According to a recent paper Dorsey et al. (2023)the answer is ‘Yes‘! Why don’t people think so?
Many are concerned that the private group insurance market (particularly smaller captives) may not have a sustainable way to cover gene therapies? If a company — especially a smaller, self-insured company — gets one or two patients who need gene therapy, it could undermine their profitability for reasons that have nothing to do with the underlying cost.
However, gene therapy is a perfect example of why insurance is needed:
After all, in theory, the main goal of insurance is to convert a large, unexpected, unaffordable but rare expense into a modest premium by spreading the large individual expense among many premium payers. “
Furthermore, in a highly competitive market, a company’s decision to offer cost-effective gene therapies may be a competitive advantage in attracting the workforce.
… Employers competing for risk-averse workers would provide this protection against financial risk if they were to match the services provided by other employers, large and small.
However, the issue may still be relevant to smaller companies that are self-insured and do not offer any stop-loss provisions for patients with unusual costs. The three main reasons why companies self-insure are (i) state taxes do not apply to self-insured plans, (ii) companies have more control over self-insured plans, and (iii) if companies have healthier health insurance plans, Costs may be lower for the average population. What is a stop loss clause?
Stop-loss insurance is a form of insurance in which an outside insurance company agrees to cover self-insured employer claims in excess of certain prespecified limits. It provides financing for unusually large claims or total claims. ”
How many workers do these types of companies have? Dorsey et al. Find out using data from the Medical Expenditure Panel Survey Insurance Component (MEPS-IC) and the Kaiser Family Foundation (KFF) Health Benefits Survey of Employer Health Benefit Products.Overall, only 1.8% of workers are employed by small self-insurers without stop-loss clauses.
Furthermore, they found that data from MEPS found that even among small self-insurers with FTE below 200, 59.2% (MEPS) or 72% (KFF) had stop-loss provisions.
However, the cost of stop-loss insurance does continue to rise over time. Stop-loss insurance coverage increased by 138% between 2012 and 2022, while home premiums increased by only 43% during the same period.
