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Morbidity compression and cancer insurance

Author

Listed:
  • Hsin-Chung WANG

    (Department of Statistical Information and Actuarial Science, Aletheia University)

  • Jack C. YUE

    (Department of Statistics, National Chengchi University, Taipei)

  • Ting-Chung CHANG

    (Department of Accounting Information, Chihlee University of Technology)

  • Ting-Chen CHANG

    (Department of Statistics, National Chengchi University, Taipei, Taiwan, R.O.C)

Abstract

Cancer is among the leading causes of death in the world, with about 10 million deaths, one in every six deaths, related to cancer in 2020. In Taiwan, cancer insurance is the most popular commercial health product. However, the loss ratio of cancer products increases with policy year and exceeds 100% in many insurance companies. In addition, almost all cancer benefits are significantly limited in order to avoid financial insolvency. In this study, we evaluate the risk of cancer insurance from the perspective of morbidity compression. We use the data from Taiwan's National Health Insurance Research Database. Also, we apply the standardized mortality ratio and the Lee-Carter model to estimate the trend of cancer-related values. We find that cancer incidence rates gradually increase with time, which indicates that the assumption of morbidity compression is violated. On the other hand, the mortality rates of cancer patients decrease significantly annually. Thus, length of life with cancer increases, and so does the cancer insurance premium. We suggest that cancer insurance covers only the first five years of medical expenditure after the insured is diagnosed with cancer.

Suggested Citation

  • Hsin-Chung WANG & Jack C. YUE & Ting-Chung CHANG & Ting-Chen CHANG, 2023. "Morbidity compression and cancer insurance," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 89(3), pages 465-482, September.
    • Handle: RePEc:ctl:louvde:v:89:y:2023:i:3:p:465-482
    DOI: 10.1017/dem.2023.11
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