Silver lining

Cancer is one of the most emotive diseases, with most people affected either first or second hand by the disease. But, with treatment costs rising, the medical insurance industry is facing a balancing act when it comes to covering this disease.

Just how expensive cancer treatment is becoming was highlighted recently by Bupa. In its report, Cancer Diagnosis and Treatment: A 2021 Projection, it estimates that the cost of cancer diagnosis and treatment will rise from £9.4 billion in 2010 to £15.3 billion in 2021 – an increase of 62 per cent. In terms of the average cost of treating someone diagnosed with cancer, this means an increase from around £30,000 in 2010 to almost £40,000 in 2021.

The report found that although a significant part of the increase in cost will be a result of the UK’s ageing population, the escalating cost of cancer technologies and treatments were also behind the increase.

These growing costs have significant implications for medical insurance. Already premiums are edging upwards as a result of cancer cover. According to Howard Hughes, head of employer marketing at Simplyhealth, the difference in premium between its full cancer cover and excluding cancer altogether is around 12 per cent. “Cancer cover is incredibly expensive,” he says. “Although it doesn’t add a huge amount to the premium when you include it as an option, it will significantly affect the cost of cover if large claims start coming in.”

And the costs associated with company schemes could rise further as a result of the abolition of the default retirement age last October. The risk of contracting cancer increases with age. While one in 10 cancers are diagnosed among people aged 25 to 49, the percentage increases to more than half in people aged between 50 and 74.

With older workforces, employers will potentially be exposed to a larger number of cancer claims. “Employers need to think about the older workforce as it could influence their decisions on cancer cover,” says Ann Dougan, marketing director at Cigna HealthCare. “As the risk of contracting the disease increases with age this could increase the number of cancer claims on a scheme and push up premiums.”

But while the cost of cancer treatment is set to rise significantly, there appears to be little appetite to cut back on cover. “The majority of our customers want the full cancer cover,” says Dr Katie Tryon, head of clinical vitality at PruHealth. “No one wants to remove cancer cover if it’s already included on a scheme but we’re also finding that employers taking out medical insurance for the first time are keen to include cancer cover.”

It offers two levels of cancer cover. Its full cancer cover, which is one of the most comprehensive in the market covering everything from diagnosis through to palliative care, and its core cover, which doesn’t include palliative care and reduces the length of time for biological therapies to 12 months and for hormone and bisphosphonate therapies to three months.

A similar reluctance to reduce cancer cover has also been seen at Simplyhealth. Hughes is surprised by this. “It puzzles me,” he says. “With budgets tight, we’re seeing more employers asking themselves why they provide medical insurance to employees. For some it’s to offer a perk and help them attract and retain employees. Others have a more hardnosed reason, getting employees back to work, but they still don’t want to drop cancer cover. It’s an emotional response rather than a rational one.”

He says that, when he talks to employers about their medical insurance, he includes six or seven different cancer cover options. These range from no cancer cover through options such as cash benefit, financial and time caps and benefit restrictions, to full cancer cover. This, he says, helps to start a discussion around the financial implications of different cover options.

Insurers are responding to this demand through their product development. While many were keen to introduce cost-saving initiatives such as time and financial limits on cancer cover a few years ago, the market is now going in the opposite direction with cancer cover becoming more and more comprehensive. “Bupa and PruHealth have offered the most comprehensive cover for some time, taking policyholders right through from diagnosis to palliative care,” says Kevin Jones, sales director, east at Jelf Employee Benefits. “They were recently joined by Aviva and I believe that some of the other insurers will make a similar move too.”

Aviva’s cancer cover is a good example of how comprehensive these insurers’ cover is. Through its cancer pledge, which comes into effect from January 2012 for new and renewing schemes, it has removed the benefit limits it previously had in place, meaning that any cancer treatments recommended by medical specialists are covered in full. On top of this it has added new benefits to support people through cancer. These include cover for anti-sickness drugs, £100 towards the cost of a wig and routine checks for up to 10 years after cancer treatment.

While the current trend is towards comprehensive cover, insurers are aware of the cost implications and are working hard to bring in additional, low-cost benefits to support employees diagnosed with cancer.

These benefits often have a high perceived value. NHS cash benefit is a good example of this. By offering a cash incentive to take treatment through the NHS, insurers can keep claims costs down without any compromise on the employee’s treatment.

“Cancer cover is incredibly expensive,” he says. “Although it doesn’t add a huge amount to the premuim when you include it as an option, it will significantly affect the cost of cover if large claims start coming in.”

Some insurers take this a step further. For instance at Cigna HealthCare, if an employee chooses to be treated within the NHS there is some flexibility around how the money they saved is used. Dougan explains: “We could help with some of the associated costs of their treatment such as taxis, childcare or parking charges. No matter what level of cover they have, we want to give them as many choices as possible about how they use it.”

Nurse-led support services are also common among the insurers. These can provide invaluable support throughout an employee’s cancer treatment, helping them decide which treatment is best and managing them back into the NHS where this is necessary.

As well as supporting employees with cancer, insurers are also looking at how they can help employees reduce the risk of contracting the disease in the first place. Recent figures from Cancer Research UK found that more than 40 per cent of cancers were due to lifestyle choices such as smoking, alcohol and excess weight.

PruHealth’s Dr Tryon says the insurer’s focus on health and wellbeing can help in this area. “Changing people’s behaviours and helping them lead healthier lives is important and can reduce their risk of contracting cancer,” she says. “This will become an increasingly important part of tackling the disease.”

And while the current focus may be for comprehensive cover, escalating costs are likely to dampen the appetite for this at some point. When this happens, more fundamental changes may be necessary. As an example, Cigna’s Dougan says that a critical illness payment may become more appropriate as employers’ budgets are stretched. “The employee would receive a lump sum upon diagnosis of cancer and, with support from the specialist nurse team, they can decide how they want to spend it,” she explains.

Hughes also believes the drive towards more and more comprehensive cover will be short-lived as the cost of treatment inevitably finds its way onto premiums. “It is a challenge,” he says. “Greater flexibility around cancer cover options is becoming more common in the large corporate market and I expect the SME market will follow. Although employers want to offer comprehensive cancer cover, it’s not sustainable.”