The impact of emerging cancer drugs on health insurance NZSA - - PowerPoint PPT Presentation

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The impact of emerging cancer drugs on health insurance NZSA - - PowerPoint PPT Presentation

Oct 29, 2022 49 likes •464 views

The impact of emerging cancer drugs on health insurance NZSA Conference November 2016 Len Elikhis, B.Comm (Hons), FNZSA, FIAA 1 Agenda 1. Background 2. Accounting & reserving practices 3. Developments in cancer care 4. Implications The

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The impact of emerging cancer drugs on health insurance

NZSA Conference November 2016

Len Elikhis, B.Comm (Hons), FNZSA, FIAA

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Agenda

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  • 1. Background
  • 2. Accounting & reserving practices
  • 3. Developments in cancer care
  • 4. Implications

The views here are my own and do not necessarily reflect those of my employers – past or present.

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Background

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Role of health insurance in NZ

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MOH ACC PHI Funding Healthcare delivery

Maternity Elective GPs / primary Semi acute Mental Health Public Hospitals

Some co- funding MedSafe Pharmac

Approval and purchasing 20 DHBs

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Long-term nature of health insurance

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Guaranteed renewability Non-cancellable Renewal on original terms

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Long-term nature of health insurance

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Pure Risk insurance Self Funding Health insurance

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Long-term nature of health insurance

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High risk claimants

Cost of renewability option

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Long-term nature of health insurance

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1 – 1.5% for each year of portfolio duration Selective lapsation

Cost of renewability option

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Background

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Accounting

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IFRS 4: same contract – different treatment

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Life insurance

BEL PVFP IBNR UPR

Non-life insurance

Unearned premium IBNR UPR

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Health insurance reserving in NZ

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Reserve Statutory Management IBNR 7 7 RBNA 3 3 Catastrophe 1 Guarantees / options 1 2 Claims expense 6 6 UPR 7 7

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Health insurers fund claims costs on a PAYG basis

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Selective lapsation Higher risk claimants No explicit allowance 4 7 Explicit allowance 3

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Eliminate the transference of financial responsibilities between generations

By contrast, ACC is fully funded

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Differences in reserving practices: health insurers and ACC

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Interpretation of the Accounting Standards? Market competition? Industry capitalisation?

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Developments in cancer care

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Health insurance coverage: continuum of cancer care

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Specialist consultations

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Health insurance coverage: continuum of cancer care

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Diagnostic scans

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Health insurance coverage: continuum of cancer care

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Cancer drugs

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Health insurance coverage: continuum of cancer care

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Radiation therapy

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Health insurance coverage: continuum of cancer care

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Surgery (therapeutic and reconstructive)

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Health insurance coverage: continuum of cancer care

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Other services

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Chemotherapy: from the trenches to the theatre

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Chemotherapy: mode of action

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Chemotherapy: toxicity

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Chemotherapy: toxicity

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Immunotherapy: harnessing the immune system

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Monoclonal antibodies

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Immunotherapy: harnessing the immune system

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Immune checkpoint inhibitors

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Immunotherapy: harnessing the immune system

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Immune checkpoint inhibitors

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Immunotherapy: harnessing the immune system

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Cell based therapies

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Immunotherapy: lower toxicity

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Implications

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Implications

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Funders should expect increased spending

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  • Longer treatment durations
  • Patents
  • Competition
  • Combination therapies
  • Policy settings
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Consumer expectations

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There are many things patients are willing to do without; however, medication for a fatal disease is not and should not be one of them. The seriousness of a cancer diagnosis plays a role in how much cost patients and physicians are willing to bear for modest incremental benefits. However, high prices for incremental benefits are a recipe for a system with unsustainable costs.

  • Siddiqui and Rajkumar, Mayo Clinic (2012)
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Cost trend: US perspective

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Cost trend: NZ perspective

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Cost trend: NZ perspective

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Coverage levels: NZ insurers

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Retail health policies are pro-consumptive and generally offer wide coverage

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Responding to emerging claims

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  • Exclusions for experimental treatment
  • Medical necessity (treatment without curative intent?)
  • Reasonable charges
  • Treatment criteria
  • Affiliated Providers
  • Ability to vary contract terms
  • Pricing
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Pulling the pricing lever: is it fair?

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The competitive cycle weakens the sustainability of retail health insurance

Insurer A “ring-fences”

Healthy customers transfer to new product Remaining customers pay higher premiums

Insurer A gains competitive price advantage Other insurers follow Cross-subsidies reduce

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Implications

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Conclusions

  • Health insurance is a long-term product
  • Evidence suggests that cancer costs may expose

insurers to even longer-tail claims

  • Market forces constrain insurers’ ability to pre-fund

liabilities – pricing becomes increasingly important