How COVID is Impacting Claims for the Self-Insured Employer

Though the worst of the COVID crisis is over, it may be several more years before American employers realize its full impact on employee health claims. The pandemic created conditions that kept some people from accessing necessary medical and mental health care. Soon, both those patients and their employers may pay the price. While some self-insured employers saw their claims drop at the height of the crisis, COVID may still have a wave of high-cost claims in store.

Factors Around COVID and Claims

No two self-insured employers have seen their claims impacted by COVID in exactly the same way. Businesses in certain industries and certain geographical areas were hit harder than others. These are just some of the ways that the pandemic affected employee health claims. 

The high cost of treating COVID: When 2020 began, self-insured employers weren’t anticipating having to pay high-cost claims related to the coronavirus. The costs associated with treating COVID cases have varied wildly from patient to patient, depending largely on the severity of each case and the patient’s underlying conditions. 

We don’t have conclusive data about how much COVID claims have cost insurers and self-insured employers nationwide, but we do know it’s been significant. (One stop-loss group, Tokio Marine HCC, reported receiving 958 claims for 2020 in which the primary diagnosis was COVID or COVID-related, with an average total claim cost of around $65,000.) Self-insured employers may have had higher-than-projected claims if even a small percentage of their covered individuals were hospitalized because of COVID.

A rise in mental health challenges: It’s hardly controversial to say that the pandemic was bad for mental health. The National Center for Health Statistics tracks mental health data in the U.S. with its weekly Household Pulse Survey. Throughout the first 12 months of the pandemic, the number of people surveyed who said they had experienced symptoms of anxiety disorder or depressive disorder in the previous seven days ranged from around somewhere between 35 and 45 percent of Americans. 

The numbers are declining now. As of late May, that number had fallen to around 30 percent—which is still three times higher than in 2019, when overall an average of 10.8 percent of people surveyed had symptoms of anxiety or depressive disorder. Plus, factors like increased stress and decreased access to social support may have exacerbated existing mental health conditions, and substance use also rose during 2020. 

Despite a surge in people struggling with mental health during the pandemic, there hasn’t yet been an equivalent surge in claims for mental health care. In May, Anthem released its inaugural State of the Nation’s Mental Health report using claims data from 27 million Anthem members. According to its data, diagnoses and treatment for anxiety and PTSD increased in 2020 over 2019, but overall mental health diagnoses fell for some age groups and only increased by a few percentage points for others. 

In other words: A lot of people who started struggling with mental health during the pandemic didn’t seek out any professional help.  About 75 percent of the behavior health specialists and doctors who participated in Anthem’s survey said they expect mental health repercussions triggered by the pandemic to last up to three years. So while self-insured employers may not have seen mental health claims rise sharply during the worst of the pandemic, it’s reasonable to expect that previously untreated mental health conditions will emerge in the coming years.

Delayed preventative care: There were a lot of reasons why people put off preventative medical treatment during the early days of the pandemic. Providers canceled routine appointments and elective procedures. Some people stayed away from their doctors’ offices because they were afraid of being exposed to the virus, while others had transportation or financial barriers that kept them from seeing treatment. 

At the end of 2020, Harvard researchers compiled a report about delayed medical care. According to one of their findings, one in five Americans polled between March and August reported that a member of their household was unable to get medical care for a serious problem. Of that group, 57 percent reported negative health consequences due to delaying care. 

Workforce changes: A self-insured employer may see an impact on its claims any time its workforce changes significantly. Businesses that downsized, cut their hours or hired extra staff because of the pandemic may have needed to make enrollment changes that affected their overall claims during 2020 and early 2021.

COVID and Stop-Loss Claims

Because so many people weren’t accessing medical care during the height of the pandemic, self-insured employers may have seen claims fall during that time. Total healthcare utilization was 23 percent lower between March and August of 2020 compared to the same period in 2019, according to the Prealize 2021 State of Health predictive report

Now that people are getting back into their doctors’ offices, self-insured employers may need to brace for an increase in high-cost claims. Prealize projects a 23 percent increase in cancer diagnoses, an 8 percent increase in COPD and a 112 percent increase in fractures between 2020 and 2021. Self-insured employers who had few or no stop-loss claims in 2020 may need to lean on their stop-loss coverage to a greater degree over the next few years as expensive conditions are diagnosed and treated. 

As we continue to watch the impact of COVID on claims, Stop Loss Insurance Brokers, Inc. is here to support self-insured businesses with all their stop-loss needs. I’ll keep you updated on everything you need to know as developments unfold. In the meantime, I welcome your questions about self funding and stop loss. Contact me today!

Denise Doyle  Denise Doyle is the President of Stop Loss Insurance Brokers, Inc. She has over 30 years of experience in the industry and is a member of Self Insurance Institute of America.




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