4 ways the pandemic has already changed employer healthcare
Apart from launching new benefits like vaccine PTO, enhanced childcare assistance and COVID leave, employers are also starting to feel the impact of broader, pandemic-driven shifts in the healthcare industry.
At a Spotlight Session during Wednesday’s Health & Benefits Leadership Conference, leaders from the Kaiser Family Foundation delivered a data-rich look at how COVID-19 is reshaping employers’ healthcare strategies. While the long-term implications of the pandemic on healthcare benefits will materialize in the coming years, KFF’s Matthew Rae and Nisha Kurani highlighted four areas already under transformation:
As the pandemic gained steam last year, hospitals across the country canceled elective care, while many patients also chose to forego routine care. KFF found that healthcare spending in the second quarter of 2020 was down 9% compared to the same quarter the year before.
“In healthcare, we’re used to seeing increased spending so this was a pretty unprecedented drop,” says Kurani, senior policy analyst at KFF. Spending rebounded slightly in the last two quarters of 2020 but overall was down 1% for the year.
Personal consumption expenditures for healthcare services—including out-of-pocket spending and premiums—also nosedived last spring, down 32% in April from the previous year.
Whether those drops in spending will translate to premium increases remains to be seen, she adds. Looking historically, however, she notes, “cumulatively, over time, premiums are growing much faster than worker wages are and that has consequences for how worker compensation is set up.”
Given the shutdowns of the last year, many employees have delayed preventive services—which could mean health complications for them and increased costs for employers.
For instance, in the second quarter of last year, cervical cancer screening rates were 80% lower than the previous year. Significant decreases were also seen in screening rates for a number of other types of cancer, Kurani adds, particularly breast and colon.
Insurers and employers alike should be concerned about that trend, as foregone preventive services can mean poorer health outcomes and increased spending, she says.
Since 2015, large employers have increasingly been offering telemedicine options; last year, for instance, 89% of them did so, up 7% from the previous year. However, few employees actually took advantage of telemedicine until the pandemic, which drove up the number of telemedicine claims, particularly as a share of the total claims; those percentages are dropping a bit, Kurani says, but telemedicine claims still represent a “sizeable share” of the total volume of healthcare claims.
In addition to more employees wanting to avoid in-person healthcare delivery during the pandemic, many employers worked with insurers to make telemedicine more accessible through plan design, to change payment policies and to relax regulations.
Now, she adds, the conversation should be shifting to when telemedicine is most appropriate and what types of healthcare are most suited to that approach.
The pandemic has ushered in serious concerns about employee mental health, and benefits leaders are now faced with how to best support struggling employees, says Matthew Rae, associate director of KFF.
The statistics are startling: In the first half of 2019, about 11% of employees surveyed through the U.S. Census were experiencing anxiety or depression, a figure that has jumped to more than 41% in the first half of 2021.
Employers can be a key player in reducing those statistics, and many in the last year have launched employee assistance programs, strengthened employee communications about existing mental health resources and connected employees to digital mental health offerings, Rae says. However, it’s an area ripe for continued improvement, as a recent KFF study found that nearly one-quarter of employees were turned off from seeking mental health treatment because they couldn’t find a provider and almost as many couldn’t afford the cost.
In addition to these four areas, shifting federal regulations, such as around insurer price transparency, will also drive continued change.
“Things are in flux and we’re watching how these will affect costs going forward,” Rae says. “There are still a lot of open questions and a lot of challenges for employers to respond to.”