Relief for Severe Asthma, at a High Price ANAHAD O'CONNOR September 3, 2012 New York Times

Struggle against asthma For two decades, Patricia DiGiusto struggled with severe asthma. Powerful medications and frequent use of her inhaler could not prevent repeated trips to the emergency room.asthma Two years ago, Ms. DiGiustos doctor told her about a new procedure called bronchial thermoplasty, the first non-drug therapy approved by the Food and Drug Administration for patients with severe asthma.

Treating asthma Avoiding allergens and using inhaled medications are enough to keep asthma under control in most patients. But for the minority with severe persistent asthma, medication and lifestyle changes are not enough. Frequent hospital trips are almost inevitable, and powerful steroids like prednisone which can cause thinning bones, cataracts, depression and other debilitating side effects become a necessity. steroidscataracts Nationwide, asthma treatment costs exceed $10 billion a year, and over half of that is spent on severe asthmatics, who make up only 10 percent of the asthma population.

Does the new treatment work? Researchers at Washington University School of Medicine found that compared with a control group, bronchial thermoplasty patients saw:found that compared with a control group –asthma attacks drop by a third –emergency room visits fall by 84 percent, and –the number of days they lost from work and school drop by 66 percent.

Insurers responses Still, even patients with severe asthma often are denied insurance coverage for the procedure. A spokeswoman for Americas Health Insurance Plans, the industry trade group, said insurers are awaiting the results of an additional five-year clinical trial, required by the F.D.A. when it approved bronchial thermoplasty. That trial will not be completed until at least Until then, she said, many insurers are denying coverage on the grounds the procedure is experimental. The issue here for health plans is the long-term safety and efficacy have yet to be established, she said.

Is it worth it? But three five-year studies have already been completed. Many asthma specialists believe that insurers are taking a shortsighted approach. The one-time cost of $20,000, they say, is dwarfed by the tens of thousands of dollars in hospital bills and medication costs that a severe asthmatic can easily accumulate in a single year. One such patient, Alberto Gaulion, 68, a retired importer in Miami, estimated that for much of the last decade, his insurer, Blue Cross Blue Shield, spent about $50,000 a year on his medical care. Every two or three weeks I had to go to the hospital, he said, and I was taking everything that was on the market. I was on a cocktail of drugs. Blue Cross would not cover the procedure for him, so Mr. Gaulion paid out of pocket when he had it in Since then, he has had no hospital visits and no asthma attacks, and takes only one medication instead of five.

Welfare Loss Economics – 1 – Moral Hazard If you insure people, they may buy more than they need. This leads to a welfare economic loss. Price Quantity Demand – no insurance P0P0 Q0Q0 Demand – insurance Q1Q1 C0C0

Economics – 2 – Income Transfer Attributed to John Nyman Person would not have bought care w/o insurance. Insurance transfers income to patient. Price Quantity Demand – no ins P0P0 Q0Q0 Demand –ins Q1Q1 C0C0 Increased Cons Surp. Loss