As Employees Catch Up on Their Delayed Health Care Needs, Claims Could Surge

At the height of the pandemic, employee health care claims dropped steeply when people avoided visiting doctors' offices. Now as coronavirus vaccinations are widely available, Americans are expected to seek long-delayed care. Health claims could reflect the consequences of letting risky health conditions go untreated for more than a year, exacerbated by stress, poor diets and suspended gym memberships.

A financially strong 2020 for self-funded health plans could turn into a challenging 2021.

A February survey by the American Psychological Association, with responses from more than 3,000 U.S. adults, found that:

• 42 percent of respondents said pandemic stress had brought about significant unwanted weight gain, with a median gain of 15 pounds.
  

• 10 percent said they had gained more than 50 pounds.
  

• Two-thirds of respondents said their sleep patterns had worsened, and nearly one-quarter said they were drinking more alcohol to cope.

Despite these warning signs, the pandemic's effect on health care usage may provide an opportunity to rethink how health benefits are designed, offered and used.

"My concern is that [health plan sponsors] may be focused on getting everyone back to the office and getting everyone vaccinated, and they won't take the time to review other opportunities that may be bigger in the long run and more sustainable," said Mark Cunningham-Hill, medical director for the Northeast Business Group on Health, one of several regional employer coalitions focused on improving employee health care. "This may be an opportunity to reboot things not as they were before but doing [health care] better."

Routine Care Trends Down

Visits for routine and preventive care trended significantly downward during the most stringent lockdown periods of the pandemic, from March through May 2020, according to health claims data. Much of that care rebounded to some extent by year's end, though newly diagnosed cancers and other chronic diseases remained well below base line.

Sunit Patel, chief actuary at HR consultancy Mercer, said newly diagnosed cases of cardiovascular disease and diabetes fell 30 percent to 40 percent from April through June 2020, not because heart disease and diabetes had diminished, but because people weren't getting routine physicals. Diagnoses for these conditions rebounded somewhat by year's end but were still approximately 10 percent below what care providers would normally expect.

In addition, "through December, cervical cancer screening was down about 15 percent and colon cancer screening was down 25 percent, and we all know the later you get diagnosed, the more severe the outcome is," Patel said.

'The later you get diagnosed, the more severe the outcome is.'

Denise Giambalvo, vice president of the Midwest Business Group on Health, echoed Patel's observation on potential consequences for missed cancer screenings.

"Employers are concerned about oncology," she said, "because the data is showing we will pay for this for the next 10 years in terms of cancer being diagnosed at a much later stage."

Ateev Mehrotra, associate professor of health care policy and medicine at the Harvard University School of Public Health, conducted research throughout the pandemic that largely bears out these concerns. The research, conducted in collaboration with health care technology vendor Phreesia and presented by the Commonwealth Fund, discovered that while outpatient visits by year's end had stabilized to a pre-pandemic base line, such visits were down 5 percent to 6 percent over usual year-end patterns, when an uptick usually accompanies the onset of flu season.

Pediatric visits also dropped in 2020, falling 27 percent from pre-pandemic levels, according to Mehrotra's research. In addition, according to a Kaiser Permanente study, the numbers of recommended childhood vaccine doses, including measles vaccine, fell dramatically after the declaration of a national state of emergency on March 13, 2020, due to the COVID-19 pandemic.

For Jeff Levin-Scherz, population health leader at consultancy Willis Towers Watson, the loss of routine childhood vaccinations is concerning. "It would be a terrible irony if we discovered we were having a measles outbreak after we got out of the COVID pandemic," he warned.

A Self-Insured Savings Windfall

Nationally, 67 percent of U.S. workers with employer-sponsored health coverage are in a plan that their employer self-funds, according to a 2020 Kaiser Family Foundation survey. The savings in 2020 claims for these employers could be significant.

Based on insurance carriers' projections, 2020 medical claims covered by employer-sponsored plans will, on average, be 5 percent lower than initially forecast due to pandemic-related decreased use of health care, consultancy Aon reported at the end of last year. The findings are based on a fall 2020 survey of 44 national and regional insurance carriers.

If a self-insured employer initially budgeted $10,000 per employee on medical costs in 2020 prior to COVID-19, the employer could see claim reductions averaging $500 per employee, Aon noted.

The survey also reported that insurers projected COVID-19 will increase U.S. employer medical claims by an additional 2 percentage points on average above normal trends in 2021. This will include costs for care that was postponed or skipped in 2020.

"This is a historic occurrence for the U.S. health care industry, but there is still uncertainty regarding COVID-19's impact on deferred treatments and long-term health care," said Tim Nimmer, Aon's chief global actuary for health solutions. "Our current expectation is that medical plan utilization will continue to normalize during 2021."

Fully insured employers did not see 2020 cost savings from the falloff in non-pandemic health care, as their annual premiums for the year were set before the global pandemic, although insurance companies profited because "insurers don't have to pay for care that patients forgo," wrote Keith Lemer, CEO of WellNet Healthcare, a health care management and advisory firm.

For fully insured employers, watching other companies benefit from lower claims under their self-funded plans may have created interest in moving to self-insurance. That interest, however, might be tempered if there is a significant resurgence in care costs for delayed elective procedures and conditions that worsened due to lack of treatments.

An Uncertain Outlook

Doug Ramsthel, a partner at Burnham Benefits, an employee benefit consulting firm, thinks expectations for a surge in health care claims may be overblown. "Not all deferred care results in more care later," he said. "In some cases, someone postponing an elective procedure may find that self-care may have resolved an issue such as back, neck or knee pain.

He pointed out that self-insured employer plans faced claims costs for COVID-19 last year that are now going down. "It's likely that the expansion of payment for COVID-19 diagnoses and treatment, covered at no or little cost by group health plans, resulted in over-testing and unnecessary use of emergency departments for people with flu-like symptoms," Ramsthel said. "As the prevalence of COVID-19 recedes, so will this costly care."

Still, his firm expects claims costs to rise from 7.1 percent to 14.8 percent this year, a range that indicates much uncertainty remains about post-pandemic care.

Plan Design Changes

For Cunningham-Hill of the Northeast Business Group on Health, 2021 presents an opportunity to tell employees about the value of preventive health care and to help promote healthier behaviors through employee wellness programs.

In addition, he said, "Benefits managers could begin discussing ways to tweak benefits packages that may cost some more money in the near term but could lead to savings down the line" by reducing future health care costs, such as lowering plan deductibles or providing funding to employees' health savings accounts, so that prohibitive costs don't become a barrier to care.

"If you're making $500,000 a year, a co-pay is irrelevant, whereas if you are making $30,000 a year, a co-pay is dinner for the kids," Cunningham-Hill said.

"A lot of big [self-insured] employers saved a lot of money last year on benefits," he added. "Instead of just pocketing it and saying let's move on, let's use that money to make some of those changes that will be more sustainable and more equitable going forward."

Greg Goth is a freelance health and technology writer based in Oakville, Conn.

Related SHRM Articles:

Level-Funded Health Plans: A Steppingstone to Self-Funding, SHRM Online, April 2021

Moderate Cost Increases Projected for Health Benefits in 2021, SHRM Online, October 2020

Employers Project Health Plan Costs Will Rise 5.3% for 2021, SHRM Online, August 2020

During the Pandemic, Telehealth Steps Up, SHRM Online, April 2020

Related SHRM Resource:

2021 Health Care Costs Projections, SHRM Express Requests