PCSC 2025 Summer Newsletter

QBE 2025 Accident & Health Market Report: Navigating the Evolving Healthcare Landscape

The healthcare sector is in constant flux, presenting both challenges and opportunities for businesses and self-funded healthcare plans. QBE’s 2025 Accident & Health Market Report offers a comprehensive look at key trends, emerging risks, and strategic insights crucial for managing healthcare costs and ensuring employee well-being. The report underscores the growing importance of robust risk management in an environment shaped by changing policies, escalating medical costs, and an evolving disease landscape.

The Indispensable Role of Medical Stop Loss Insurance

In today’s intricate healthcare environment, medical stoploss insurance remains an essential tool for stabilizing costs for self-funded plans. Projections indicate a continued shift from fully insured to self-funded plans, as employers increasingly seek ways to control rising premiums. This move is significant, with fully insured enrollment expected to decrease while self-funded enrollment rises over the next few years. Simultaneously, hospitals are likely to push for higher reimbursement rates in contract negotiations, further emphasizing the critical need for cost containment within employer-sponsored health plans.

Increasing Organ Transplant Costs and the Need for Carve-Out Policies

Organ transplant procedures continue to hit record highs, a trend expected to persist due to increasing organ demand, new legislation, and scientific advancements. QBE has noted a sustained increase in the overall cost of transplants, highlighting the necessity for self-funded groups to protect themselves from these substantial financial risks. A fully insured organ transplant carve-out policy from QBE directly addresses this growing need.

Key Medical Stop Loss Claims Trends

QBE’s analysis of stop loss claims by primary diagnosis reveals variations in claim mix across different deductible levels. Cancers (neoplasms) consistently remain the leading diagnosis across all deductibles, though their impact lessens at higher deductibles. Circulatory system diseases are the second most frequent, making up about 12% at every deductible. As deductibles increase, respiratory system diseases and preterm births with congenital anomalies become more significant contributors to overall claim costs. Higher deductible claims (at $500K and above) are more heavily influenced by extremely high-dollar claims. The mix of cancer claims also varies by type and deductible. For example, female breast cancer accounts for a larger percentage of claims at lower deductibles but a much smaller percentage at higher deductibles. Conversely, lymphoid leukemia’s share of cancer claims significantly increases with higher deductibles, becoming the highest cost category at these levels due to expensive treatments like CAR-T therapy. Despite a slight dip in the mix of neoplasms at the $200K deductible in Q1 2024, both the frequency and severity of cancer claims continue to rise across all deductible levels. Overall claim frequency continues its upward trend, with Q1 2024 effective date groups experiencing an all-time high increase. Neoplasm claim frequency for 2024 effective groups has also significantly increased, as have diseases of the circulatory system for the same period.

The Alarming Rise in Cancer Among Younger Populations

A particularly concerning trend is the sharp increase in the frequency and severity of malignant neoplasms, especially in individual sunder 50. Early-onset cancers, including breast, lung, and pancreatic, are becoming more prevalent and often present with aggressive characteristics. This shift suggests that environmental and lifestyle factors are playing a more significant role than genetic predisposition. Forecasts predict a substantial global increase in early-onset cancer by 2030, with women under 50 facing a considerably higher incidence rate than men. Treatments for these cancers are often more aggressive and costly, requiring prolonged care. A significant percentage of cancers are believed to be caused by modifiable environmental factors, highlighting the importance of lifestyle changes and societal interventions.

A Dangerous Surge in Circulatory Disease

The increasing prevalence of circulatory diseases, encompassing conditions like heart failure, atrial fibrillation, and hypertensive diseases, is another major concern. Chronic conditions such as diabetes, obesity, and hypertension contribute to this rise. Studies have highlighted increasing heart failure rates and worsening disparities in cardiovascular care, disproportionately affecting younger patients, minority groups, and individuals with co-morbidities. The frequency of circulatory claims has risen significantly post-COVID. Research is beginning to show a link between severe infection with the original COVID virus strain in unvaccinated individuals and an increased risk of heart attack or stroke. QBE’s analysis of circulatory claims reveals a notable increase in both frequency and severity, with heart failure being the most common diagnosis for claims exceeding $1M. Reimbursements for circulatory diseases have increased significantly as a percentage of all claims over $200K in a four-year period, with some individual claims exceeding several million dollars. Projections indicate a potential tripling of healthcare costs related to circulatory disease from 2020 to 2050, emphasizing the urgent need for effective prevention, early detection, and equitable healthcare access.

The Impact of Preterm Infant Claims on Health Plans

While the overall preterm birth rate remained stable in 2024, QBE has observed a concerning trend: a growing frequency of claims for preterm births with associated congenital anomalies, particularly at the $1M and $2M deductible levels. This indicates a continuous escalation in the magnitude of these claims. Recent research suggests a shift towards more aggressive treatments for infants born at very early stages of gestation, likely contributing to the increased severity of premature birth claims. Beyond congenital anomalies, factors such as smoking, hypertension, diabetes, unhealthy weight, and the mother’s gestational age influence preterm birth. Addressing chronic health conditions and risk factors is crucial for reducing the risks of preterm birth. Although the Centers for Disease Control and Prevention reported a slight decline in the rate from 2021 to 2022, preterm births remain a leading cause of infant mortality, which saw ahistoric increase in 2023. QBE’s largest claims for preterm births with associated congenital anomalies have exceeded several million dollars in recent years.

Explosive Growth in the Specialty Pharmacy Market

The specialty drug market, which includes biologics, gene therapies, and cancer treatments, is one of the fastest-growing segments within pharmacy services, experiencing rapid growth in the past year due to numerous new drug approvals. With the average cost of a specialty medication now exceeding $5,000 annually, this increased expense is significantly straining healthcare plans. The U.S. faces notably higher costs compared to other industrialized nations due to factors such as price regulation, high demand for revolutionary treatments, rapid FDA approvals, and extensive marketing. This historic growth in marketing has been fueled by the launch of novel drugs and limited new biosimilar impact. Specialty pharmacy revenue is projected to rise steadily over the next few years, increasing profitability for specialty pharmacies and managed care service providers. The global spend on cancer drugs alone is expected to reach hundreds of billions of dollars by 2027.

Cell and Gene Therapy: A Record Year for Approvals

2024 was a landmark year for cell and gene therapy approvals, with several new therapies receiving approval for autoimmune diseases and rare genetic conditions. There are now approved cell and gene therapies for over 20 conditions across more than eight distinct disease categories. Despite these advancements, the incidence of gene therapy claims on QBE’s book of business has remained low from 2022-2024. PCHIP members may request a full copy of the report.  Organizations interested in learning about the benefits that PCHIP may bring to their employee health benefit program should contact Eric Himes at eric@pcsconline.org.