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Crain's Grand Rapids Business Brief 01-31-2024

Crain's Grand Rapids Business

WGVU’s Patrick Center talks with Crain’s senior writer Mark Sanchez about who pays for new high-cost gene and cell therapies. Also, Housing Next study identifies more than a dozen area corridors for potential housing development.

Mark Sanchez: Housing Next was an organization formed, I believe, 2018. As you start seeing more information about, oh, we've got this kind of a housing shortage evolving here or emerging here. And the idea is to grow the economy, grow the region, support the businesses that are growing. How do you do that? You need more people. You need more workers. Well, if they come here, where are they going to live? So, there's an issue about now here in 2024, and it's kind of gotten worse the last few years, about is there enough housing? And there's not, and we've talked about this before on this program, several thousand-unit shortage over the next several years. So, Housing Next, again, formed in 2018 to address the housing shortage in Kent and Ottawa Counties. It's working on a study that it will put out here this coming spring, looking at 21 key commercial corridors in Kent County that are ripe for housing development. And they're going to base this on things like the access to public utilities. Are they already there? Water and sewer, public transportation, underutilized buildings around the neighborhood and some of these corridors are the Plainfield Avenue, Alpine Avenue, Fulton Street, Kalamazoo Avenue, 44th and 28th Street. And it really looks at the municipalities here in the core of Kent County, Plainfield Township, Walker, Wyoming, Kentwood, and the city of Grand Rapids. So, it's coming together. Housing next is putting it together, working with a consultant. It should be ready by March or April. And then this provides the basis of how do you now go about addressing this housing shortage. It identifies these corridors that are best for development and that gives some information, some more data to your developers on, you know, we all want to go down the path of least resistance sometimes. So that provides them an area to look at for where they could put some new developments in, really started addressing the shortage we see in Kent County.

Patrick Center: What type of housing is the study suggesting?

Mark Sanchez: We'll have to wait and see to see what they come out with. It's easy to say, well, single family units, multi-family units, condos, apartments. What you're already seeing in the market is a lot of multi-family developments going up and being proposed apartments and condos. So that's something we'll have to wait and see to see exactly what the study suggests, what it comes out with, and what's best for the marketplace.

Patrick Center: We're talking with Crain's Grand Rapids Business Senior Writer Mark Sanchez. A couple of stories in Crain's talking about health insurance and new cancer gene therapies.

Mark Sanchez: We are in the age of molecular genetic medicine that does amazing stuff, cures incurable diseases, gives new hope to people who are really losing hope. And there was a situation involving Priority Health that ProPublica did a story on back in November, really calling out Priority Health, it had denied coverage to a gentleman from Sparta who had lymphoma and qualified for what's called CAR-T cell therapy. It's a very expensive form of therapy. It's in many cases the last hope. Well, Priority Health denied coverage, the man passed. But the issue in this particular situation really raises the question about these therapies. And I've done some writing about this in the last year as my colleague over at Crain's Detroit, yes, these new therapies, these new age, new generation cell and gene therapies do amazing things medically, but they're extremely expensive. In this one particular case, CAR-T, you're looking at half a million dollars for the initial therapy, and then probably another half million for the follow-up care, especially if there were any complications or side effects. You're seeing some other cell an gene therapies coming up, you're looking at $3 million or $4 million costs for these therapies. Now the issue is in Michigan, the law states very clearly that insurance companies must cover cancer drugs. Well, this is something that comes up. These gene and cell therapies were not even around. They were not even envisioned at the time that law was written, 34, almost 35 years ago. They didn't exist. So that creates another issue of exactly how this coverage comes about. And the insurance commissioner in the state, Anita Fox, three weeks ago issued a bulletin, a directive to insurance companies reminding them they must cover cancer drugs. And that includes these gene and cell therapies. She specifically mentioned CAR-T. So, there's that broader debate about the affordability of these treatments for folks. How do you access? Priority Health says it now does cover CAR-T. Blue Cross Blue Shield of Michigan, we talked to them. Yes, they've been covering this form of therapy since it came on the market in 2017. But for employers, especially if you're a self-funded employer, where one claim can really break you financially, you need to look at this. Do I cover this? Do I not? Or how do I cover it? And in most cases, One of the gentlemen I talked to, Dominick Pallone, at the Michigan Association of Health Plans, he says a lot of the insurers are doing it with reinsurance, which kicks in when you have a medical claim that exceeds a certain threshold, let's say $1 million, then reinsurance comes in and that insurance company lays off the money to the reinsurer that picks up that claim. But then that of course can create financial issues for that reinsurer. So, we're in an era of really great medical advances with these gene and cell therapies that do amazing things. But boy, they're expensive and it really creates this debate about cost access. And there are no easy answers to resolve it.

Patrick Center: We'll stick with healthcare and cost. You've written an article titled MSU Health Care helps employers save on insurance costs with new direct contracting model.

Mark Sanchez: Yeah, this is the academic medical operation for Michigan State University. It's largely. concentrated around Lansing, Southeast Michigan, but it has plans for expansion around the state here in the next several years. And MSU Health Care has signed on with a Utah company called Nomi Health, stands for no middleman, N-O-M-I. And it does direct contracting with employers. So, if you're an employer of some size and many employers, when you're talking, you get 200, 300, 400, or many more people on the payroll, they self-fund their health benefits. So, this company is looking to go out around the state and now work with these self-funded companies to directly contract with care providers. MSU Health Care is one of the first and they want to start signing up physician practices and the health systems around the state to be part of their network. And you as an employer, you contract then directly with that physician practice or that health system for care for your employees. Your employees go there, you know, you can craft those benefits to have some incentives to go there, and they take on more risks, they get better payments if they get quality outcomes. And in this case for Nomi Health, what it's promising the care providers, the health systems, and doctors, is we will pay you within 48 hours of the claim. And that of course helps with their cashflow as a business. And their aim is to really reduce the high cost of healthcare. You know, this is a story that's been going on 30 to 40 years in America. I'd love to do a story someday saying your costs for healthcare just went down, but it's just not happening. So, here's a new model for folks to consider. Again, MSU Health Care have signed on with this outfit, Nomi health, and they're looking to do direct contracting. And it's something that's getting a little more attention up there among employers who are paying high costs. You're talking $20,000+, $21,000, $22,000 a year now for a family health plan. And what's a business employer to do, especially a small business. Direct contracting is something that's getting more conversation and talking to benefit managers or talking to folks who run some of the benefit consulting firms. They say that conversation comes up more often now with employers. They at least want to look at self-funding and direct contracting. So, it's an option that's going to grow. And here's a couple of organizations that are looking to play into it.

Patrick Center: Crane's Grand Rapids Business Senior Writer, Mark Sanchez. Thank you so much.

Mark Sanchez: Thank you, Patrick.

Patrick joined WGVU Public Media in December, 2008 after eight years of investigative reporting at Grand Rapids' WOOD-TV8 and three years at WYTV News Channel 33 in Youngstown, Ohio. As News and Public Affairs Director, Patrick manages our daily radio news operation and public interest television programming. An award-winning reporter, Patrick has won multiple Michigan Associated Press Best Reporter/Anchor awards and is a three-time Academy of Television Arts & Sciences EMMY Award winner with 14 nominations.