Gene Therapy and Large Claims Impact on Student Health Insurance

Gene therapy is revolutionizing medical science and will impact student health insurance due to its high costs. This groundbreaking treatment method offers potential cures for chronic conditions like sickle cell disease and hemophilia. Yet, its large financial implications will drive up premiums and reshape insurance plans.

This shift presents both challenges and opportunities within the student health sector, as administrators must balance the costs with the substantial benefits of gene therapy. As it evolves, gene therapy’s high cost will influence the design and pricing of health coverage.

Gene therapy and student health insurance

What is gene therapy?

Gene therapy modifies a person's genes to treat or prevent diseases. It involves changing genetic material inside cells, targeting the root causes of diseases for potential long-term cures. This method shows promise for genetic disorders and some cancers.

How is gene therapy affecting students?

Gene therapy has emerged as an imminent topic in student health insurance. It has the potential to significantly change how chronic conditions are treated, shifting from long-term management to potentially curative interventions. This shift towards integrating more advanced medical treatments will impact how health coverage is structured and offered to students.

How is student health insurance affected by gene therapy costs?

Gene therapy has the potential to affect student health insurance because it's expensive, costing between $65,000 to over $3 million per treatment. As these therapies become more common, insurance companies are worried about the high costs. To manage these expenses, they might have to increase student health insurance premiums or change how large claims are managed. This could lead to higher costs for everyone, even if very few students receive these expensive treatments.

Colleges and universities are thinking about their student health insurance plan benefits and how to implement strategies to alleviate the rising costs of expensive treatments. They might cut back on some benefits or require students to participate more in the cost share for certain services.

Negotiating costs of health insurance for students

Navigating health insurance costs and coverage

Insurers face the challenge of integrating gene therapy's high costs into benefit plans. They engage in complex negotiations to determine therapy pricing and secure outcome-based agreements. An example of this type of agreement is when insurance companies negotiate with therapy providers to include guarantees about the therapy's effectiveness. This means they might not have to pay again if the treatment doesn't work the first time.

The outcomes of these negotiations are crucial for students, especially those benefiting from gene therapy. While still costly, these agreements improve the affordability of advanced therapies for students.

Does health insurance cover gene therapy?

Adjusting insurance strategies

Most health insurance plans require prior authorization for gene therapy. Serving a healthy demographic has kept claims costs and enrollee premiums associated with student health insurance relatively low. Gene therapy's high costs, however, are making insurers rethink how they assess risk and set prices for student health insurance. This means students and schools might see higher insurance premiums as insurers try to cover these big expenses.

Cost management efforts

A key consideration in the cost management of gene therapy is the insurance company’s internal stop-loss limits and pooling levels. These techniques help an insurance company finance or spread the risk of large claims. The internal limit is the amount the insurer includes in the school’s claim pool and will impact future rates.

Managing internal stop loss and pooling levels helps limit how much of these high dollar claims impact overall premiums. These adjustments enable insurers to manage large claims without major disruptions. The insurance companies are raising the cost associated with the stop loss or pooling levels, putting additional pressure on student premiums.

Revising how insurers assess risk and set prices for student health insurance could mean that students are responsible for a greater share of the costs through higher premiums and reduced benefits. Some colleges and universities help pay a portion of these costs, especially for contracted graduate students. As the cost of insurance goes up, the school’s budget needs to be adjusted.

The future of student health insurance

Strategic planning for future challenges

Gene therapy’s development makes it critical for higher ed institutions to work closely with student health insurance brokers to review and consider benefit adjustments:

• Evaluate benefit options: Assess your current student health insurance plan. This evaluation might lead to restructuring to balance the cost implications of gene therapy and other high-cost claims.
• Anticipate rate increases: Consider that insurance premiums may increase by 10% or more in any given year while tuition and fees might only rise by 3 to 4%. This means the cost of student health insurance could grow much faster than tuition and fees. As a result, schools are exploring ways to keep health insurance affordable despite rising costs.
• Educate and communicate to enhance transparency: Transparency with plan beneficiaries is more crucial than ever. Better communication will help students get ready for changes and understand why these changes are happening.

Preparing for gene therapy and other large claims

Gene therapy and other large claims will transform student health insurance and healthcare broadly, driving up costs and necessitating adjustments. Higher education institutions need to start planning now to manage the impact on insurance premiums and coverage options.

Want to learn more?

Find Kristen Devine on LinkedIn.

Connect with the Risk Strategies Education team at highereducation@risk-strategies.com.