2021 benefit predictions: Where will utilization, costs increase the most?

Wayne Sakamoto, president, Health Insurance Interactive, Inc.

The fog will clear

When I think about health plan dollars in 2021, I think mental health. Humans have been impacted on so many different levels that a mental and physical reboot will be needed to feel “normal” again. But beyond that, where health care is going and was going pre-COVID, is a shift towards a “whole person” focus. Mental, physical and financial health are all so intertwined, it’s easy to expose a weakness in one without impacting the others.

With a shift towards consumer-driven health care, we also saw increased claims utilization and an increase in the price of that care. When you are avoiding physical care or sick care due to financial instability, there goes your mental well-being. And when your mental well-being isn’t there, your physical health suffers, as well. You can see how vicious this cycle can be.

If we don’t drastically change the way we consume health care, we are going to see a continued cry for help. Things like direct primary care (DPC) will be a strong foundation in rebuilding a stronger health care system for generations to come. Employers will also be charged with making some “smarter” decisions for their employees while making it easier for the end-user.

Employers are afraid of change after a year like 2020, but I think you will see an opportunity for those employers that can see through this fog we are currently in. Plan now for what will happen over the next 5-10 years, not the next five days or weeks. We know that the fog will clear and we need to ready benefit plan fiduciaries/employers to regain control and have the most valuable benefits program possible.

Taylor Lindsey, partner, Employee Benefit Consultants, Inc.

Help the helpers

In 2021, we will likely see the largest increase in the utilization of benefits that support working parents. Parents and caregivers have been disproportionately impacted by the pandemic and many have had to make the tough decision between work or caring for loved ones or children. Going forward, the expectations have changed for the ways to provide support for these groups in the workplace.

We are also likely to see an increase in the cost of health care benefits in general. Hospital systems and other health care providers are tapped out and going through premiums at a pretty intense rate.

Rachel Lyubovitzky, CEO, EverythingBenefits

An important reminder

Globally, we will continue to monitor both the utilization of medical claims as well as the underutilization of filed medical claims as a whole. Both will potentially have a resounding impact over the next two to three years. Risk mitigation and cost-containment tactics are already shifting the overall design and delivery of voluntary benefits to maximize utilization rate calculations.

Based on current trends, the voluntary benefits marketplace will look a great deal different. We are moving away from siloed discussions when incorporating medical, stop-loss, absentee management and voluntary benefit utilization impacts. The next two to three years are going to present challenges that we never thought were imaginable. However, if we continue to enhance our product portfolios to focus strictly on utilization and claims experience, we are well prepared for record growth.

Trevor Garbers, VP, practice leader – voluntary benefits, HUB International

COVID’s other impacts

In 2021, employers should anticipate an increase in disability claims related primarily to mental health and self-reported symptoms. Historically (and unjustly), disability coverage stands lower on the employee benefits totem pole; the topic deserves more attention now than ever. With employees working from home under non-ideal working conditions, waves of layoffs, economic uncertainty and mental health challenges, employees are likely to need to rely on employer-leave policies and disability plans that generally replace a portion of an employee’s income when they are unable to work due to an injury or illness.

Many employers and employees are working from a bedroom, the kitchen table or have some other setup that doesn’t include ergonomically safe chairs, desks, computer screens and other technology needed to conduct the core competencies of their job. If employees are working in these conditions over a prolonged period of time, disability claims will increase. Furthermore, during the COVID-19 pandemic, people have stopped their recreational league sports, ordered more delivery, consumed more alcohol and many aren’t getting out as much.

Brian Lacher, vice president, employee benefits, Nielsen Benefits Group

Wise investments

Specialty medications will lead the trend cost curve, with a projected 11% inflation rate year over year and more than 60 new specialty medications expected to receive FDA approval in 2021. The specialty medication trend is unique in that half is price inflation and half is increased utilization. Thus, employers will need to proactively negotiate contracts and demand more from their prescription drug benefit partners.

Employers should also invest in increased preventive care utilization. COVID-19 has significantly reduced elective outpatient care, including preventive screenings. We know “an ounce of prevention is worth a pound of cure.”

Finally, COVID-19 has increased employee adoption of telehealth and this positive trend should last well beyond COVID. Virtual care is highly efficient and effective for the patient, the physician, and the employer-sponsored health plan. This year will continue to expand services available through telehealth, specifically improving access to behavioral health and mental well-being.

