Regardless of who wins the White House and which party controls the House and Senate, the role of employer-sponsored health benefits is certain to get more attention in coming weeks. It’s inevitable.
BACKGROUND
Employer-sponsored health insurance has been around since the Dallas school system first offered hospital insurance to its employees in 1929. From 2000 to 2010, prior to the Affordable Care Act, the percentage of the population covered through employer-sponsored coverage shrank from 66% to 56%.
In 2019 prior to the coronavirus pandemic, employer sponsored health insurance covered 156,199,800 Americans, or 49% of the population. By the end of this year, it’s likely to be 141,000,000 (43% of 2020 U.S. population) as half of the 30 million who’ve lost jobs in the pandemic also lost their coverage. Big employers will continue to provide coverage but coverage by small employers and individuals will likely continue its 20-year slide. And for those who have employer coverage can expect to pay a higher deductible out of pocket before their insurance kicks in: $1655 in 2019, up 85% since 2010.
There’s no requirement that employers provide health benefits to their employees. The employer mandate in the Affordable Care Act was set aside. During the pandemic, many self-insured employers have waived employee co-payments, and all have instituted safe workplace protocols among their initiatives. So, for employers, offering health insurance is an investment in their workforce. Some consider it essential to recruiting and keeping their workers; others consider it unnecessary and all consider it expensive.
THREE THEMES EMERGING FROM THE PANDEMIC FOR EMPLOYERS
Looking beyond the pandemic, studies by the Kaiser Family Foundation, MetLife, Mercer, Deloitte, and releases last week by the Business Group on Health and Commonwealth Fund, three themes emerge about how employer-sponsored health benefits will evolve:
1. The Workplace has Changed Permanently
As a result of the coronavirus pandemic, social distancing and economic downturn, stress and anxiety among employees is high negatively impacting their physical and emotional health. It’s not likely to subside anytime soon.
2. Cost-Containment Remains a Major Concern
The pre-Covid appetite among employers to encourage providers to be more accountable for costs, outcomes and access was temporarily suspended as the Covid-19 spike swept workplaces and communities. Most employers think a return to normalcy in the workplace will not occur before 2021 and even then, 20% of the workforce might be displaced by technologies or outsourcing solutions that are less costly. So, employers think the transition from volume to value is the right direction and necessary; the pandemic is merely a temporary delay.
3. Employee Wellbeing is the Aim
Employers have embraced ‘whole-person care’ as their strategic response to the new workplace. It’s activated through their investments in on-site/near site clinics that offer holistic primary care (physical medicine, behavioral counseling, nutrition, prophylactic dentistry, et al) as well as financial wellness and other personal health services. Wellbeing management is foundational on employee health programs going forward.
MY TAKE
The future of the health system in the U.S. is more likely to be defined by large employers than federal regulators. That’s because the politics of healthcare mires innovations in Medicare and Medicaid hopelessly at times, and, as a result, employers have a window of opportunity in which to act decisively.
The healthcare system has not addressed employer concerns effectively. Employers resent they pay 1.5-2.5 times what Medicare pays to hospitals and physicians for the identical services. They are taking matters into their own hands i.e. implementing total costs of care in purchasing hospital services, providing price estimation tools so employees can know their out of pocket obligations before purchasing a product or service, operating on-site clinics to manage employee primary care and channel referrals to high value specialists, advocating for expanded scope of practice for pharmacists and mid-level practitioners and drug price constraints and against hospital consolidation that perpetuates higher-than-necessary costs. And they are putting their money to work at a time when their access to capital is attractive: so far in 2020, companies have secured $1.5 trillion in new debt at attractive rates (Examples: Alphabet secured $5.75 billion at .08%; Visa secured $500 million at .075% et al) and much is being invested in their employee health efforts.
Employer sponsored health coverage will be a prominent theme in Campaign 2020 but neither party is poised to respond effectively. Employers value employee health benefits as part of their workforce strategy but they don’t think providers are serious about reducing waste and unnecessary care and they doubt politicians understand their issues at all.
