Neil Minkoff, Marc Hixson, Kim Gwiazdzinski, and Jim Clement authored an intriguing article in AJMC last month about stop-loss.

Apparently when payers can’t absorb the risk (from high-cost patients), they can push the cost onto stop-loss carriers. When the shock claims become too high even for the stop-loss carriers, they can pass on a certain amount to reinsurers. This is the nutshell version of something that is much more complex.

Ultimately, payers make patients pay the price (either literally or figuratively).

I couldn’t help but notice that the organizations that are meant to absorb the cost aren’t able to absorb the cost themselves.

The authors raise an interesting point: what is the point of coverage? Is it to absorb shock claims IF they occur or WHEN they occur?

One would think that payers are ready for the shock claims WHEN they occur, although this sadly doesn’t seem to be the case.

What principles of microeconomics can show up to address this problem? Would spending less in other areas allow payers to invest more on the latest high-quality drugs?