Employer Health Care Cost and COVID-19: More affordable premiums?

Insurance Cossts?

Employer Health Care Cost and COVID-19: More affordable premiums?

By Grant Dattilo

Could COVID-19 actually reduce health insurance premiums?

We all see that COVID-19 is affecting us in multiple ways. Every day, our media gives us cumulative COVID-19 test results – total cases and infections, number of hospitalized individuals and of course, deaths. COVID-19 weighs heavily on employers who are at the same time, concerned about protecting employees but also sustaining the business.

Here is some good news. “Year-to-date spending on health services is down about 2% from last year. Health spending for the calendar year may end up lower than it was in 2019,” according to Kaiser Family Foundation.[i]

Reduced spending should translate to lower group insurance premiums or, at the least, much lower increases.

Reduction in health care spending results from a variety of factors, some which may seem negative at first blush. For instance, studies show patients made fewer appointments to see their primary care doctors, and that means fewer screenings or less oversight of chronic health care issues. It also could mean a reduction in overall health spending, for there is a maxim common to health care that each physician’s pen holds the potential for $5 million in spending on treatment, surgeries, tests and pharmaceuticals. If the population is making fewer visits to the doctor, perhaps this spending will fall.

Consider

COVID-19 has forced people to make changes. It provides ample proof that folks can make wise decisions for themselves. We have come to embrace common sense medicine, so that if you are not feeling well, you decide not to be around other people. In the past, however, we got comfortable relying on the health care system to make us feel better without personal responsibility. In this way, our health care system has enabled us to somewhat ignore personal health.

The threat of infection with the COVID-19 virus has created a sense of caution and care among individuals. As a result, individuals are paying more attention to personal health. This concern has affected how individuals interact with each other to the extent that their actions will result in a reduction in passing on any contagious disease, not just COVID-19.

People are paying more attention to personal hygiene. Practicing personal preventive medicine is far more common, with individuals guarding against unnecessary exposure to others who are ill, getting more rest and taking one’s temperature more regularly.

COVID-19 awareness has, for example, fed a spike in the sale of medical thermometers, projected to increase at a compound 28.7 percent rate by 2027. “Since high fever is a major symptom of COVID-19 and other infectious diseases, there has been a sudden surge in demand for thermometers due to the need for temperature screening and monitoring.”[ii]

Another example of individual concerns over health is seen in the explosion of sales of a simple device – the pulse oximeter. “The purchase of at-home pulse oximeters has spiked over 500% since the detection of COVID-19 cases in the US. …pulse oximeters are an important device to identify declining lung function early and address the cause, including COVID-19.”[iii]

Telemedicine may not be the answer to solving access to physicians, but it certainly has grown as a result of COVID-19. Remarkably, just during April 2020, there was “… a relative increase of 4,081%…” compared to 2019 in the use of telemedicine services. Physicians and clinics were demanding it, at the least as a screening tool, and patients embraced it.[iv]

The March and April forced closures of thousands of medical clinics resulted in a huge drop in health care screenings for cancer, diabetes, and even vaccinations for children which were down more than 22%. The number of elective surgeries likewise fell.[v] About this, it means the system did not spend money it normally would have spent. That is good. Some screenings are of questionable medical value, and at times, result in spending on surgery or pharmaceutical care that is unnecessary – even damaging in the long run. On the other hand, some individuals will likely suffer more because their diseases were left untreated for several months.

Vaccination at Warp Speed and Other Blessings

Think of how quickly a vaccine has been produced. Though it is not a “cure” it will mitigate the worst elements of the disease. This should result in healthier people ready to move toward a new normal, with more interaction at work, and on social and family levels.

Here are some other blessings, at least as it relates to health and spending:

  • People are paying more attention to their personal health.
  • Kids are learning better hygiene.
  • Insurance premium increases are moderating.
  • Families are more likely to be together at mealtime and for recreation in their own homes and on their own property, working on communication skills.
  • Parents are discovering the value of teachers – and learning to teach at home.
  • We are seeing a new understanding of federalism, as Governors have been tasked with managing the COVID-19 response in their states.

And a great opportunity has presented itself. We all see that never before has a new health care payment strategy been more necessary. Will COVID-19 finally force us to come together to solve this complicated problem?

[i] Altman, Drew. “COVID-19 Is Causing Health Spending To Go Down.” KFF (blog), December 2, 2020. https://www.kff.org/coronavirus-covid-19/perspective/covid-19-is-causing-health-spending-to-go-down/.

[ii] “U.S. Medical Thermometer Market Share Report, 2020-2027.” Accessed December 16, 2020. https://www.grandviewresearch.com/industry-analysis/us-medical-thermometer-market.

[iii] Staff. “The Pulse Oximeter Market by Revenue Is Expected to Grow at a CAGR of over 9% during the Period 2019-2025.” Accessed December 16, 2020. https://www.prnewswire.com/news-releases/the-pulse-oximeter-market-by-revenue-is-expected-to-grow-at-a-cagr-of-over-9-during-the-period-20192025-301114969.html.

[iv] Whaley, Christopher M., Megan F. Pera, Jonathan Cantor, Jennie Chang, Julia Velasco, Heather K. Hagg, Neeraj Sood, and Dena M. Bravata. “Changes in Health Services Use Among Commercially Insured US Populations During the COVID-19 Pandemic.” JAMA Network Open 3, no. 11 (November 5, 2020): e2024984. https://doi.org/10.1001/jamanetworkopen.2020.24984.

[v] Ibid.

Grant Dattilo
grant@dci-clientserv.com