Last summer, the Congressional Budget Office released a report under the unassuming name “Budgetary Effects of Policies That Would Increase Hepatitis C Treatment.” I read it because I am the type of person who is interested in the budgetary effects of policies that would increase hepatitis C treatment.

Embedded in the report, though, was a point that will be important for just about anything the federal government tries to do to save the lives of Americans.

Hep C is a nasty viral infection whose effects are, for a virus, unusually long-lasting. Untreated, it causes serious liver damage over the course of decades, leading to much higher rates of cirrhosis and liver cancer, all of which is very expensive to treat.

But in the 2010s, a number of extremely effective antivirals, which randomized trials show cure upwards of 95 percent of chronic infections, came on the market. Like most new drugs, these antivirals are under patent and quite expensive; as of 2020, the cost of an eight-to-twelve week course of the drugs, usually enough to cure an infection, was between $11,500 and $17,000.

Yet CBO concludes that the drugs are so effective, and the costs of treating patients with hep C who haven’t been cured are so massive, that expanding treatment with these drugs reduces federal spending on hep C treatment and associated complications overall. Doubling the number of Medicaid patients getting the drugs would increase federal spending by $4 billion over 10 years. But over the same decade, the federal government would save $7 billion through reduced need for treatments like liver transplants and ongoing care for chronic cases.

Put like that, this starts to sound like one of the rarest discoveries in federal budgeting: a free lunch. That means a policy that is good on its own merits (saving lives and preventing debilitating chronic disease) but also saves the government money.

But the most interesting part of the report to me comes at the end. “An increase in hepatitis C treatment could also affect the federal budget in other ways—for example, by leading to improved longevity and lower rates of disability,” the authors note. The latter point is pretty straightforward: If hepatitis C leads to disabilities that make people eligible for disability insurance and subsidized health coverage, then reduced hep C means lower spending on those programs. But (and this is me speculating, so blame me and not the CBO if I’m wrong) that effect is probably swamped by that of “improved longevity.”

Simply put: curing hep C means people live longer, which means they spend more years collecting Social Security, Medicare, and other benefits. That could mean that whatever cost savings the actual hep C treatment produces might be wiped out by the fact that the people whose lives are being saved will be cashing retirement checks for longer.

I like to call it the Grim Reaper effect. The US runs a large budget deficit. It also provides far more generous benefits to seniors than to children or working-age adults. Per the Urban Institute’s regular report on government spending for children, the ratio of per capita spending on senior citizens to per capita spending on children is over 5 to 1. Put together, the deficit and the elder-biased composition of federal spending implies something that is equally important and macabre: helping people live longer lives will, all else being equal, be bad for the federal budget.

In an increasingly aging country, hep C is not the first place where the Grim Reaper effect has been felt, and it won’t be the last. I don’t have an easy fix for the situation, but it feels important to at least understand.

Logan’s Run........

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