A number of reinsurers and stop-loss carriers issue regular reports on the nature and size of the claims they are seeing. These companies sell insurance designed to cover very large cases that employers and health plans are concerned about bearing the full cost of. HCC is one of the country’s largest stop-loss insurers and recently issued a new report on the topic. According to the report the average severity of a stop-loss claim is over $3.1 million. The number of these claims, even at a very large deductible levels of a million dollars or more, is growing rapidly.
In terms of frequency of large claims, cancer is number one and cardiovascular disease, nervous system conditions and kidney disease are big contributors. Transplants are the top average claim cost category, with cancer and blood disorders, such as hemophilia, also having large average claims. One thing that is noticeable about most of the diseases responsible for either frequent or high stop-loss claims is the prevalence of high-cost specialty drugs in the treatment mix.
Cancer accounts for 35% of all stop-loss claim dollars paid by HCC and those costs have increased rapidly. Cardiovascular diseases are second in rank by this measure and the top ten diagnoses represent 85% of all claim costs. Led by very premature births and some gene therapies for childhood diseases, claims for young children are increasing as an area of focus. People who exercise their COBRA rights to continue coverage after losing a job, as you might expect, tend to be a high source of claims, since only those who know they are seriously ill are likely to pay the premiums for this coverage.
The stop-loss market has had a rough couple of years for profitability, so pricing has firmed up and expectations are that pricing discipline will be maintained in the face of rising claim costs, which means more expense for self-funded employers. (HCC Report)
