» Healthcare Utilization Isn’t Bouncing Back From COVID Like We Thought It Would
August 19, 2021
We’ve been closely watching reports on how Americans have been consuming healthcare as the COVID pandemic has evolved.
In 2020, we saw drastic decreases in services, leading to worry about the impact of skipped screenings and doctor’s visits such as preventative services.
Previous conversations with our friend Josh Axene (July 2020, January 2021) centered on these questions. How will spending increase or decrease due to COVID? And as reduced utilization during COVID became apparent, how will costs and utilization bounce back from 2020 lows?
The Peterson-KFF Health Systems Tracker updated its analysis with research on data from 250 hospitals across 47 states and 112 million patients to look at just this question.
So far through June 2021, admissions and spending remain below expected levels. In short, we haven’t seen an increase in services and spending as a result of pent-up demand for deferred or delayed care over the last year and a half.
Hospital Admissions have been lower than expected through early 2021
The research so far has shown that hospital admissions are about 86% of what would have been expected and averaged over the first quarter of 2021, 89% of what would have been expected.
For employers who are self-funded and paying claims as incurred, this has resulted in decreased spending through 2020 and 2021 so far. And for fully insured groups with health insurance from a major carrier, they’ve realized rebates due to MLR requirements.
Unclear impact of Increased Hospitalizations due to Delta Variant
Something to watch will be if and how the data shifts as COVID-19 hospitalizations increase due to the Delta variant. 2020 saw overall reduced utilization even accounting for COVID hospitalizations, and 2021 could see a similar result.
Spending is Lower due to Reduced Utilization
As you would expect, reduced utilization has led to lower health spending so far through 2021.
Specifically, data published by the Bureau of Economic Analysis found that spending on health services (hospitals and ambulatory care) is still 7.1% below what would have been expected for June 2021 health spending. And hospital spending was found to be 4.1% below expected.
Growth of spending on an annualized basis is growing at a similar rate as before the pandemic between 2017 and 2020.
Carrier Benefit Financially from COVID
While lower utilization depressed health system revenues and required a $178 billion provider relief fund from HHS, health insurers have been benefiting from the decline in utilization.
Analysis from KFF found that gross margins for carriers are relatively high compared to pre-pandemic margins in every market, including individual, group, Medicare Advantage and Medicaid Managed Care. Some of these increased margins have returned to enrollees due to MLR required rebates as part of the ACA.
Impact on Population Health of Delayed and Deferred Care
As COVID has yet to go away and regular health services resume, we are still waiting to see the long-term effects on population health due to COVID.
If people have delayed and forgone care due to COVID, then un- and under-treated acute and chronic conditions will lead to people presenting at higher severity. This will have a negative impact on population health, leading to worse outcomes and higher claims.
Employers can benefit by understanding population health dynamics and their influence on their health plans. The more informed and strategic an employer can be, the greater results they can expect from their benefit plans.
How can your employee health plans benefit from a population health approach?
Chat with our consultants to learn more!
Posted by John Hansbrough in Healthcare Spending, News, Research