By WK Editorial Staff
Not only do insurers expect the number of claims to rise, costs will likely rise must faster than inflation.
Disruption to the delivery of healthcare and lasting changes to work patterns resulting from the COVID-19 pandemic will have a major impact on both the cost and design of employer-provided health benefits, according to a new report by Mercer Marsh Benefits (MMB). The sixth annual, MMB Health Trends: 2020 Insurer Survey (formerly known as Medical Health Trends Around the World survey), reveals that 68 percent of insurers expect increased medical claims driven by COVID-19 diagnostics, care and treatment.
Insurers also said they expect increases in medical costs to continue to vastly outstrip inflation in 2021. In 2019, insurers reported cost increases of 9.7 percent, which was just under 3 times the rate of inflation. In 2020, they expect a rise in medical costs of 9.5 percent, which is roughly 3.5 times the inflation rate. For 2021, 90 percent of insurers expect the trend to sustain or increase.
"COVID-19 has had profound effects on all parts of society and the economy, including healthcare. With an expected rebound in elective treatments deferred during lockdown, a rise in negative health issues related to remote working and sedentary lifestyle, including musculoskeletal and mental health issues, and ongoing concerns about the long-term physical and mental health implications of COVID-19, we expect medical costs to continue to increase," said Herve Balzano, President, Health at Mercer and Mercer Marsh Benefits International Leader. "In order to meet the new challenges posed by remote working and contain expanding costs, companies need to radically rethink the range of benefits they offer their employees and the way in which they deliver them."
The COVID-19 crisis has highlighted the fragility of current employee benefits systems, many of which are paper based and cannot be accessed or managed remotely. With many employers now looking for benefit providers that can offer additional benefits such as mental health, preventive care, and an enhanced range of digital and online services, insurers are increasingly looking to broaden their suite of solutions.
The survey found an increase in the number of insurers offering virtual health consultations, or "telemedicine", with 59 percent saying it was an active part of their current approach to plan management, up from 38 percent in 2019. Furthermore, 55 percent of insurers now cover preventive health initiatives, such as screenings, with an additional 20 percent indicating they are experimenting or have developed plans to initiate this within the next 24 months. Employer-sponsored plans will continue to play an important role in providing people with the health services they need. For example, just over half of insurers expect their employer-sponsored plans will cover COVID-19 vaccinations, especially in Latin America.
The survey also found remaining gaps in mental health support, despite the increase in demand seen during the pandemic. For example, virtual mental health counselling is still not widespread, with only one-third of insurers offering it globally while 32 percent of insurers do not provide plans covering any mental health services. This is despite the fact that in all regions, insurers rate private, employer-sponsored health care systems as more effective than public ones in providing the needed prevention, diagnostics and treatment of mental health disorders.
Amy Laverock, MMB’s Advice and Solutions Leader, added: "As medical costs rise and recession looms, it is important for more companies to focus on ensuring that the benefits they provide improve the health, well-being, productivity and engagement of their employees. Workforce health is a critical asset to firms, helping them to drive business performance and manage people risk effectively. Health plans should be looked at as an investment in people, not just a necessary cost."
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