Impact of pandemic on commercial health insurance: Spending, risk both increasing

Areas of growing focus for employers include behavioral health, musculoskeletal services and wellbeing programs.

However, utilization of psychiatry services increased 32 percent, the largest growth in utilization of any subcategory of service. This, combined with a moderate price growth drove a 43 percent increase in spending.

The pandemic brought significant changes to the ways in which consumers engage with the health care system. The ripple effect of those changes will be felt not only for the rest of 2022 but well into the future.

“What really stands out to me is that even if the pandemic ended tomorrow, the health consequences of the pandemic are here to stay,” said Chris Whaley, health economist for the RAND Corporation. “The pandemic has been the largest shock to U.S. society, in health outcomes and the economy, since World War II.”

Whaley was part of a panel discussion about the new Workforce Health Index from Castlight, a San Francisco-based health care navigation company. Castlight CEO Maeve O’Meara shared the topline results of the report.

Related: 5 factors that can make or break health care spending in 2022

“One thing this report highlights is that employers are different, geographies are different and populations are different, so look at the data,” she said. “Point one is that preventive care has not fully come back, and employers need to leverage things such as incentives, which have been proven to have an impact to drive up utilization of preventive care.

“Point two is that preventive care usually leads to a conversation about primary care and behavioral health. What is exciting about the data is that it is clear that there is a recognition among employers that behavioral health is a challenge that has in many ways been effectively addressed, but there is a need to think about subpopulations such as adolescents.”

Castlight analyzed more than 160 million medical claims, employer investments in digital programs, data from ecosystem partners and responses to its health-risk assessment for plan sponsors. It focused on medical spend rather than pharmaceutical spend because of the disproportionate impact of the pandemic on health services utilization. Commercial medical spending grew steadily over the past decade until 2020, when the pandemic upended this historical trend. Per-member per-year spending grew 7.1% from 2018 to 2019.

“In 2020, as a result of the pandemic, there was almost a 7% decrease in spending among commercially insured populations,” said Dr. Dena Bravata, chief medical officer for Castlight and lead author of the report. “That spend has rebounded to essentially pre-pandemic levels. One of the key findings of this report is that we are anticipating that it will be flat through the rest of this year.“

The report offered several important takeaways.

Employees and their families are sicker than they were pre-pandemic. The clinical risk of this population increased by 9.3% from 2019 to 2021. The risk of this population was expected to increase by only 3% on the basis of the cohort getting older over the time period, so the increased burden of disease was three times what was expected.

Reductions in preventive care spend during the pandemic are projected to rebound in 2022 but fail to reach pre-pandemic levels. “Preventive services is a key category where we saw a decrease in spend during the pandemic,” Bravata said. “Unfortunately, it has not rebounded to pre-pandemic levels. This is particularly worrisome for self-insured employers who want to make sure that members are getting the preventive services they need. Without this, I think we are looking ahead to dramatic increases in costs down the road.”

Telehealth utilization accelerated and shifted to virtual primary care and condition management. “One of the most durable changes from the pandemic is the incredible increase in telehealth services,” she said. “Pre-pandemic, most telehealth services were for pulmonary-related issues. As a result of the pandemic, telemedicine services exploded 30-fold in 2020. There also were two other important changes. One is that the people providing these services are general clinicians.

The second change is that behavioral health makes up an enormous amount of telehealth visits for this population. “There is about a 13% decline in telehealth services from last year, but it’s still 25-fold the rates we saw pre-pandemic,” Bravata noted.

Gaps in primary care utilization are even more pronounced in low-income communities. People in low-income communities forgo their care more frequently than those in wealthier areas.

“It’s obvious from the data that communities of color are not accessing care or getting the right kinds of care at the rates we want to see,” said Ryan Schmid, CEO of Vera Whole Health. “There isn’t a one-size-fits-all approach. We must think about how access models and personalized engagement and outreach in this financial world support the ability to create programs to meet people where they are and address their relevant needs.”

Significant growth in employee demand for behavioral health services is projected to continue. “There was a steady march long before the pandemic of increases in behavioral health spend,” Bravata said. “There was a bit of a bump in 2020, but not as dramatic as people thought. On one hand, increases in behavioral health spend is a good thing. These are people who are getting the care they need. But it’s also a reflection of the fact that more people are in need of behavioral health services.”

Demand for musculoskeletal services was exacerbated by the pandemic and is expected to grow in 2022. “There was a bit of a drop in musculoskeletal care in 2020, but it’s now back to pre-pandemic levels,” she said. “It’s the No. 1 category of spend over the past five years, closely followed by cancer care.”

Investments in health and wellbeing programs have grown. Employers have steadily increased their investment in digital health programs. In 2021, the average employer offered more than 12 digital programs to their workforce.

Despite the challenges, panelists are upbeat about where the industry is headed over the next five to 10 years.

“The fact that you do see such a decrease in preventive care and an increase in behavioral health issues creates a potential tsunami in negative outcomes and spend down the road,” Schmid said. “That’s the risk, but it also creates an opportunity. One thing that has been reinforced is that you cannot separate the social from the mental from the physical. There is a growing demand for the integration of solutions.

“The fact that employers are beginning to demand the ability to pay for outcome instead of just services is really important. You will see the supply side catch up to the demand in a way that is really powerful for our society.”