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Research Questions

  1. How could policymakers change incentives to reduce the risk of payers avoiding payment for high-cost curative treatment?
  2. What framework could policymakers use to evaluate their options?

In this Perspective, Mattke and his colleagues discuss the risk that strategic behavior by health insurers could unravel the market for curative therapies for chronic diseases. Because the cost of these cures is front-loaded but the benefits accrue over time, insurers might attempt to delay treatment or avoid patients who require it, in the hope that they might change insurers. The authors discuss policy options to remedy this potential free-rider problem through alignment of incentives at the patient level, coordination among payers, and government intervention. They present a framework to analyze policy options and real-world case studies. While implementing those policy options is far from easy, stakeholders need to collaborate in order to establish equitable mechanisms that fairly distribute the cost and benefits of high-cost cures.

Key Findings

  • High-cost cures require substantial up-front payment on the part of payers, and cost savings can take years to realize.
  • The front-loading of costs could distort incentives in that some payers try to get a "free ride" by avoiding patients who need high-cost curative treatment.
  • Policy options at the individual, payer, and government level could help realign incentives to avoid the potential free rider problem.
  • Mattke and colleagues developed a framework for evaluating policy choices according to how long it takes insurers to reap monetary benefits of a cure and the extent to which the treatment's cost can be separated from the total cost of the patient's disease management.
  • Innovative financing models require collaboration among private and public payers.


Economic analyses are needed to evaluate both medical spending over time and the relationship of spending trends and patient movement among payers.

The research underlying this Perspective was conducted in RAND Health Advisory Services, the consulting practice of RAND Health.

This publication is part of the RAND Corporation Perspective series. RAND Perspectives present expert insights on timely policy issues. All RAND Perspectives undergo peer review to ensure high standards for quality and objectivity.

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