The healthcare industry continues to face unprecedented challenges as COVID-19 relentlessly spreads throughout the U.S. Job losses and rising healthcare costs have made it challenging for individuals to retain coverage. Coupled with disruptions to healthcare access and delivery, many Americans struggle to receive the medical attention they need to maintain good physical and mental health.
Annual family health coverage premiums for employer-sponsored health insurance rose 4 percent in 2021 to an average of $22,221 for the year, according to a recent benchmark KFF Employer Health Benefits Survey released in November. The survey revealed that the average employee contributed $5,969 this year towards the cost of family coverage, with their employers paying the remainder.
Health insurance premiums for the 2021-2022 cycle are expected to exceed the previous year’s increase, creating uncertainty for many who cannot afford inflated healthcare costs. Learn more about how health coverage premiums have been affected by the COVID-19 pandemic and where to find affordable health insurance.
Health Premiums’ Steady Rise
Businesses across the country experienced moderate relief in 2020. In response to the COVID-19 pandemic, insurance companies prioritized the health and well-being of Americans and focused on improving COVID-19 vaccine access and acceptance. However, this relief in health coverage premiums is not expected to continue in 2022.
Fear of contracting COVID-19 has caused many Americans to defer or forgo medical, dental, and vision care. Delaying or avoiding doctor visits and medical procedures due to the pandemic has directly resulted in higher utilization in the second half of 2021 and is expected to continue into the new year.
A recent KFF poll suggests up to 50 percent of the public have postponed or avoided medical care due to concerns about the coronavirus. Avoiding medical care results in higher health insurance costs as these delays sometimes cause treatable conditions to become more expensive to treat.
COVID has also increased the need for testing, care, and treatment as more Americans become ill and require lengthy hospital stays. Based on its current course, healthcare spending is expected to grow at an average rate of 5.4 percent annually and reach $6.2 trillion by 2028, according to the U.S. Centers for Medicare & Medicaid Services.
In response to the ongoing crisis, policymakers in many jurisdictions are working to find ways to support policyholders, including small- and medium-sized enterprises that have encountered significant business interruption losses since the start of the COVID-19 pandemic.
COVID’s Impact On Health Premiums
While it is not uncommon to see minor increases in health coverage premiums from year to year, the COVID-19 pandemic has significantly changed the healthcare landscape in ways not seen before. Although the full financial impact of the pandemic is yet to be seen, its ramifications are expected to be experienced for years to come.
When forecasting premiums, it is important to remember that insurers are required to develop the following year’s rates based on the following year’s expected costs only. Insurers are not permitted to include past losses in prospective premium rates if those costs are not expected to continue.
The worst of the pandemic is indeed likely behind us, but people are still getting sick. According to the CDC, the current 7-day average of cases is 118,515 as of December 2021 and with growing concerns about new variant B.1.1.529 or “Omicron,” 2022 health coverage premiums are likely to be affected.
COVID-19 has greatly impacted healthcare spending as a whole since the start of the pandemic. In addition to the lower utilization of healthcare services, the demand on hospitals has varied greatly because of waves of coronavirus patients.
Many healthcare systems were forced to reduce nonemergency medical services due to a lack of staff and resources.
There have also been some concerns about the increase in telehealth services in response to the pandemic. Although these services were proven exceedingly helpful in 2020, questions remain regarding the overall effectiveness of these services. There is also some confusion as to how to appropriately set reimbursement levels.
Coverages That Are On The Rise
The COVID-19 pandemic changed the course of the healthcare industry’s future, seemingly overnight. While nothing is set in stone, the healthcare ecosystem and the patients it serves are likely to experience a challenging world of virtual doctor visits, remote working, and a weakened supply chain due to shortages.
The types of coverage that patients seek are also likely to change pace. Uncertainty, fear, and grief will alter consumer behavior, increasing the need for services like mental health coverage. According to KFF, about 4 in 10 adults in the U.S. reported symptoms of depressive disorder or anxiety during the pandemic, up from 1 in 10 adults who reported these symptoms in 2019.
