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Cost cutting strategies put into action now can help employers lessen future financial impact of COVID-19
Concerns have been raised over the potential for increased healthcare spending during this extraordinary and unprecedented time in our nation’s history.
A March 22 briefing from Covered California, the state’s Affordable Care Act marketplace, projected the costs for 170 million Americans in the commercial market for testing, treatment and care specifically related to COVID-19 ranges from a low of $34 billion to $251 billion or more in the first year of the pandemic. Their best estimate is $103 billion.
Covered California’s policy brief, sent to Congress to help inform legislation, included recommendations such as “limiting the costs of COVID-19 for health insurers, self-insured employers and those they cover” which would directly benefit individuals and small employers for 2020 by reducing their financial burden and allow for more certainty in pricing for 2021.
Since then, the CARES ACT was signed into law. The relief legislation should have a positive impact on near-term healthcare costs and 2021 renewals. However, actual claims experience ultimately will determine the facts.
Even though there also is speculation from some healthcare leaders that costs should be falling for most employers, now is the time for employers to take action to help mitigate COVID-19’s financial impact.
My recent discussions with health systems and providers in Indiana indicate that utilization is down significantly. Hospitals and other health providers are not performing elective procedures at this time. Consumers, concerned for their personal health, are not seeking care unless absolutely necessary. In the interim, all data points indicate that lower healthcare costs will occur over the next two to three months.
Now would be the time for strategic attention and action to employee benefits programs. Focusing on both immediate and short-term savings will provide employers with capital preservation to continue their payroll and find new business opportunities.
Increased cost-sharing with employees, directing employees to high quality, lower cost providers, and reducing pharmacy cost spend are just a few ways that immediate benefit cost reductions can be achieved.
On the long-term horizon, the value of maintaining and improving an individual’s health to prevent disease has been proven. Strengthened immune systems, vaccinations, and addressing health conditions early in their emergence will provide avoidance of illness and related healthcare costs. Engagement of populations can change lives and reduce costs for the betterment of all benefit plan participants.
Apex is able to provide your organization with a data driven strategy to make these changes in the most urgent short-term while also preparing a longer-term program focused on cost avoidance and prevention, plan participant engagement and improved health of the workforce population.
About the Author
Stan Jackson, CPBS, is chief innovation officer for Apex. He is responsible for leading the development of products, services and capabilities necessary for Apex to continue growing its long-term innovation strategy. He focuses on new product offerings, applications for big data, predictive analytics and AI in health benefits, and other areas to best serve our current and future clients. Before joining Apex, Stan worked for SIHO Insurance Services, IU Health Plans, and other health plans in the Indianapolis area. Stan has a bachelor’s degree from the University of Indianapolis in Accounting/Economics, but transitioned to underwriting and risk management over 20 years ago. Connect on LinkedIn.