Financing the War on Cancer
Ralph Koijen and
Stijn Van Nieuwerburgh
No 24730, NBER Working Papers from National Bureau of Economic Research, Inc
We estimate the potential gains of life-extending treatments to life insurance companies and apply it to immunotherapy. These treatments promise to dramatically raise durable survival rates for a growing number of cancer patients but are often prohibitively expensive for patients and governments alike. Our main insight is that life insurance companies have a direct benefit from such treatments as they lower the insurer’s liabilities by pushing the death benefit further into the future and raise future premium income. Using detailed survival data from clinical studies, we quantify the insurers’ benefit from immunotherapy for melanoma patients. Extrapolating to 17 other cancer sites, we estimate the insurance sector’s benefit to equal $6.8 billion a year. We discuss various financing mechanisms that exploit this value creation, which depend on the relative bargaining power of insurers and consumers. Moreover, the potential gains for life insurers, which could only accrue if health insurers cover the cost of the treatments and households finance the out-of-pocket expenditure, may warrant some exploration of new boundaries between life and health insurance. We discuss the broader implications for medical innovation and long-term care insurance markets.
JEL-codes: G22 I13 I31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ias
Note: AP HC
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Financing the War on Cancer (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:24730
Ordering information: This working paper can be ordered from
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().