COVID’s unprecedented scope and speed have forced many healthcare organizations to address unexpected and serious problems with regard to healthcare access and availability. A sudden drop in employment at the start of the pandemic, along with forced business closures and surges of illnesses, forced the healthcare industry to quickly adapt to the new “normal.”
While the healthcare industry is starting to recover, certain coverages continue to rise. Here is a closer look at these rising healthcare coverages and the part they play in a post-COVID world.
In February 2020, the CDC advised healthcare providers and patients in areas affected by COVID-19 to adopt social distancing practices, which included offering clinical services through virtual methods like telehealth. This two-way telecommunications technology proved highly advantageous in helping to stop the spread of the virus.
The use of telemedicine grew a whopping 6,000 percent during the COVID-19 pandemic, according to Definitive Healthcare. Telehealth services helped the healthcare industry overcome physical barriers between provider access and patients, meaning more patients could get the healthcare services they needed without potentially exposing themselves or others to the virus.
In the U.S., “stay at home” orders and social distancing guidelines enforced by the government prevented many patients from seeing their providers in person. In response to these strict orders and guidelines, many employers made the swift decision to expand their telehealth offerings.
Near the start of the pandemic, approximately one-third of larger companies (200 or more employees) and 19 percent of small companies (50 to 99 employees) that offered telehealth services expanded the number of services covered and the type or number of clinicians who could provide telehealth services, according to the JAMA Network.
In addition, 24 percent of employers expanded the locations or settings in which participating workers could use telehealth services. Nearly half of all employers that have 50 or more employees for whom they offer health benefits agree that telemedicine will remain an important service in the future.
More than 70 percent of employees described the COVID-19 pandemic as the most stressful period of their professional careers, according to MarketWatch. From financial issues related to job cuts to the challenge of juggling remote work with home responsibilities, the pandemic has taken a serious toll on workers’ physical and mental health.
The ongoing pandemic has revealed the need for more extensive wellness programs, including virtual wellness offerings. Since the start of the pandemic, more employers have started offering online health solutions, such as webinars, virtual fitness classes, and mindfulness exercises employees can safely practice at home.
With employees becoming more health-conscious, job seekers are being more selective about choosing companies that care about their wellbeing. Employers must become more aware of the ongoing physical and mental health issues that workers face now and in the future. Businesses that cater to the health needs of employees by offering competitive health and wellness benefits are more likely to attract and retain top talent.
Mental Health Coverage
COVID and the resulting economic recession have negatively impacted the mental health of many Americans and have created new barriers for people that already suffer from substance abuse and mental health disorders. Unfortunately, critical mental health services were halted or disrupted due to the COVID-19 pandemic in 93 percent of countries worldwide, according to a WHO survey published in 2020.
The pandemic drove many people to increased levels of drug and alcohol use. Many also experienced mental and neurological complications as a result of the virus itself, including agitation, delirium, and stroke. Individuals who have preexisting mental, substance, or neurological conditions are more vulnerable to infections and the mental health effects of the pandemic.
While mental health concerns have slowed since the wake of the pandemic, these services remain more important than ever before. Unfortunately, rising health coverage premiums for mental health services has made it challenging for many sufferers to get the services they need.
Going into 2022, more employers are boosting mental health resources as they recognize the ongoing strain that the pandemic has put on employees. According to a Business Group on Health survey, 54 percent of employers stated that they will offer free or low-cost virtual mental health visits.
Work With New City For Your Health Insurance Coverage
The COVID-19 pandemic has affected nearly every aspect of our lives, including the affordability of health coverage. Congress passed four major relief bills both in 2020 and 2021 to help improve the economy and health system during the sudden COVID-related recession. Several administrative changes have also been implemented by the Biden Administration to help more people enroll in health insurance coverage.
With coronavirus cases continuing at a steady rate in the U.S., having adequate health coverage is essential. Employers can help ensure that their workforce remains physically and mentally healthy until the end of the pandemic and onwards. To learn more about how health coverage premiums have been affected by COVID or to speak with an experienced employee benefits consulting firm, contact New City Insurance.