Future of Health Insurance
As private insurance thins out toward a more catastrophic form, however, this dynamic can be expected to change, in two ways. First, facing a much larger share of the first-dollar cost of expensive therapies, patients will be much more price-sensitive than they are now. Second, having transferred most of the first-dollar risks to the beneficiaries, health plan sponsors will focus their cost containment efforts more sharply on the big-ticket items that represent an increasing share of their costs. The combined effect of these two sets of pressures will push back strongly against manufacturers’ pricing flexibility. Increasingly, the question of whether a high-cost technology is covered at all by an insurance plan will become the most important determinant of product economics.
Moran’s thesis is that comprehensive health insurance is not sustainable, so it will gradually “thin out.” Insurance companies will try to reduce coverage for expensive procedures. This in turn will force medical innovators to focus on either cost-saving therapies or lobbying efforts to get therapies covered by insurance.
In an email, Don Boudreaux pointed to a letter to the editor of the Boston Globe by a woman arguing that state-subsidized health insurance should be required to pay for infertility treatment. This is the sort of political issue that Moran would predict will heat up going forward.