Apparently it is the time of year for reinsurance information. Two more interesting reports came to our attention this week. This may be due to the growing importance of stop-loss coverage under health reform, both because more employers are now looking at stop-loss and because of health plan uncertainty due to new enrollments through the exchanges. The first report is the seventh annual survey by Aegis Risk of policy characteristics and trends, covering 224 companies. (Aegis Survey) Deductibles, aggregates, maximums, policy coverage periods, employee demographics–all figure into a stop-loss premium calculation. Even though medical trend is rising, most respondents plan to keep their deductible at the current level. The premium cost is highly sensitive to individual deductible level. For example, for 2013 on a paid claims policy, the average monthly premium per employee is $97.43 for a $100,000 deductible, but only $23.57 with a $300,000 deductible. As might be expected, larger employers tend to have higher deductibles. Aggregate deductibles, which must be satisfied before any individual claim is paid, are only used by about 26% of respondents. Aggregate coverage, which in essence limits the employer’s exposure to a lot of claims under the deductible, is most common at lower deductible levels, but tends to be relatively expensive. 2014 renewals are running at about a 15% trend. Pharmacy is included in about 92% of plans. Unlimited lifetime maximums are now in 97% of reinsurance policies, consistent with the inability to use such limitations under the reform law. Fifty-five percent of companies had at least one claim over $500,000 and 14% had one over $1 million.
The Sun Life survey focused on an analysis of catastrophic or very large claims, looking at years from 2010 to 2013. The total of these claims during the study was $4.4 billion, with employers paying $2.4 billion of that and reinsurers $2 billion. (Sun Life Survey) The top ten conditions for stop-loss included cancer, end-stage renal disease, congenital anomalies and other birth issues, cerebrovascular disorders, congestive heart failure and complications of surgical or medical care. The top ten conditions changed little over the study period, and collectively accounted for about 47% of stop-loss payments. They also tend to lead to the highest number of claims. To the extent that reinsurance includes pharmacy, cancer is likely to represent even more and larger catastrophic claims in the future. The number of claims exceeding $1 million rose very rapidly from 2010 to 2013, by 1000 percent. Leukemia, transplants and premature birth accounted for many of these claims.