Treatments for the hepatitis C virus (HCV) are expensive. At one point they cost over $80,000 per year, although costs have decreased since then. To prevent moral hazard, should insurance companies rely on cost sharing to decrease utilization? An article by Lakdawalla, Linthicum, and Vanderpuye-Orgle (2016) argues that they shouldn’t.
Cost sharing appears even less efficient when one considers that treatment makes long term financial sense for society: the treatment of HCV today will lead to lower medical expenditures for covered individuals in later years. Combined with the health and longevity gains from treatment, this is likely to lead to a return on investment within 8 years. Curing more patients with HCV in the present also prevents more cases of infection in the future, and the reduced rate of transmission will accelerate the return on investment even further. Further, there is no good economic reason to discourage patients with HCV from using novel agents and every reason to protect them against financial risk.
Even though HCV treatments are costly. because the returns to patients, payers and society is so large, reducing utilization is suboptimal.