The medical cost trend could rise as much as 10%, according to PwC’s Health Research Institute (HRI) annual report.
The coronavirus pandemic brought uncertainty to the American economy and healthcare system, and how both will recover is unknown. To guide payers and physicians during the climate of healthcare post COVID-19, PwC’s HRI developed three spending scenarios that may arise in 2021 to account for the possible responses to the pandemic’s impact: low, medium and high. To account for the decline in employer healthcare spending earlier this year, the PwC HRI projected the 2021 medical cost trend relative to 2020 costs while normalizing for COVID-19. As the study was published in June, spending in the second half of 2020 could not be accounted for.
A low-spending scenario may occur if spending remains deflated and/or a second wave of coronavirus occurs in 2021, with the healthcare cost trend estimated to reach 4%. A medium-spending scenario is possible if facilities spend roughly the amount predicted prior to the pandemic, leading the cost trend to reach 6%. If a high-spending scenario occurs and physicians deliver care that was delayed during the pandemic in 2021, the cost trend could skyrocket to 10%. On either end of the spectrum, numbers this low or high have not been seen in years.
The Changing Landscape of Post-Coronavirus Health care
Mental health care was an anticipated inflator in 2019 as employers worked to expand available benefits and destigmatize mental illness. The PwC’s HRI anticipates this will continue to impact 2021’s medical cost trend, especially in light of the effect COVID-19 has had on mental health. The American Psychological Association (APA) updated its annual Stress in America survey to address how Americans are responding to the pandemic. The average stress rating for those polled was 5.9 out of a 10-point scale, with “1” representing “little or no stress” and “10” representing “a great deal of stress.” As a response, many employers and insurance plans offer a multitude of mental health services in an effort to provide a “whole patient” approach to health care. In many cases, this includes the option to receive mental health care via telehealth.
In fact, telehealth has connected patients and physicians in numerous specialties. While it gradually became common in healthcare systems prior to the pandemic, the impact of COVID-19 has brought telehealth to the forefront of patient care. Among their outlined safety precautions, the CDC recommends patients use virtual care options whenever possible. In March 2020, the CMS issued temporary regulation waivers, which included offering more than 80 additional services via telehealth. Under the same waivers, virtual visits were allowed to fulfill in-person requirements for some clinicians. For many patients, it is a viable and attractive alternative to in-person care, and PwC’s HRI encourages physicians to integrate telehealth into their practice as part of “the new normal.” Moving forward, telehealth offers cost-saving opportunities for patients and providers and is expected to be a deflator in the healthcare cost trend.
Additional factors that may affect the medical cost trend also include employers selecting narrower networks and specialty drug spending, both of which were anticipated factors in 2019, as well. In response to the economic effects of the coronavirus, many employers may select narrower networks as a way to cut costs. To address the potential millions specialty drugs could cost, providers are encouraged to collaborate with payers and employers to deliver therapies to patients in the safest way available and at the lowest cost possible.
How Physicians Can Help
Spending was deflated in early 2020 by multiple factors, such as state lockdowns and government mandates to delay all non-emergent procedures and surgeries. Patients were hesitant to receive care, as well; 57% of patients with employer-based insurance reported to PwC HRI that they were worried about getting medical care during the pandemic. As a result, roughly two out of 10 surveyed individuals with employer insurance reported delaying their care. Of this group, patients with complex chronic conditions were the most likely to delay receiving care.
In light of this, physicians have a unique opportunity to encourage patients to receive necessary care. Respondents stated that they would respond most to communication from their doctors about health and safety measures — more so than their local governor, their insurance provider, or the CDC. Physicians are a trusted source of information during the coronavirus pandemic, and it may be used as an opportunity to foster more patient-provider communication.