What COVID is Doing to Your Health Plan

I’ve made an effort to work from home again more often over the last couple weeks. And as I again sit in the home office where I spent most of my time last year, I am trying to feel nostalgic as opposed to distressed. Nostalgic for the point last Spring/Summer when we had settled into a rhythm of working from home and were enjoying the novelty… as opposed to distressed over the recent COVID surge in Louisiana, and the extraordinary strain currently faced by our local healthcare facilities.

During those halcyon days (sarcasm strongly implied, friend), I spent a lot of time speculating on the effect the pandemic would have on clients’ benefit plans. With the persistent uncertainty of COVID, these discussions never seem to have abated. But now that we’re into our second year of this mess, at least we’re starting to get some data to evaluate. I always look forward to the annual release of PWC’s medical cost trend study, and this year’s study confirmed some of my speculation from last year.

As healthcare systems rushed to shut down last Spring, my biggest concern was the future impact on acuity. With restricted access to care, delayed preventive screenings, and cancelled elective procedures, I wondered how conditions would manifest themselves as the public started getting care again. The PWC study shows that my concern was real: evidence shows that due to last year’s deferred care, the acuity of illness is worse than expected in 2021. The study is filled with plenty of other interesting observations, and I recommend reading it if you’re a benefits geek like me. And let’s face it, if you read this blog…

The increased acuity seems to be born out anecdotally in what we’ve seen in health plan renewals over the last 12-18 months. As they were making record profits, we saw health carriers issuing predictable but cautious renewals. Instead of rate decreases (or even rate passes), we saw consistent low- to mid-single digit increases for most of 2020 through the January 1 renewal cycle. But 2021 has been a different story, and volatility has been the theme as we’ve seen outpatient surgeries bounce back and an increase in inpatient stays.

So what does the future hold, and what can plan sponsors do? Unfortunately I don’t have the answer for the first part. Just as it seemed we were reaching a new equilibrium, the recent COVID surge has area hospitals packed and unable to perform elective procedures or even treat routine illness and injury. If we don’t get the surge under control, it seems to me that we may be due for a repeat of this past year – artificially suppressed utilization followed by a crush of higher-acuity care.

What plan sponsors can do is maybe a bit clearer. Employee engagement is vital in this moment. Now is not the time to lose focus on keeping employees eating better and moving more. Traditional workplace wellness strategies – like biometric screenings and other preventive care incentives – should be hammered as hard as possible. If you don’t have a digital strategy for communication and enrollment, it’s time. Skyrocketing drug spend hasn’t been impacted by the pandemic whatsoever, and mitigation strategies need to continue to be vetted. It’s never a bad time to make sure you’re up to speed on emerging cost management strategies overall. Although many plan sponsors took a breather from strategic work last year as carriers were issuing those modest renewals, health trend is not abating – so plan sponsors need to remain vigilant.

Although I’m feeling nostalgic, I am in fact working here in my home office… and I welcome the opportunity to talk to you about benefits strategy, employee engagement and cost containment. Give me a shout and let’s geek out.