COVID-19 Pandemic May Lower Health Care Costs, But Deferral Impact Exists

by Peter Johnson

Health insurers will probably have lower health care expenditures in 2020 and 2021 than before the COVID-19 pandemic, according to a new analysis from Willis Towers Watson. However, the white paper emphasizes that substantial risk is still possible and says plan sponsors need to take proactive steps to blunt the future impact of deferred care.

The policy environment could change suddenly and dramatically depending on the outcome of California v. Texas, a suit that could lead the Supreme Court to overturn the Affordable Care Act, and the presidential election.

"Pursuant to the upcoming case on the ACA, and obviously the current Supreme Court nomination and whether or not it gets through — so many major factors really put a lot of these pieces into an unknown place," says Trevis Parson, Willis Towers Watson's managing director and chief actuary for health and benefits, who coauthored the analysis.

According to the paper, "the likelihood of deferred care returning to the system will vary based on the type of care. In fact, we expect that a significant portion of deferred care will be completely forgone and never return. Further, the return time will depend on status of the pandemic, system capacity, public policy, patient willingness to visit care settings and the urgency of the need for care."

Worryingly, the paper found that "the largest decreases in utilization have been in preventive care and other office-based services." Parson says plan sponsors were not doing a very good job emphasizing preventive care and holistic health before the pandemic, and the care deferrals could make that problem worse.

The paper also attempts to project the short- and middle-term impact of the pandemic on utilization. Parson and coauthor Jeff Levin-Scherz, M.D., the North America co-leader of the health management practice at Willis Towers Watson, modeled four scenarios, and found that any of the four scenarios would result in a 2.7% to 3.8% net decrease in medical costs per member over the course of the combined two years.

These findings are welcome news to health insurance stakeholders, as previous projections of the pandemic's costs were much more catastrophic. However, Parson urges plan sponsors to resist complacency — a point he regards as the "key message" of the paper.

From Health Plan Weekly