The case for investing in children’s health should be self-evident. As a society we have a responsibility to invest in the next generation, and few investments carry greater long-term benefit than helping children reach their healthiest possible futures.
When we diagnose and treat conditions early, we do more than improve a child’s health in the moment. We are altering the trajectory of their entire life: development of their personal confidence, resilience, mental wellbeing, learning capacity, and in many cases, also reducing decades of downstream public and private healthcare costs.
Yet, pediatric innovation remains chronically and systemically undervalued in healthcare.
That is not because the market for pediatric healthcare is small, it is because the incentives are misaligned. The cost of treating a child’s condition is incurred immediately. However, when early pediatric interventions are effective, their benefits often compound over decades.
No single stakeholder is incentivized to properly and accurately consider the full return on early pediatric interventions and support their adoption. The average tenure of a person staying on the same health plan is two to three years. As a result, private insurers are focused on cost savings that will be realized within that time frame, which for pediatric treatments especially, may only represent a small proportion of the overall benefit.
On the public insurance side, children are largely covered by Medicaid, and while pediatric health is a central tenet of Medicaid’s mission, the program is too often hamstrung by its structure. Unlike Medicare, which is entirely financed at the federal level, Medicaid is jointly financed between the federal government and each individual state. The program is often left underfunded, as its budget is subject to annual appropriations decisions by state legislators who have limited fiscal flexibility. Priorities are constantly changing, making long-term planning next to impossible for Medicaid decision makers.
That misalignment has consequences well before a new technology ever reaches a payer’s desk. When long-term pediatric outcomes are undervalued, the ripple effect moves backward through the entire innovation pipeline, shaping what gets funded, what gets studied, and what ultimately reaches patients.
Investors, wary of uncertain reimbursement and lower near-term returns, often direct capital toward adult indications with clearer paths to market. Drug and device developers may follow the same logic, deprioritize pediatric programs or skip pediatric studies. The result is a self-reinforcing cycle: limited investment leads to fewer pediatric success stories, which then reinforces the false perception that pediatric markets are too small or too risky to justify meaningful investment.
This is why pediatric innovation in healthcare must be evaluated differently.
Payers should require robust clinical evidence to make responsible coverage decisions. But the decision making framework for pediatric products should reflect the unique realities of childhood conditions: the value of early intervention, the long-term costs and consequences of undertreatment, and the potential for a therapy to alter a child’s life path before preventable challenges become permanent ones.
Policy leaders should also examine whether existing pediatric coverage pathways are actually keeping pace with modern innovation. In theory, we already have a powerful mechanism for this: the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) benefit. Under federal law, EPSDT mandates that Medicaid-enrolled children receive all medically necessary services to correct or ameliorate important pediatric conditions, regardless of whether those services are explicitly covered in a state’s standard plan. It is a visionary policy designed to ensure that no child is left behind by the structural limitations of our healthcare system. In practice, awareness of the EPSDT benefit among Medicaid beneficiaries is low, and Medicaid plans need to do more to streamline the approval process for EPSDT-covered technologies.
Investing in pediatric care is not simply a moral imperative. It is one of the most practical long-term investments the healthcare system can make.
The question is not whether children’s health is worth the investment, that answer is self-evident. The real question is whether our healthcare ecosystem has the foresight to correct these incentive structures before another generation of children bear the cost of our delay.
Photo: Suriyapong Thongsawang, Getty Images
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Scott Xiao is the co-founder and CEO of Luminopia, a therapeutics company developing software-based interventions at the intersection of ophthalmology and neuroscience. Luminopia’s lead product is a novel FDA-cleared prescription digital therapeutic for amblyopia, the leading cause of vision loss in children, affecting approximately 1 in every 30 children. Scott founded Luminopia after leaving Harvard University at age 17, inspired by a classmate’s experience with amblyopia and the limitations of traditional treatment. He has led the company from early development through clinical validation, regulatory clearance and national commercialization, with the therapy now prescribed to more than 12,000 patients by 1,300+ providers at 600+ top eye institutes, children's hospitals and private practices. Under his leadership, Luminopia became the first FDA-cleared virtual reality–based treatment for any medical condition. Scott has also spearheaded Luminopia’s real-world evidence strategy, including the development of the PUPiL Registry, which has been instrumental in securing both FDA label expansion and major payer coverage decisions. Scott has been recognized on Forbes 30 Under 30 list in Healthcare, MIT Technology Review Innovators Under 35, and Modern Healthcare’s 40 Under 40. Luminopia was also named one of TIME’s Best Inventions of 2023. Scott is a strong advocate for the role of technology in improving patient engagement and outcomes and is focused on expanding Luminopia’s pipeline to address additional neuro-visual conditions, including strabismus and vision loss following stroke or traumatic brain injury.
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