Reed Smith, SVP, practice leader, employee benefits, BOK Financial Insurance

Unlimited mental health support

We will continue to see record utilization in the area of employee assistance programs (EAPs) and telehealth/virtual health care. More employees are working from home, which creates emotional strain. Employers that are offering an EAP need to make sure they communicate to their employees how they can access that benefit. One of our vendors offered the opportunity for the employer to add unlimited virtual usage for employees in the area of mental health.

I think it will be very interesting to see the utilization results from this benefit as the year progresses. If you use a program for unlimited mental health support where there is a fixed PEPM, you keep it off of the health plan and provide an extra layer of protection for your group medical renewal (assuming you are self-insured). If you are currently getting your EAP or telehealth through an ancillary or medical carrier as a “value add,” then you can expect to see an increase on the products that you pay premium on due to the increase that they will see from those vendors as utilization increases.

Justin B. White, partner, Brock Insurance Agency

Virtual delivery comes with a cost

Virtual care will see the largest increase in utilization in 2021. Specifically, virtual therapy and virtual primary care as we start to see an evolution in the way people engage in their overall health and well-being proactively through virtual resources instead of reactively. Employers will need to make sure their benefits programs evolve to offer the right mix of virtual care options.

I think this is also where you’ll see the largest cost increases. Health plan increases are expected to be moderate, but employers will need to make sure their overall benefits program evolves to meet the changing needs of their employees and the changing delivery options of health care. Investment in more proactive virtual services will be required.

One cost trend to watch is the impact that online pharmacy offerings have on the industry. This has been an emerging trend for years, but Amazon has recently made a big push here that will cause the rest of the industry to evolve and find ways to cut out middle-men in an effort to reduce costs.

Rob LaHayne, CEO, Touchcare

Paid leave progresses

In the coming year, I see huge increases in the cost and utilization of paid leave benefits. Whether employer-initiated or state-mandated, there is going to be a continued expansion of these programs, coupled with enhanced awareness and education.

While these programs provide much-needed benefits to employees, they also come at a significant cost to both employers and employees. In 2021, NY and NJ employees, for example, will see nearly 90% increases in their employee contributions. Additionally, with many employees moving to a work-from-home scenario, employers are faced with new concerns about the conditions that satisfy paid-leave claims.

We recommend outsourcing or co-sourcing leave and absence management to an insurance carrier or third-party administrator, as there are currently new vendors, higher-quality solutions and advanced technologies. In nearly every case, the result will be a quantifiable ROI and a streamlined process.

Kevin Kennedy, benefits consultant, TriBen Insurance Solutions

A delayed rebound?

I expect to see higher demand for mental health services as employees and their family members deal with anxiety and social isolation from the pandemic. We finally saw telehealth widely adopted last year, and I expect virtual mental health offerings will play a big role in meeting the increased demand. The elimination of elective surgeries and care avoidance sets the stage for a rebound, but I think we’ll see a similar utilization pattern in 2021.

Specialty drug costs were a major concern before the pandemic, and we expect it will continue to be the fastest-growing piece of the health cost pie, accounting for almost half of the total drug spend in 2021. The prescription drug pipeline is robust, and most medications in the pipeline are specialty drugs. We’re also paying close attention to see how health systems react to the financial losses suffered during the pandemic.

Tim Doherty, president, Pinnacle HR Solutions

More tough times

We are seeing a major increase in the number of critically ill COVID patients, many in ICU for weeks, many receiving treatment with ECMO, which uses a pump to circulate blood through an artificial lung and back into the body. Now we are also beginning to see patients who were in the first wave of COVID getting evaluated for lung transplants. This is going to be a major cost-driver in the future.

We are also seeing a surge in the number of patients who have gone to get elective services and then within a few weeks are diagnosed with COVID. There’s nothing sadder than the story of a perfectly healthy, active, at-work, 72-year-old whose doctor told him to go to the local hospital to get blood work as a part of his annual physical exam who, two weeks later, is in the ICU on a ventilator.

Another area of major utilization increase is in mental health. We’ve seen a large spike in the number of people, especially those under 30, who are requiring inpatient mental health/chemical dependence and substance abuse treatment. Many are attributing this to the lack of social interaction.

