Inflation, a changing workforce profile, and a return to the doctor’s office are the latest active ingredients giving employer-sponsored health plan managers recurring headaches. Of course they add up to increased costs for the sponsor. But if these factors cannot be controlled, sponsors can at least plan for and manage these new cost drivers.
This is the advice of experts at Marsh McLennan Agency, a unit of global consulting firm. The firm gathered intelligence from within and outside its domain in an effort to guide plan sponsors through at least six months of cost uncertainties.
The agency cites “deferred use return” as perhaps the most predictable and manageable of factors. Plan members who avoided medical offices and procedures during the pandemic are now coming back seeking care two to three years late. The results are bound to boost claims across all health plans.
The agency said, “As the number of medical visits increases in the remaining months of 2022 and into 2023, we are likely to see an increase in severity for newly diagnosed patients and an increase in complication rates for those with existing chronic conditions.” ” its report.
Two trends that emerged during the pandemic — greater telehealth use and demand for more mental health services — will have different impacts on plan costs. Marsh McLennan says telehealth and related remote medical services are here to stay and its impact on plan costs should be minimal. However, the upfront costs associated with remote care can add up.
“… increase in use [of telehealth] Also comes the need to share patient data with multiple providers. Health care data is highly sensitive and sharing it between providers can be a finicky process. While each situation is unique, in general, a lack of coordination of care can also increase costs,” the report says.
Meanwhile, many plans, responding to requests from members, added mental health treatment coverage to benefits packages during the pandemic. Studies show that plan members have in fact taken advantage of such services, and Marsh McLennan says it is unlikely that usage will drop significantly.
Bottom line: Members are going to file more claims after deferring during the pandemic, and sponsors should prepare for a spike.
Inflation can drive up costs over the course of a health plan. Good news: The effect of the central government’s attack on inflation is visible. Bad news: Inflation has already caused cost/price increases that will drive up total health care spending.
Inflation has already driven compensation increases higher than usual as employers battling for top talent quickly responded to early waves of inflation by sweetening pay and benefits packages. Health care systems were among employers already struggling to staff. And while Marsha McLennan says hospitals and other providers are almost back to pre-pandemic employment levels, the staffing came at a cost — one that will hit health plans.
Supply chain constraints and inflation-driven increases in the cost of medical devices must also be shared by plan sponsors. After decades of price stabilization, planning for inflation has become a lost art. But this would be a good time to revive those practices, says Marsh McLennan. If our government cannot control it.
“In general, it is becoming increasingly difficult to suppress growth for all spending. However, it remains to be seen how effective the measures implemented by the government till date will be in containing inflation. The longer the elevated levels persist, the bigger the effect.”
Workforce demographics are bound to change in the coming months as employers and workers respond to inflation and the upswing of the economy. If we enter a true economic recession, employers will be forced to lay off. This will almost certainly trigger a claims spike by those exiting the company. And even the shadow of a recession could cause workers nearing retirement to reconsider sailing off into the sunset.
Perhaps one likely scenario is a mix of layoffs as a first defense against recession, combined with a growing reluctance of older workers to retire. Impact on the Workforce: Worker Profile Age. Impact on health plans: Older workforce generates more claims.
“It is essential that employers take advantage of high-cost claimant management best-practice strategies that combine care optimization, cost-containment, stop- Loses and focuses on employee support.” Marsh McLennan, Director, Actuarial & Underwriting, Employee Health and Benefits Division.
The employer cannot control inflation, or any legislation that may emerge from Congress may further complicate the management of the health plan. But employers can set aside additional funds to offset anticipated claims spikes and increases in overall costs. They can review their benefits package to ensure that it aligns with their workforce profile. And they can continue to encourage plan members to access preventive care that will reduce claims and improve productivity over time.