Costs and Spillover Effects of Private Insurers’ Coverage of Hepatitis C Treatment

Karen Mulligan, Darius Lakdawalla, and their colleagues examined how and to what extent private payers’ hepatitis C virus (HCV) treatment coverage decisions impact Medicare’s and private payers’ future costs. HCV treatment incentives for private payers may be misaligned because payers must bear immediate costs and may not realize long-term benefits. However, these benefits may accrue to future payers, including Medicare. By modeling HCV disease progression and transmission to simulate the economic and social effects of different private-payer HCV treatment scenarios on Medicare, the study showed that expanded HCV treatment coverage reduced medical expenditures for private payers in the three- to five-year time horizon; however, they still face higher treatment costs. Over a 20-year horizon, private payers experience overall savings of $10 billion to $14 billion after treatment costs. Expansion of coverage by private payers generates positive spillover benefits to Medicare of $0.3 billion to $0.7 billion over a five-year horizon, and $4 billion to $11 billion over a 20-year horizon. When private payers increase HCV treatment coverage, they may achieve significant savings while inducing spillover benefits to Medicare. Future savings, however, may not motivate immediate treatment investments among private payers who experience high beneficiary turnover.

The full study is available at American Journal of Managed Care.

Citation: Moreno, G. A., Mulligan, K., Huber, C., Linthicum, M. T., Dreyfus, D., Juday, T., … & Lakdawalla, D. N. (2016). Costs and Spillover Effects of Private Insurers’ Coverage of Hepatitis C Treatment. American Journal of Managed Care.