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Greg Callahan is a health-benefits consultant and strategist for CBIZ in Kansas City, Mo.
Q. There’s a lot still to play out with respect to how the current COVID-19 crisis will impact health-care insurance, and particularly the coverage offered by employers, but are you seeing any significant trends emerging?
A. Employer plan sponsors have been challenged to keep up with the tidal wave of guidance as a result of the Families First and CARES acts. Not only were they dealing with the economic realities of all the challenges we all face, whether within your business or mine, but then they had to keep up with changing rules. Those are designed to positively impact both employers and employees, but the devil is in the details, right? Legislation is pushed out, but the guidance comes in the days and weeks to follow, and things that seem simple on the surface, like emergency paid family leave, sometimes aren’t in reality. On the surface, those are fantastic benefits to be able to keep the wheels turning and keep people employed, but at the same time, there are a lot of questions coming in every day, mainly along the lines of “How do these rules apply in my specific situation?”
Q. A lot of employers will be wondering about impact on the costs for their plans. Any sense of movement there?
A. From a cost standpoint, there are really four elements of cost concerns arising from COVID: testing, treatment, the delay of non-emergency care, and vaccines. In talking with providers, volumes are down for emergency and elective care, and we don’t know yet what the cost impact of that deferred care might be. As for a vaccine, when will it come and how will that be treated? If you’re an insurance company or have an employer-sponsored self-funded plan, there are some things we know: We know the legislation says we have to cover testing. They’ve afforded us the ability to provide benefits to qualified high-deductible health plans without violating the qualified status of those plans. We have received guidance from the CARES act, and there will be costs associated with that. We see that as a nominal expense. Telemed visits are way up, and that’s a more efficient delivery of care with a lower cost of care. Testing itself has an expense, but we don’t see that as having a tremendous impact on the cost of health care.
Q. Does the difference between markets play a role?
A. It does. What’s interesting to look at today with the potential cost of treatment related to COVID—it’s hard to put a collar on that number because there are all kinds of variables, like where you are in the country, what degree of treatment you need. That cost could potentially be offset by the delay in treatment for non-emergent procedures. But then again, if your doctor says you need elective surgery and you put that off, there is going to be a cost. It could be significant, or maybe not; that’s truly unknown. And with he vaccine, there are questions of not only what will it cost, but what will be the rate at which people take it? Will everybody take it, or will it be more like flu shots, where some do and some don’t?
Q. So which of all those unknowns would be the greatest concerns for employers with health plans?
A. If I were ranking in terms of increasing variability. today we have our hands on what the costs are for tests and what we think will be a reasonable percentage of folks who will test. For that part, we’re seeing those come in around less than 1 percent of overall cost of insured or self-funded plans. With telemed, we seeing an uptick in utilization, but still no dramatic impact on the cost of the plan, again, probably 1 percent or less. Then we get to cost of treatment, where there are more variables than we could document together right now. We’re seeing the cost of treatment ranging somewhere between an additional 1 and 7 percent, but you want to be careful with that because we don’t think it will be 7 percent for local employers, just some in certain pockets of the country or with high-risk employers.
Q. Does all the math change if a vaccine is developed?
A. We’re not predicting a vaccine by end of the year, but we said if there were one, our job is to model and forecast. If there is, over the next 12 months, what does that look like? Probably 2 percent or less. After all of those pluses and minuses, tjat gets us to a place where the net impact on plans is somewhere between 2 and 5 percent. If you’re a self-funded plan, that’s important information that should be reviewed with your plan adviser and actuarial team, to determine whether you have set aside enough money to account for that. In most cases, employers will have done that.
Q. How will all of this alter the insurer-employer-employee dynamic?
A. One thing will be interesting: If I had business, small, mid-size or large, with a fully insured or self-funded plan, as a sponsor I would want to be looking at all of the innovations in health-plan risk management available today that require you to do things a little differently. That may involve a little more friction between the plan sponsor and members that comes with additional savings. It’s probably time for employers to start considering those as ways to mitigate these costs. Trying to forecast to the end of the year is one thing; what insurers and re-insurers do is another.
