Healthcare reformers can't leave employer-sponsored insurance untouched

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Presidential candidates and other Democrats who want to patch or build on the ACA rather than create a substantially new system generally neglect, to varying degrees, an attendant problem: employer-sponsored insurance (ESI) is also in dire need of reform.

A Kaiser Family Foundation's report on large employer coverage released this month found that health spending by families in large employer plans has grown twice as fast as wages over the past decade. The employer share of costs in family coverage (premium plus out-of-pocket) has downticked only slightly:  it was 68% in 2008 and 66% in 2018.  But families and employers alike are tapped out: total costs increased 67% over those ten years. The total cost of large group coverage for a family of four now averages $22,000 per year. Reducing healthcare costs is among voters' top priorities.

Beyond the steady-but-high yearly increases recorded by Kaiser, yesterday NYT reporters Reed Abelson and Katie Thomas spotlighted a recent development that could be destabilizing: the proliferation of specialty drugs for rare diseases, which can carry price tags in the millions per patient per year. As Abelson and Thomas note, about 10% of the population is afflicted with rare diseases,  and more than half the drugs approved in 2018 targeted such diseases.

Who pays for astronomically expensive orphan drugs? Some questions prompted by the NYT report

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The Times' Reed Abelson and Katie Thomas have a major story exploring a key factor in rising healthcare costs: specialty drugs for rare diseases, which increasingly can carry price tags in the millions per patient per year. The trend and the impact are laid out succinctly:

Rare diseases, however, aren’t all that rare. There are an estimated 7,000 of them, and about 30 million Americans have one — roughly the same number of people in the United States with diabetes. And although there are no treatments for most rare diseases, new therapies are coming on the market nearly every month,  with some reaching beyond $2 million a year for a single treatment. Of 59 new drugs approved in 2018, more than half, or 34, were for rare diseases. 

Leaving aside the broad question of how the U.S. might contain costs for these drugs without choking off their development, the story prompted a few thoughts and questions about how these costs are currently distributed, and how that might change. Some factors to consider: