the impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa...
TRANSCRIPT
![Page 1: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/1.jpg)
The impact of emerging cancer drugs on health
insurance
NZSA Conference
November 2016
Len Elikhis, B.Comm (Hons), FNZSA, FIAA
1
![Page 2: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/2.jpg)
Agenda
2
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.
![Page 3: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/3.jpg)
Background
3
![Page 4: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/4.jpg)
Role of health insurance in NZ
4
MOH ACC PHI
Funding
Healthcare delivery
MaternityElectiveGPs /
primary
Semi
acute
Mental
Health
Public
Hospitals
Some co-
funding
MedSafe
Pharmac
Approval and
purchasing
20 DHBs
![Page 5: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/5.jpg)
Long-term nature of health insurance
5
Guaranteed renewability
Non-cancellable
Renewal on original terms
![Page 6: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/6.jpg)
Long-term nature of health insurance
6
Pure
Risk
insurance
Self
Funding
Health
insurance
![Page 7: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/7.jpg)
Long-term nature of health insurance
7
High risk claimants
Cost of renewability option
![Page 8: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/8.jpg)
Long-term nature of health insurance
8
1 – 1.5% for each year of portfolio duration
Selective lapsation
Cost of renewability option
![Page 9: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/9.jpg)
Background
9
Accounting
![Page 10: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/10.jpg)
IFRS 4: same contract – different treatment
10
Life insurance
BEL
PVFP
IBNR
UPR
Non-life insurance
Unearned premium
IBNR
UPR
![Page 11: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/11.jpg)
Health insurance reserving in NZ
11
Reserve Statutory Management
IBNR 7 7
RBNA 3 3
Catastrophe 0 1
Guarantees / options 1 2
Claims expense 6 6
UPR 7 7
![Page 12: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/12.jpg)
Health insurers fund claims costs on a PAYG basis
12
Selective
lapsation
Higher risk
claimants
No explicit allowance 4 7
Explicit allowance 3 0
![Page 13: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/13.jpg)
13
Eliminate the transference of
financial responsibilities between
generations
By contrast, ACC is fully funded
![Page 14: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/14.jpg)
14
![Page 15: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/15.jpg)
Differences in reserving practices: health insurers and ACC
15
Interpretation of the Accounting Standards?
Market competition?
Industry capitalisation?
![Page 16: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/16.jpg)
Developments in cancer care
16
![Page 17: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/17.jpg)
Health insurance coverage: continuum of cancer care
17
Specialist consultations
![Page 18: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/18.jpg)
Health insurance coverage: continuum of cancer care
18
Diagnostic scans
![Page 19: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/19.jpg)
Health insurance coverage: continuum of cancer care
19
Cancer drugs
![Page 20: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/20.jpg)
Health insurance coverage: continuum of cancer care
20
Radiation therapy
![Page 21: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/21.jpg)
Health insurance coverage: continuum of cancer care
21
Surgery (therapeutic and reconstructive)
![Page 22: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/22.jpg)
Health insurance coverage: continuum of cancer care
22
Other services
![Page 23: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/23.jpg)
Chemotherapy: from the trenches to the theatre
23
![Page 24: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/24.jpg)
Chemotherapy: mode of action
24
![Page 25: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/25.jpg)
Chemotherapy: toxicity
25
![Page 26: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/26.jpg)
Chemotherapy: toxicity
26
![Page 27: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/27.jpg)
Immunotherapy: harnessing the immune system
27
Monoclonal antibodies
![Page 28: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/28.jpg)
Immunotherapy: harnessing the immune system
28
Immune checkpoint inhibitors
![Page 29: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/29.jpg)
Immunotherapy: harnessing the immune system
29
Immune checkpoint inhibitors
![Page 30: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/30.jpg)
Immunotherapy: harnessing the immune system
30
Cell based therapies
![Page 31: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/31.jpg)
Immunotherapy: lower toxicity
31
![Page 32: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/32.jpg)
Implications
32
Implications
![Page 33: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/33.jpg)
Funders should expect increased spending
33
• Longer treatment durations
• Patents
• Competition
• Combination therapies
• Policy settings
![Page 34: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/34.jpg)
Consumer expectations
34
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)
![Page 35: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/35.jpg)
Cost trend: US perspective
35
![Page 36: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/36.jpg)
Cost trend: NZ perspective
36
![Page 37: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/37.jpg)
Cost trend: NZ perspective
37
![Page 38: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/38.jpg)
Coverage levels: NZ insurers
38
Retail health policies are pro-consumptive and generally offer wide coverage
![Page 39: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/39.jpg)
Responding to emerging claims
39
• Exclusions for experimental treatment
• Medical necessity (treatment without curative intent?)
• Reasonable charges
• Treatment criteria
• Affiliated Providers
• Ability to vary contract terms
• Pricing
![Page 40: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/40.jpg)
Pulling the pricing lever: is it fair?
40
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
![Page 41: The impact of emerging cancer drugs on health insuranceconference.co.nz/files/docs/00 nzsa 16/slides/elikhis.pdf · 2016. 11. 22. · Selective lapsation Higher risk claimants No](https://reader033.vdocuments.net/reader033/viewer/2022060900/609d84985eb73050a3478adc/html5/thumbnails/41.jpg)
Implications
41
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