Their concerns—a transition to a new workplace, cost-containment, and wellbeing management—are opportunities for some but non-starters for many in our industry.
Paul
RESOURCES
“Navigating Together: Trends Study 2020 Supporting Employee Well-Being in Uncertain Times” MetLife’s 18th Annual U.S. Employee Benefit Navigating Together: Trends Study 2020; https://www.metlife.com/employee-benefit-trends/ebts2020-holistic-well-being-drives-workforce-success/
“2019 Employer Health Benefits Survey” Kaiser Family Foundation; https://www.kff.org/health-costs/report/2019-employer-health-benefits-survey/
“National Survey of Employer-Sponsored Health Plans” Mercer; https://www.mercer.us/what-we-do/health-and-benefits/strategy-and-transformation/mercer-national-survey-benefit-trends.html
“Health Insurance Coverage of the Total Population” Kaiser Family Foundation https://www.kff.org/other/state-indicator/total-population
“The Public Option in the 2020 Economic Environment” FTI CONSULTING REPORT August 2020; https://americashealthcarefuture.org/wp-content/uploads/2020/08/FTI-Report-The-Public-Option-2020-Economic-Environment.pdf
INDUSTRY / CORONAVIRUS NEWS
Survey: Large Employers Focused on Virtual Care, High Cost Treatments
“These results reflect the perspectives and plan designs of 122 large employers that cover more than 9 million lives.” 84 (69%) of the companies in the survey employ more than 10,000 employees. Highlights:
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Employers believe investments in health and well-being as an integral part of workforce strategy, increasing from 27% in 2018, 36% in 2019 to 45% in 2020.
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The initiatives employers cite as most important changes in their top benefits design strategies include integration of more virtual care (53%), expansion of mental health services (36%, and focused attention on high cost claims (31%).
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Large Employers’ Median Health Care Increase in Trend (Actual and Projected), 2016-2021: Notably, large employers have consistently projected their median health care cost increases at 6% annually and their projected costs at 5% (2016-2020) increasing slightly to 5.3% for 2021.But actual spending has been below their projections every year averaging 4.2% (2016-2019)
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Employer-led initiatives to stimulate delivery system reforms have slowed due to the pandemic though attention to high cost treatments/specialty pharma continues to be a priority.
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On-site or near-site employer sponsored clinics are a key focus: 61% of the employers in the survey host a clinic (up from 47% in 2016) and 11% anticipate adding clinics in the next 2 years.
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The average cost of coverage, including premiums and out-of-pocket costs paid by workers and their families, would reach roughly $15,550, up from an estimated $14,769 this year. Employees would shoulder about $4,665 of that.
“Business Group on Health. 2021 Large Employers’ Health Care Strategy and Plan Design Survey” August 2020. https://www.businessgrouphealth.org/resources/2021-large-employers-health-care-strategy-and-plan-design-survey
Cleveland Clinic-Aetna Partnership Targets NE Ohio Employers
Last week, Cleveland Clinic announced its collaboration with Aetna, a CVS Health Company (NYSE: CVS), to form an Accountable Care Organization (ACO) model and offer new plans and programs featuring Cleveland Clinic providers. The collaboration includes the launch of a co-branded insurance plan, which could reduce health care costs for participating employers, an expanded relationship nationwide to provide members enrolled in Aetna commercial plans access to second opinions by Cleveland Clinic for certain conditions, and the deployment of Cleveland Clinic’s Cardiac Center of Excellence (COE) program to Aetna plan sponsors. The Aetna Whole Health℠ – Cleveland Clinic co-branded commercial plan offers Northeast Ohio employers access to the Cleveland Clinic Quality Alliance network of employed and independent community physicians or at any Cleveland Clinic facility. Cleveland Clinic will be rewarded for achieving quality and cost targets.
