Take a Mortgage for Expensive Healthcare?

Kaiser Health News (KHN) published a story on March 29, 2016 that caught my attention. Mortgages For Expensive Health Care? Some Experts Think It Can Work reports on a recent report from “[a] Massachusetts Institute of Technology economist and Harvard oncologist have a proposal to get highly effective but prohibitively expensive drugs into consumers’ hands: health care installment loans.”  The article was published in Science Translational Medicine and is available here. The abstract explains

A crisis is building over the prices of new transformative therapies for cancer, hepatitis C virus infection, and rare diseases. The clinical imperative is to offer these therapies as broadly and rapidly as possible. We propose a practical way to increase drug affordability through health care loans (HCLs)—the equivalent of mortgages for large health care expenses. HCLs allow patients in both multipayer and single-payer markets to access a broader set of therapeutics, including expensive short-duration treatments that are curative. HCLs also link payment to clinical benefit and should help lower per-patient cost while incentivizing the development of transformative therapies rather than those that offer small incremental advances. Moreover, we propose the use of securitization—a well-known financial engineering method—to finance a large diversified pool of HCLs through both debt and equity. Numerical simulations suggest that securitization is viable for a wide range of economic environments and cost parameters, allowing a much broader patient population to access transformative therapies while also aligning the interests of patients, payers, and the pharmaceutical industry.

The KHN article explains that this proposal is “not designed to pay for maintenance drugs that help people deal with chronic illness. It’s easier for insurers to cover maintenance drugs because they’re purchased over an extended period of time….” The KHN article offers comments from those with opposing views and discusses how outcomes effect the loan.