Before COVID, if you would have asked me what the cost-drivers for 2021 were going to be, I would have said musculoskeletal and diabetes. I wish I could say that those issues have gone away, but unfortunately that doesn’t seem to be the case! In fact, with so many people transferring out of the office to home and setting up shop at the kitchen table, I’m concerned that these two issues could actually pan out to be even worse than originally projected!

I wish that the forecast was rosy…but I am deeply concerned that employers who had not taken control of their health plans prior to COVID and are in traditional health insurance situations are headed for a rocky financial future. It might not be in 2021 (because of the timing of claims), but in 2022 we are likely to have a very rude financial awakening for many employers. I think when that happens, those employers sponsoring health benefits for their employees are going to have a watershed moment. They will have to decide to either take control of their health plan, or to stop offering health care coverage.

‘Nurse Deb,’ Deborah Ault, president, AIMM

Ring, ring…

I think the biggest shift we’ll see in terms of benefit offerings is in mental health and telehealth. This past year was trial by fire for both of these services, but usage has been phenomenal. Our telehealth partner saw a 300% increase in teletherapy through their app since March. I don’t think we can unring this bell. I expect companies to formalize mental health and telehealth offerings in 2021 and include them in open enrollment discussions for 2022. This, of course, will come with some cost considerations for employers, but it will also help them attract and retain talent as things return to normal.

Brian Colburn, SVP corporate development and strategy, Alegeus

Open for business

As the “Year of the Pandemic,” 2020 will go down as a “medical anomaly.” How much of the COVID-19 impact will flow into 2021 depends mostly on the timing and availability of the coronavirus vaccine.

Overall health care costs in 2020 and early 2021 were and will be lower than expected, largely because many people put off discretionary care. Unfortunately, this includes not only elective procedures but also important preventive care. Additionally, there have been widespread reports of people who should have sought care for medical emergencies delaying or completely avoiding going to an emergency room because of fear of being exposed to the virus.

This downward trend may be surprising, given the number of people infected with coronavirus, but on a comparative scale, these costs are still lower than what would have been expected under normal circumstances. As a result, there is uncertainty about what the immediate future holds.

For their part, premium underwriters inside health plans hate uncertainty and are likely to create a “cushion” in their medical cost calculations to account for when this return toward normal occurs and what exactly it looks like. On the self-insured side of the business, employers would be wise to respond similarly, anticipating higher costs in 2021 than they saw in 2020.

Telemedicine has changed the healthcare delivery system. This change will not be reversed just because in-person medical care becomes more accessible. We’ve learned that a lot of quality care can be provided by telemedicine, but this is not always the case, and misuse and/or overuse of telemedicine has the potential to significantly increase medical costs. Discerning between appropriate and less than appropriate use of telemedicine is a challenge that will require careful monitoring and assessment moving forward.

Finally, the pandemic caused somewhat of a pause in the march toward accountable care organizations, provider at-risk relationships, and patient-centered medical homes. This pause is likely to end once the virus is under control, once again placing the emphasis on continuing patient care and successful outcomes.

Arthur “Abbie” Leibowitz, CMO and founder at Health Advocate

The afterburn effect

This year has been a marathon, with new challenges being thrown at us on a regular basis. I anticipate the essential worker population will likely be dealing with PTSD issues or unresolved stress.

But 2020 was a game-changer for all employees’ health and well-being, and most workers experienced multiple stressors at the same time. As we move ahead into 2021, it will be critical to address the residual effects of the past year. This might include a combination of ensuring employees are aware of programs like EAPs, as well as more frequent check-ins, open communication, greater levels of compassion, flexibility and more from organizational leadership. By taking these steps, it is possible to prevent burnout and decrease the medical, mental health and substance abuse costs to organizations and their employees.

The universal challenges of the past year have helped to further destigmatize seeking support for mental health, so I think utilization will continue to increase due to this in the years ahead.

Norbert “Bert” J. Alicea, executive vice president, EAP+Work/Life Services, Health Advocate

Read more: 

• 2021: Bringing mental health to the boardroom and C-suite
• Ergonomics best practices for happier and healthier employees working from home
• Health care utilization and spending finishing the year lower because of pandemic