With talks of a COVID-19 vaccine on the horizon, many are asking about the long term effects of the pandemic, like how will COVID-19 change health insurance. The COVID-19 pandemic has impacted businesses and other organizations in multiple ways. Lost revenue and the overnight change to remote workforces, among other things, have caused significant changes to operations and finances. A new report shows that there will be long-term effects on employee benefit programs as well.
Health insurers are forecasting continued cost increases that dwarf general inflation rates, according to the report by Mercer Marsh Benefits. Most expect 2021 medical cost inflation to come in at 4.3%, slightly higher than in 2020. They anticipate the trend of escalating costs to continue next year and going forward.
The culprits? The high costs of diagnosing, caring for and treating COVID-19 patients. A survey of studies released in September showed that half of all COVID-19 patients who were admitted to an intensive care unit were there more than seven days. ICU patients who need ventilators also cost more to treat – 59% more per day, according to one report.
A new landscape for plan outlays
Like this year, 2021 will be a very different one for group health plan outlays, as a number of novel factors take center stage, including:
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A rebound in elective diagnostics and treatments
Mercer Marsh predicts a rebound in some elective treatments when it is safe to resume these procedures in 2021. On the other hand, some elective procedures that were postponed will never be rescheduled as people end up taking a different non-surgical course and ideally recover from their ailment or use lower cost-of-care virtual services.
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Delays leading to a greater need for care
Delays in treatment for serious conditions, such as cancer, and exacerbation of other chronic conditions, like diabetes, may require more invasive and expensive care. Many people have postponed these treatments during the pandemic and doing so may end up increasing the cost of the treatments if their conditions have deteriorated.
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New claims linked to remote working
The report predicts a higher incidence of conditions relating to remote working and sedentary lifestyle, including musculoskeletal and mental health issues. According to the journal The Lancet Psychiatry, “A major adverse consequence of the COVID-19 pandemic is likely to be increased social isolation and loneliness … which are strongly associated with anxiety, depression, self-harm, and suicide attempts across the lifespan.”
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COVID-19-specific claims
Sixty-eight percent of insurers expect to see higher outlays due to the cost of COVID-19-related diagnostics, care and treatment. There is also the issue of paying for a vaccine once one becomes available. These costs cannot be predicted at this point.
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Ongoing COVID-19 concerns
The long-term physical and mental health effects on survivors of COVID-19 are largely unknown. Some coronavirus “long-haulers,” who have lingering symptoms and effects that can last for months, may require additional treatment and doctors’ visits as they try to cope.
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Increases to unit prices
Prices for a wide range of services are increasing as demand rises and/or to offset revenue lost due to COVID-19. Mercer Marsh found that 68% of insurers expect costs will rise in 2021 because of health providers charging more to offset revenue lost due to the coronavirus.
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New PPE costs
The unit cost of care is also being driven up by the cost of personal protective equipment, which is being added to many treatment bills.
The takeaway
In the years ahead, employee benefits will change in terms of the services they provide, the treatments they cover, and the way they will be delivered.
More doctors’ visits will be done via tablet computers. Coverage for preventive medicine will increase to drive better and less expensive health outcomes. But even with that, a vicious pandemic coupled with uninvited changes in lifestyles will likely drive up the cost of those benefits for years to come.
