Taking Out a Health Care Mortgage for a Cure

By: Dave Roos
What if you could mortgage health care costs the way you mortgage a house? CSA-Images/Getty/HowStuffWorks
What if you could mortgage health care costs the way you mortgage a house? CSA-Images/Getty/HowStuffWorks

Nearly 20,000 Americans died of complications from hepatitis C in 2013, a liver disease that claims 500,000 lives worldwide, according to the CDC. Until recently, the best course of treatment for hepatitis C was 48 weeks of immune-boosting injections that only cured half of patients and left others with life-threatening side effects. But then came Sovaldi.

Approved by the FDA in 2013, Sovaldi is nothing short of a miracle drug for people with hepatitis C. Patients take one pill a day for 12 weeks (in combination with some other drugs), and in 90 percent of cases, they are functionally cured of hepatitis C for life. Yes, for life.


But there's a catch. Sovaldi costs a jaw-dropping $1,000 a pill, with a full course of treatments running $84,000, not factoring in doctor's fees. If your insurance doesn't cover Sovaldi, or your state's Medicaid programs won't pay for it, you're looking at the health care equivalent of buying a small house.

Let's stick with that house analogy for a minute. Few Americans can afford to buy a house up front in cash. That's why banks offer mortgages, so that homeowners can pay for a house incrementally over 20 to 30 years. What if we created the same type of loan for life-changing, but crazy expensive health care treatments — a mortgage for a cure?

That's exactly what researchers at the MIT Laboratory for Financial Engineering and the Dana-Farber Cancer Institute have proposed in a recent article in the journal Science Translational Medicine. By offering mortgage-style health care loans (HCLs), more Americans would potentially have access to breakthrough medical treatments, not only for hepatitis C, but also for cancer and other rare and deadly diseases.

In the past, the best drugs were “maintenance” drugs, relatively inexpensive pills for lowering cholesterol or managing blood sugar that a patient would take for life. Now scientists have the tools to develop a one-shot cure in a pill. But those cures, like Sovaldi, will be costly. 

Before you rail at pharmaceutical companies for charging $1,000 for a pill, it's important to realize that a lifetime of old-school hepatitis C treatments — plus the strong likelihood of a liver transplant — would cost the same or more than a 12-week course of Sovaldi. The real problem with this new breed of miracle drug isn't the cost, per se, but the fact that patients have to pay for it all at once. 

In that case, the proposal for a mortgage-style loan to cover the upfront cost of curatives seems sound. The authors of the paper run scenarios in which these health care loans are securitized like mortgages and sold to investors. This would be better than the current methods available for paying for unexpected medical bills, such as taking out a second mortgage on the family house or using credit cards with high interest rates.

"The fact that 62 percent of all personal bankruptcies in 2007 were related to medical expenses and three-quarters of those filing for bankruptcy had some form of health insurance underscores the need for a more efficient health care loan market," the researchers write.

It all seems to make perfect sense. Until you talk to Soeren Mattke.

Mattke is a senior scientist at the RAND Corporation and the managing director of RAND Health Advisory Services. He, too, is deeply concerned about the cost and availability of revolutionary drugs like Sovaldi, and he agrees that alternative means of financing must be explored. But he's not on board with the above proposal.

“The [Science Translational Medicine] paper is intellectually interesting, but the concept of making individuals pay off health care costs is a really dumb idea in my mind,” says Mattke. 

The study authors restricted low-income people from their proposal since they say that they can get drug funding through Medicaid (or perhaps a special government program.) Mattke argues that it's lower-income Medicaid recipients who are most likely to lack access to life-saving drugs like Sovaldi.  Many state Medicaid programs have put onerous restrictions on who can get Sovaldi, reserving the expensive treatment for only the sickest patients. The rest have to wait their turn.  

“A pharmaceutical company with an expensive breakthrough drug could say to Medicaid, ‘OK, you need to treat 10,000 patients, but you can only afford to pay for 1,000 patients per year. We'll give you the drugs right now for all 10,000 patients and you pay us back over the next 10 years,'” Mattke says. “These financing arrangements are not unheard of in medical care, they're just not established with things that are consumed right away, like drugs. Conceptually, to me, it's really not that different.”