The Impact of High-Cost Claims on Health Plans

It is logical that high-cost claims significantly impact health plans, but the amount that high-cost claims increase a plan’s risk might surprise plan sponsors. In a recent Mercer study of about 300 health professionals, 74% of respondents cited high-cost claims as the biggest health plan cost-driver. Statistics from the 2017 Sun Life Financial Stop-Loss Report show that the frequency of claims above $1 million increased 68% from 2013 to 2016. Additionally, specialty drugs now represent one-third of all drug expenditures. Patients being treated with recently developed specialty drugs have annual costs of approximately $100,000 and those costs are anticipated to trend upward approximately 20% to 30% through 2019. The increase of high-cost claims causes a corresponding increase in stop-loss premiums. Self-funded plan sponsors who do not have a stop-loss policy should consider these high-cost claim trends and re-evaluate if a stop-loss policy is appropriate.