“Cleveland Clinic, Aetna to Offer New Plans Designed to Reduce Employers’ Health Care Costs and Expand Access to Cleveland Clinic Providers for Aetna Members Through New Programs” Cleveland Clinic August 19, 2020 https://newsroom.clevelandclinic.org/
Commonwealth Fund: 43% of Working Age Adults in America Underinsured
Findings from the newly released Commonwealth Fund Biennial Health Insurance Survey of 4,272 adults age 19 to 64 conducted from January 14, 2020 through June 5:
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In the first half of 2020, 43.4% of U.S. adults ages 19 to 64 were inadequately insured, unchanged from 2018. (Includes adult uninsured 12.5%, 9.5% insured but had a gap in coverage in the past year and 21.3% were underinsured. These findings are also statistically unchanged from 2018.
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28% who those in employer plans are underinsured: 42% of the underinsured purchase individual insurance, up from 37% in 2010; 26% have employer-sponsored coverage, up from 17% in 2010.
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The share of the employer-sponsored covered population with a deductible of $1000 or more has increased from 22% in 2010 to 46% in 2020. In 2010, 7% of people in private plans had deductibles that amounted to 5% or more of income. By 2016, that share was 15%.
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24% of the population 19-64 reported they had problems paying a medical bill in the past year including 14% of those who had health insurance without interruption.
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People who reported problems paying medical bills experienced lingering financial problems including damage to their credit ratings and depleted savings.
Commonwealth Fund has conducted its bi-annual survey of consumers since 2010: in the decade, there are few major changes in insurance status of the population: from 2010 to 2020, those insured all year without interruption increased 1% from 56% to 57%, those insured all year without interruption but underinsured increased 5% from 16% to 21%, those insured who experienced an coverage interruption increased 2% from 8% to 10%, and those who were uninsured at the time of the survey decreased 7% from 20% to 13%.
Collins et al “U.S. Health Insurance Coverage in 2020: A Looming Crisis in Affordability” The Commonwealth Fund August 19, 2020; https://www.commonwealthfund.org/publications/issue-briefs/2020/aug/looming-crisis-health-coverage-2020-biennial
Physicians’ Survey: Half Think COVID-19 Won’t be Under Control Until After June 2021
Key findings from the Physicians Foundation survey of 3500 physicians released last week:
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Nearly half of physicians don’t believe the COVID-19 pandemic will be under control until after June 2021, while 86% don’t think it will be under control until January.
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76% cited changes in employment and insurance status is a primary cause of harm to patients caused by COVID-19 but 59% believed opening schools, businesses and other public places posed a greater risk to their patients than continued social isolation.
“The Physicians Foundation 2020 Physician Survey” The Physicians Foundation August 18, 2020 https://physiciansfoundation.org/physician-leadership/physician-and-patient-surveys/
CDC: Suicide Rate in Rural Areas Higher than Urban U.S.
Highlights of the new CDC report:
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The rate of suicides in rural areas rose from a rate of 13 deaths per 100,000 people in 2000 to 19 deaths per 100,000 in 2018. Over the same time period, rates of suicides in urban areas went from 10 deaths per 100,000 people to around 13 deaths per 100,000.
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The suicide rate among men in rural areas increased by 34% since 2007, while the rate increased 17% among men in urban areas from 2006 – 2016. The suicide rate among women in the rural U.S. nearly doubled between 2000 and 2018, while the rate among urban women grew by 50%.
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Firearm-related deaths were the leading type of suicide among men in rural and urban areas and among women in rural areas. Women in urban areas most often died by suffocation.
“Suicide in Rural America” CDC; https://www.cdc.gov/ruralhealth/Suicide.html
Poll: Telehealth Among Seniors Gaining Acceptance
According to the University of Michigan National Poll on Healthy Aging:
The percentage of older adults who had ever participated in a telehealth visit rose from 4% in May 2019 to 30% in June 2020,
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Nearly half of those who had a telehealth visit said their healthcare provider canceled or rescheduled an in-person visit between March and June, and 30% said that a virtual visit was the only option when they called to schedule an appointment.
