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How COVID-19 is Changing the Cost of Health Care
by Melina Kambitsi Ph.D.

Primary care has always been the first line of defense in caring for patients, offering the most value to our health system. Its effectiveness, however, has suffered over time due to lacking care coordination, poor patient access, and misaligned payment incentives. And although the pandemic has taken a highlighter to our current system’s flaws, The Alliance believes there’s good news on the horizon.

 

New Payment Methods

Patients suffering from common, chronic symptoms may not see their physician due to post-pandemic access restrictions, their physician not having sufficient ability to test for COVID-19, or they may forego treatment altogether due to fear of contracting it at their physician’s office. In fact, nearly half of adults (48%) have postponed or skipped medical care due to the coronavirus outbreak. 

As fewer patients seek primary care, their providers lose billable hours crucial to their fee-for-service payment models. Additionally, more than a third of hospital income is generated via “shoppable” procedures, which are being delayed or cancelled by patients and hospitals. 
These issues are casting a bright light on the need for change – specifically, a move toward global payments and an integrated care model that focuses on the quality of care, and one that aligns financial incentives for both the patient and provider.

 

Telehealth – Our New “Normal” 

In addition to new payment methods, patients are exploring new care delivery methods as well. An emergency declaration made on March 13 now allows Medicare and Medicaid to utilize virtual telehealth appointments, and this newfound access has played an important role for patients with common, chronic illnesses who need to check in with their doctor regularly. The Alliance believes these new regulations have come to stay.
 

The Future Cost of COVID-19 

Although employers can likely look forward to value-based care in the future, they might be wondering what the pandemic is going to cost them now.

On its face, the cost of COVID-19 is staggering; private insurers pay as much as $20,000 for pneumonia treatment, and more than $80,000 if the patient requires a ventilator. And because the cost of coronavirus testing is expected to increase as it becomes more widely available (and insurers are required by law to cover those costs), that could mean insurers might overprice their 2021 health plans to offset those costs.

However, because 37% of private insurance spending on hospital admissions stems from non-emergency surgical procedures, 2021 should see a higher volume of these procedures and help offset some of those costs for insurers. Overall though, employers can expect their health plans to increase in the coming years.

 

Self-Funding Smart 

For self-funded employers, health costs will be impacted differently; while they may see a decrease this year due to the lack of elective procedures, the long term effects on cost will be determined by their incidence of COVID-19 testing, the number of cases in their workforce, and the severity of those cases. However, they won’t see the same increasing insurance prices because they own their health plan. 
If you want to learn more about your data and plan for the future, please contact us.

About the Author:
Melina Kambitsi Ph.D. joined The Alliance in 2017 and leads the teams responsible for business development, client development, and strategic marketing. Previously, she was chief sales and strategy officer for Network Health and was responsible for sales and underwriting, strategic planning, product development and risk-based contract analytics. Earlier she was senior vice president of sales at Blue Cross Blue Shield, Honolulu and the vice president of sales, marketing and product development at Blue Cross of Northeastern Pennsylvania.

 
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