Financing cures in the United States

Abstract

True cures in health care are rare but likely not for long. The high price tag that accompanies a cure along with its rapid uptake create challenges in the financing of cures by public and private payers. In the US, the disaggregated nature of health insurance system adds to this challenge as patients frequently churn across multiple health plans. This creates a 'free-rider' problem, where no one health plan has the incentive to invest in cure since the returns will be scattered over many health plans. Here, a new health currency is proposed as a generalized version of a social impact bond that has the potential to solve this free-rider problem, as it can be traded not only between public and private payers but also within the private sector. An ensuing debate as to whether and how to develop such a currency can serve the US health care system well.