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In 2020, 24% of seniors said they had concerns about privacy during a telehealth visit than they did vs. 49% in 2019.
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62% say that at least one of their health providers offer telehealth visits, up from 14% in 2019.
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17% say they have never used any sort of video conferencing tool for any reason, including medical care, vs. 6% in 2019.
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More older adults are interested in using telehealth to connect with a provider they had seen before: 72% in 2020, up from 58% in 2019.
“Telehealth Use Among Older Adults Before and During COVID-19” University of Michigan National Poll on Aging August 2020; https://www.healthyagingpoll.org/report/telehealth-use-among-older-adults-and-during-covid-19
Survey: Risk-Based Initiatives Slowed Prior to Covid-19
According to the survey of 500 C-suite healthcare executives conducted prior to the Covid-19 pandemic, The State of Population Health: Fifth Annual Numerof Survey Report done in conjunction with the Jefferson College of Population Health found:
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1 in 5 cited the threat of financial loss as the primary reason they have not moved to a risk-based model. Other concerns include issues with systems like IT, tracking, and management (15%); uncertainty about when to make the transition from the current model (13%); difficulty in modeling the cost of care across the continuum (10%); and difficulty changing the organization’s culture (9%).
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More than three quarters reported their organization was in at least one agreement with a payer that includes upside gain and/or downside risk.
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Two-thirds of respondents in risk-based agreements said that less than 20% of their organization’s revenue is at risk.
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24% said their risk-based contracts had no downside risk, only the possibility of a “bonus” if targets were exceeded.
Note: The projectability of these findings is limited due to its methodology. “Approximately 9,800 individuals were invited to participate in the online survey, which was fielded from June 2019 to September 2019. The target audience was defined as physician group executives or vice presidents, as well as individuals working in U.S. provider organizations including healthcare systems, hospital and academic medical centers.”
“The State of Population Health: Fifth Annual Numerof Survey Report” Numerof and Associates August 2020; https://nai-consulting.com/numerof-state-of-population-health-survey/
Study: Working from Home Means Shorter Meetings, More Attendees, Longer Workdays
Researchers examined the impact of COVID-19 on employee digital communication patterns in 16 large metropolitan areas in North America, Europe, and the Middle East. Using de- identified, aggregated meeting and email meta-data from 3,143,270 users, compared to pre- pandemic levels:
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increases in the number of meetings per person (+12.9%) and the number of attendees per meeting (+13.5%),
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decreases in the average length of meetings (-20.1%). Europeans have been keener than Americans to cut meetings short: the trend is most marked in Brussels, Oslo, and Zurich.
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increases in length of the average workday (+8.2 percent, or +48.5 minutes), along with short-term increases in email activity
“Collectively, the net effect is that people spent less time in meetings per day (-11.5%) in the post- lockdown period.“
Evan DeFilippis, Stephen Michael Impink, Madison Singell, Jeffrey T. Polzer, Raffaella Sadun “Collaborating During Coronavirus: The Impact of COVID-19 on the Nature of Work” NBER Working Paper No. 27612 July 2020; https://www.nber.org/papers/w27612
Randomized Trial: Remdesivir Effective for Covid-19 Patients who are Hospitalized
584 patients in 105 U.S., European and Asian hospitals with moderate COVID-19 were randomized to a 5-day and 10-day course with remdesivir vs. standard care for others from March 15 through May 20,2020. Key finding: “among patients with moderate COVID-19, those randomized to a 10-day course of remdesivir did not have a statistically significant difference in clinical status compared with standard care at 11 days after initiation of treatment. Patients randomized to a 5-day course of remdesivir had a statistically significant difference in clinical status compared with standard care, but the difference was of uncertain clinical importance.”
Spinner et al “Effect of Remdesivir vs Standard Care on Clinical Status at 11 Days in Patients With Moderate COVID-19: A Randomized Clinical Trial” JAMA August 21, 2020; https://jamanetwork.com/journals/jama/fullarticle/2769871
