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Regulators post cancer table update drafts

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Medical science, lifestyle changes and medical underwriting seem to have cut the hospitalization bills for people who have cancer insurance dramatically.

Claimants in their 40s, for example, might have filed about $20 to $30 in claims per $100 of daily hospitalization coverage in the late 1970s. Today, the average is only about $5 in claims per $100 of daily hospitalization benefits, and that means an insurer can afford to back obligations for a new cancer insurance claim with a much smaller reserve than it would have had to create in the late 1970s, according to actuaries at the Washington, D.C.-based American Academy of Actuaries and the Schaumburg, Illinois-based Society of Actuaries.

The actuaries have presented cancer insurance claim in a report on proposed 2016 cancer claim cost valuation tables. 

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The Health Actuarial Task Force, part of the Kansas City, Missouri-based National Association of Insurance Commissioners, has posted the cancer tables report on its section of the NAIC website. If the NAIC approves the tables, insurers could use the tables when developing and pricing cancer insurance products, and regulators could use the tables when deciding whether coverage issuers have adequate reserves.

Insurers now use tables published in 1985. Those tables were based on cancer claims sent to insurers from 1978 through 1980.

The new tables are based on cancer insurance claims sent to 15 cancer issuers from 2001 through 2010.

The actuaries who developed the tables say the middle-age insureds in the new tables are more likely to file cancer claims than the middle-age insureds in the 1985 tables, but that seems to be because doctors are doing a better job of detecting cancer when it’s easier to treat. The reported incidence of cancer for older insureds is much lower than it was.

Adults younger than 30 years are unlikely to file cancer insurance claims, but, when they do, the average length of hospital stays is very high, the actuaries say.

“Further research, including discussions with physicians, indicated that the types of cancer diagnosed in adults less than 30 is materially different than those in older ages,” the actuaries write. “Typically more leukemia and lymphoma requiring longer treatment as compared to site tumors, which more often require a surgical stay for extraction.”

For insureds over 30, length of stay does increase for the older insureds, but length of stay increases at a relatively slow rate, the actuaries say. 

A 20-year-old woman with cancer insurance who files a claim after entering the hospital for leukemia or another other form of blood cancer spends an average of about 56 days in the hospital. A 19-year-old male cancer insurance insured who enters the hospital for treatment of blood cancer spends an average of about 221 days on the hospital, according to the report.

Comments on the report are due Oct. 6.


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