Two years after businesses were shut down nationwide by the pandemic, more employers may begin to change their health insurance benefits.
The COVID-19 pandemic has forced businesses large and small to put significant changes to their health plans on hold.
In early 2021, Conrad Siegel, a Harrisburg employee benefits and investment consulting firm, reported that in a survey of 100 organizations, only 7% of respondents planned to make changes to their health care benefits. .
Labor issues resulting from the pandemic have forced employers to continue to refrain from making sudden changes to their benefits. However, that could change this year with increased pressure from health care inflation, said Robert Glus, partner and consulting actuary at Conrad Siegel.
“Health care is a big deal and attracting and retaining employees is one of the biggest challenges right now. It’s not worth having to cut benefits or increase deductibles,” Glus said.
Despite this desire to stay competitive for future hires, Glus added that employers won’t be able to continue to bear increases in benefit costs now that health care utilization is normalizing.
“The pandemic was a terrible situation, but for healthcare costs and premiums, that wasn’t a bad thing – it kept costs down,” he said. “Now we are going to be under all this pressure. There will be tons of pressure on costs and trends and people will have to react. »
Glus said that in recent months the biggest cost increase he has seen in the market was the jump in COVID test purchases at the end of 2021. This cost spike was particularly high for self-funded groups. .
“The amount of testing going on was a huge cost driver at the end of 2021 and into 2022,” he said. “He’s just one of the pilots. Things that add even one to two percent to your health care expenses can be significant.
Possible pressures on additional benefits this year could prompt employers to seek to be more efficient and cut costs. For employers trying not to increase their employees’ pay, this could mean things like contracting with local health systems to increase efficiency but reduce flexibility.
Glus said that for some organizations, it may be worth asking the question, “Is reducing the ‘where’ in health care worth the limits?” »
“You can get so many benefits in terms of deductibles and copayments, but at some point you have to look at efficiency even if it means limiting where someone can get coverage,” he said. declared.
Transparency rules in preparation
In late 2020, the Trump administration issued a Transparency in Hedging Rule intended to improve price and quality transparency in the marketplace.
Implementing that rule was pushed back by the Biden administration, but Glus said it’s something employers should keep on their radar.
The new rule requires most health insurers to provide personalized information regarding reimbursable expenses for covered services. The aim of the regulations, which are due to come into force from 2023, is to encourage consumers to seek out healthcare services and providers.
Glus said that while the new regulations may make it easier to purchase services and compare costs, additional transparency does not necessarily promise lower costs.
“Instead of having a race to the bottom, often when we’re talking about insurance and providers, there’s a race to the top,” he said. “If everything is public and everything is broadcast so that an insurance company can see how much is reimbursed from one provider to another, it will be interesting if it lowers or increases costs.