A child with sickle cell disease can now potentially be cured with a single treatment. So can some patients with inherited blindness or fatal immune disorders. These gene therapies represent some of the greatest medical breakthroughs of the last 20 years. And yet, in the United States (U.S.), many patients who could benefit from them never receive them—not because the science fails––but because our health insurance system does.
Gene therapies can potentially cure lifelong chronic diseases, dramatically improve patients’ lives, and reduce decades of medical spending. Still, according to recent research, over half of new cell and gene therapies face significant coverage restrictions from commercial insurers. With dozens of high-cost gene therapies expected to reach the market over the next decade, will patients in the U.S. be able to access these drugs?
According to the Food and Drug Administration, gene therapy is a technique that “modifies a person’s genes to treat or cure disease.” Nearly 50 cell and gene therapies are already approved in the U.S., with hundreds more in development. Unlike traditional drugs, gene therapies are typically administered once and priced accordingly, often exceeding $1 million per patient.
That price tag exposes a fundamental flaw in American health insurance. Insurers pay the full cost of a gene therapy upfront, but the financial benefits—fewer hospitalizations, fewer complications, and better quality of life—accrue over decades. In a system where patients frequently change insurance plans, the insurer that pays for the cure is rarely the one that benefits from it.
An insurer could spend $2-3 million dollars on a gene therapy today, only to see the patient switch plans next year. In that case, the insurer may recoup just a fraction of the savings, while the next insurer benefits for free. Similar to high-priced hepatitis C drugs a decade ago, for state Medicaid programs and smaller insurers operating on thin margins and short budget cycles, this misalignment can make even life-saving therapies financially untenable.
The federal government has begun to respond. In January 2025, the Center for Medicare and Medicaid Innovation (CMMI) launched a new payment model for gene therapies in Medicaid. Under the program, the federal government negotiates outcomes-based contracts on behalf of state Medicaid agencies and provides technical support. These agreements, which tie payment to real-world effectiveness, are an important towards financial sustainability.
While the CMMI gene therapy model has many benefits and is a good first step, it has limits. It applies only to Medicaid and not commercial insurance. And it does not solve the biggest structural problem in gene therapy financing: what happens when patients change insurers.
To truly unlock access to gene therapies, policymakers must address this portability problem head-on.
First, insurers should stop accepting one-time, upfront pricing as the default. Instead, gene therapies should be paid for through value-based arrangements that spread payments over time (e.g., 10-15 years) and link those payments to patient outcomes. This approach would reduce financial risk for insurers and better reflect the uncertainty that still exists about long-term durability.
Second, payment obligations for gene therapies should follow patients when they change insurance plans. If a patient switches insurers, the remaining payments should transfer as well, rather than staying with the original payer. Similar to current pre-existing condition coverage rules under the Affordable Care Act, the government should maintain rules that insurers cannot deny coverage based on these payment obligations.
Third, federal regulators should modernize existing rules to allow subscription-based payment models to function at scale. Under these arrangements, insurers pay a predictable per-member fee to gain access to certain high-cost therapies. Today, overlapping regulations from antitrust law to Medicaid drug rebate reporting requirements can make these models legally risky or administratively impractical, even when they could expand access and control costs.
Finally, policymakers should seriously consider a national reinsurance pool for gene therapies. Under such a system, a central fund would cover part of the cost whenever a payer approves a gene therapy, minimizing financial shocks to state Medicaid programs and smaller insurers, and spreading costs nationally to reflect the national benefits of curing rare, genetic diseases.
A national pool would also solve several problems at once: it would address insurer churn, enable long-term tracking of patient outcomes, and ensure that the federal government’s substantial investment in gene therapy research translates into real-world access.
Today, the U.S. health insurance system has few financial incentives for health insurers to pay for potentially life-changing gene therapies––even when they work. Without reforms, gene therapies risk becoming medical miracles that exist largely out of reach. America has invested billions in discovering gene therapies. Now we need to invest in a payment system capable of delivering them.
Research for this piece was supported by Arnold Ventures.
