The illness trap: The impact of disability benefits on willingness to receive HCV treatment

Health care is assumed to be a primary good, implying that patients should always demand or accept treatments that may enhance their life expectancy and quality of life, especially if the risks associated with the treatment are low. We argue that, especially in countries with a well-developed welfare state, treating an invalidating condition may lead to opportunity costs in terms of reduced disability allowances that may represent a barrier to treatment for low-income individuals. We test this hypothesis by applying a recursive bivariate probit approach to population data from an ad hoc administrative database for Liguria (an Italian administrative region). The dataset includes data for more than 8 thousand people affected by hepatitis C Virus (HCV) infection between 2013 and 2020. After the discovery of new direct-acting antivirals (DAAs) in 2014, HCV eradication may now be possible. However, despite the national and international efforts, several patients diagnosed with HCV choose not to undergo drug therapy despite the adverse consequences for their personal health and relevant costs to the national health system. We show that five years after the implementation of the new drugs, approximately 41 % of the diagnosed population in Liguria remains untreated. This percentage increases to 64 % within the subgroup entitled to disability benefits and characterized by lower income levels. The "illness trap" effect is more substantial for older people but also low-income patients. Moreover, we find that this effect is higher in patients with an intermediate range of comorbidities; indeed, these patients are at a higher risk of losing economic benefits if they recover from HCV. These results suggest the need for healthcare policies addressing this distorting effect when designing benefit programs and granting financial benefits to patients.