This time from HCC Holdings, one of the very largest stop-loss insurance providers to self-funded plans. HCC’s new state of the market report has some more detailed analysis than the other reports. HCC importantly notes that it isn’t just the high level of claims, but the fact that many persist beyond one year that is bedeviling both self-funded health plans and their stop-loss carriers. This is a critical factor pressuring premiums. Cancer is both the number one condition for claims dollars and also the leading example of this high-cost patient persistence. Cancer has often become a chronic disease with patients undergoing multiple rounds of very expansive therapies, which work for a while but ultimately fail to completely clear the cancer.
The report also points out that high dollar claims are an issue but what matters for stop-loss insurers is the amount of a claim that is over the deductible, or the amount the self-funded plan pays. The number of claims over a $500,000 deductible rose 83% in 2024 and 114% in 2025. The number over a $1 million deductible rose 158% in 2024 and 213% in 2025. So the carriers are seeing many more claims. And many plans have deductibles as low as $100,000. As other carriers have noted, cancer has for years been the top total dollar condition, followed by cardiovascular conditions. Congenital and other birth conditions continue to account for a high percent of all claims over $1 million. Mental and behavioral health claims are hitting stop-loss insurers more frequently and you have to wonder if part of this is driven by widespread fraud among some providers.
Transplants have been a source of expensive stop-loss claims for decades and there is a small but continuing trend for for transplants each year, probably due to aging, more serious disease at a young age in some groups and better organ supply. A good tip for their customers is to not lock-in a renewal rate until at least ten months of data is in. The more data is included, the lower and more accurate tends to be the current year’s final estimate of the percent of premium paid out on claims, so it can benefit self-funded plans to wait before making a commitment on a renewal plan. The report contains some other useful recommendations for these employer plans. (HCC Report)
