While you might have seen your healthcare costs or claim costs go down in the latter part of 2020 and early in 2021, I don’t suspect that we will be in such a fortunate spot in 2022. Here’s why:
The reduced healthcare spend during the pandemic was largely attributable to the postponement of both elective and non-elective procedures and services. In a report released last year, the American Hospital Association stated:
“The AHA estimates $120.5 billion in total financial impact from July 2020 through December 2020, or an average $20.1 billion per month, should hospitals and health systems reach baseline patient volumes by July 2021. These estimates are in addition to the $202.6 billion in losses the AHA estimated between March 2020 and June 2020, bringing total financial losses for hospitals and health systems in 2020 to at least $323.1 billion”
There’s only one way to make up for those losses: the FIRST reason is called increased hospital prices. There are no regulations, laws, rules, etc. that govern or limit what those prices could be – only the CFO’s imagination.
Notwithstanding the recent surge of COVID-19 cases due to the Delta variant, many facilities have partially reopened for their resumption of those postponed services mentioned above. Whether they were elective procedures are not, this is the SECOND reason: increased utilization. As more and more people get comfortable with the reduction of hospital restrictions as well as their inability to contract COVID-19 either through vaccinations or personal hygiene or safety protocols, groups should see more claims activity by their members and thus increased utilization.
One of the outcomes of the postponements was that those members who have chronic conditions or certain diseases were not able to get the treatment and screenings that were necessary to manage their conditions. As a result, those members’ conditions may have deteriorated and left them with more serious complications. For example those people who had cancer but couldn’t continue their radiation or treat or chemo treatment, or someone that has a chronic conditions such as diabetes or COPD and not able to access treatment will certainly be in a more serious state. The THIRD reason: lack of care and increased complications.
I’ve spoken to numerous underwriters who are somewhat perplexed about how to price upcoming renewal due to these issues. Couple that with increased cost and utilization of specialty drugs and you get a formula of uncertainty. Underwriters are very cautious and conservative minded, so they will certainly error on the side of higher costs rather than aggressively pricing and insurance program.
There are programs that can either eliminate or mitigate these issues before they become problematic. If you would like to learn more about what remedies and strategies you can take to do this, email me at [email protected] or call me at 970 – 349 – 7707 and we can chat.
30 minutes could save you 30% or more on your health insurance costs!
