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Dean's Blog: Insurance Is a Matter of Public Health

Dean Laura SiminoffLaura A. Siminoff, Dean of the College of Public Health and Laura H. Carnell Professor of Public Health, explains why insurance is a public health issue.

I once considered taking a job in the pharmaceutical industry. During the interview process I met with many people at the company, and I asked how drug prices were determined. The way it was explained to me seemed relatively uncomplicated, at least on the surface: The company considered the costs of making the drug, conducted focus groups to determine the maximum amount that consumers would be willing to pay for a drug, then set the price based on a philosophy of “whatever the market would bear.”

I thought about this when Congress withdrew the new healthcare bill, the American Health Care Act. It aimed to repeal and replace the Affordable Care Act (also known as Obamacare), but it also seemed to raise a very basic question: What responsibility does the government have in ensuring access to affordable, effective care, and how can we assure that Americans have access to reasonably priced drugs?

The question of access is one of the most important ones to ask when we think about public health, because health has such a huge impact on everything we do. As my grandmother would say, “If you don’t have your health, you have nothing.” The uninsured and underinsured can rarely access preventive care because the cost is often prohibitive; they may forgo medications they can’t afford or take their medications inconsistently; and they show up in the doctor’s office (or in the emergency room) at later stages of disease, making those illnesses more expensive to treat and resulting in poorer outcomes. These impacts do not remain neatly within the bounds of the uninsured population; the inefficiencies ripple throughout society, with a sicker population who can’t work, have higher absenteeism from work, and children who start life with serious disadvantages.

In 2010 the United States took a giant step in joining the rest of the developed nations by passing the Affordable Care Act. Although imperfect, its successes are worth reviewing. Under the ACA, more people have health insurance. A 2012 report from the Centers for Disease Control noted that about 45.5 million Americans were uninsured at the time the ACA was passed. By 2014 that number was at 36 million, and in 2015 it was down to 28.6 million. In 2016 the U.S. Department of Health and Human Services attributed 20 million newly insured to the ACA.

Another move toward a public-health-oriented model of the ACA is that insurance plans are now required to cover more services. Known as the 10 essential health benefits, these include outpatient services, emergency services, hospitalization, maternity and newborn care, mental health services and addiction treatment, prescription drugs, rehabilitative services and devices, lab services, preventive and wellness services as well as treatment for chronic disease, and pediatric services. This means that all purchased insurance policies actually provide access to basic services. Prior to the ACA, many policies provided little in the way of coverage. (Only when it was too late did the policy holder find out that the care they needed was not covered by their insurance policy.)

These changes have begun to point us in a better direction in terms of efficiency, affordability, and overall public health. However, the ACA does not control the cost of drugs, a large share of the high cost of healthcare in the U.S. Why?

In the late 1950s, recent leaps in pharmaceutical development sparked an investigation into drug development, deployment, marketing, and pricing. Echoing worldwide concerns about drug safety, the U.S. passed the Kefauver-Harris Amendments to the Food, Drug & Cosmetic Act of 1962. While the sponsors had proposed price limits and marketing restrictions among the bill’s measures, these considerations were lost on the legislative floor.

Eventually, virtually every other country adopted regulations to control drug costs. To this day, the United States has not. Recently Heather Bresch, the CEO of Mylan Pharmaceuticals, appeared on MSNBC explaining why the patient cost of the Epipen went from $25 to more than $600. Mylan saw $274 of the price, and middlemen took the rest: insurance companies, pharmacies, others. Determining the prices of drugs is “complicated,” she said.

Is it really complicated? More likely, it’s that drug companies are still following a policy of what the market will bear, making drugs more expensive here than elsewhere around the world. 

Posted:  April 9, 2017