only been bought once since 2012 and stands out as a commercial disaster.

Incredibly high need for the patient, but high development costs, essentially non-existent consumer base, no competition, no economies of scale, and no consumer bargaining power. Any one of those can destroy a market, but all at once? The only thing that would make it worse is if the patients can’t pay. Oh, right. They can’t. Because it costs $1m. If I’ve ever heard of a perfect government job, then this is it.

In the US, rare disease treatments will need to be covered by CMS and the associated costs spread across the entire tax base, because the free market will quite literally never be able to find a humane solution for this problem. Good luck using charity, vouchers or tax credits to cover a $1m treatment.

Health Fail – ACA Smoking Surcharges

Sometimes people’s behavior triggers, surprises and pleases me all at once. The ACA contains a provision enabling insurance providers to add a surcharge on the premiums of smokers, hoping to incentivize smokers to quit. Yale researchers report in Health Affairs how the smokers reacted to these incentives:

That’s right. Smokers dropped insurance coverage. I can’t even anymore.

The administration managed to put through a measure penalizing smoking without using the word that shall not be spoken in congress (tax) and got outsmarted (outdumbed?) by the smokers. I napped through most of my college macro economics course, but the one thing I took away from that class was that if you encounter a market failure that you want to correct, you tax it directly and never tangentially.

This is exactly why.

By the way, this is also why we desperately need to #MakeTaxesGreatAgain in U.S. politics. Treating the taxman as a pariah is tying down policymakers hands with foolish and disastrous consequences.