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Tag: willingness to pay

Does Anybody Want to Pay for Depression Treatment?

Imagine for a moment you are suffering from an illness that makes you feel like your soul has been run over by an angry defensive lineman, a disease that interferes with your desire to sleep, eat and make love. Oh, and this illness will continue to make you feel this way for the rest of your life. How much would you be willing to pay for a treatment makes you feel normal again?

My colleagues and I posed that question to a nationally representative sample of more than 700 Americans  and we discovered something troubling—people’s willingness to pay for medical interventions depends in large part on whether the illness in question is “physical” or “mental.”  People are much less willing to part with money to treat mental illnesses, even after accounting for the perceived severity of those same illnesses. Our article—“What’s It Worth?”—is available online at the Journal of Psychiatric Services.

Let me tell you a bit more about our study. We described a handful of illnesses to people and asked them to tell us, in effect, how bad each one would be to experience. For instance, we describe type 2 diabetes to people, and told them that it was uncomplicated by any other medical problems. People thought that would be pretty hard on their quality of life. We also described below-the-knee amputation, and they thought that would be even worse than diabetes. We described severe blindness, which only leaves one able to distinguish shadows.  People thought that one was worse than either of the first two problems.

We also described a case of moderately severe depression to people, a level bad enough to cause the victims to “feel sad and downhearted a lot of the time.” The description went on to explain that it would make people “feel like a failure” and lose interest in food and sex. Trust me, it was a thorough and devastating picture of how depression can affect people’s lives.  Indeed, people thought it was horrendous, at least as bad as any of the physical illnesses we described.

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Is Health Insurance Too Cheap?

Researchers at USC recently published a study designed to find out how much people are willing to pay for better drug coverage from their health insurance plan.  The question they posed to the general public was straightforward: How much extra money would you pay per month for a health insurance plan that would pay for “specialty drugs” if you need them?

Specialty drugs are expensive new treatments for diseases like leukemia, multiple sclerosis and rheumatoid arthritis.  These drugs often cost tens of thousands of dollars, and in some cases even run into six figures per patient.  But these high costs can be accompanied by significant benefit.  Gleevec for example can dramatically increase life expectancy for people with otherwise fatal leukemia.

Keep in mind that not only are specialty drugs expensive but they are being used with increasing frequency.  According to the USC team, 3 out of 100 people in the United States will use at least one specialty drug in the following year.

How much would you pay to make sure you aren’t responsible to pay for these drugs out of pocket?  Would you be willing to give your insurance company an extra $5 per month? $10?  Maybe even $20?

The USC team found that, on average, people were willing to spend around $13 extra per month to make sure their health insurance plans cover such specialty drugs. (The study was published in the April issue of Health Affairs, and was led by John Romney.)  To put that into perspective, the actuarial cost of such coverage—how much insurance companies would expect to spend per person if everyone obtained such coverage—is around $5 per month.

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