Employee health benefits claims will rise 'for years' after COVID

The cost and design of employer-provided health benefits are set to change considerably as a result of COVID-related disruption to healthcare and working patterns, according to a report by Mercer Marsh Benefits.

The company's latest Health Trends: 2020 Insurer Survey suggests that 68% of insurers expect increased medical claims driven by COVID-19 diagnostics, care and treatment.

Insurers also expect increases in medical costs to continue to outstrip inflation in 2021. In 2019, insurers reported cost increases of 9.7%, which was just under 3 times the rate of inflation. In 2020, they expect a rise in medical costs of 9.5%, which is roughly 3.5 times the inflation rate. For 2021, 90% of insurers expect the trend to sustain or increase.

Hervé Balzano, president of the firm's health division, said: “COVID-19 has had profound effects on all parts of society and the economy, including healthcare. With an expected rebound in elective treatments deferred during lockdown, a rise in negative health issues related to remote working and sedentary lifestyle, including musculoskeletal and mental health issues, and ongoing concerns about the long-term physical and mental health implications of COVID-19, we expect medical costs to continue to increase.

“In order to meet the new challenges posed by remote working and contain expanding costs, companies need to radically rethink the range of benefits they offer their employees and the way in which they deliver them.”

Report highlights (Source: Health Trends 2020 Insurer Survey, Mercer Marsh Benefits)

The COVID-19 crisis has highlighted the fragility of current employee benefits systems, many of which are paper based and cannot be accessed or managed remotely. With many employers now looking for benefit providers that can offer additional benefits such as mental health, preventive care, and an enhanced range of digital and online services, insurers are increasingly looking to broaden their suite of solutions.

The survey found an increase in the number of insurers offering virtual health consultations, or telemedicine, with 59% saying it was an active part of their current approach to plan management, up from 38% in 2019. Furthermore, 55% of insurers now cover preventive health initiatives, such as screenings, with an additional 20% indicating they are experimenting or have developed plans to initiate this within the next 24 months. Employer-sponsored plans will continue to play an important role in providing people with the health services they need. For example, just over half of insurers expect their employer-sponsored plans will cover COVID-19 vaccinations, especially in Latin America.

The survey also found remaining gaps in mental health support, despite the increase in demand seen during the pandemic. For example, virtual mental health counselling is still not widespread, with only one-third of insurers offering it globally while 32% of insurers do not provide plans covering any mental health services. This is despite the fact that in all regions, insurers rate private, employer-sponsored health care systems as more effective than public ones in providing the needed prevention, diagnostics and treatment of mental health disorders.

    Share Story:

Recent Stories

Cyber physical risks
Property damage as a consequence of cyber attack is often excluded from standard property policies, but as the industrial internet of things expands, so too do the risks. This podcast examines the evolving threat landscape. Published October 2021

Financial institutions were early adopters of cyber security and insurance. Are they still on top of the game?
Managing huge amounts of sensitive data online makes financial institutions a prime target for hackers. As such, the sector was an early cohort for insurers in creating cyber cover. Since then, the market has evolved almost beyond recognition. It continues to challenge itself to this day, complying with rigorous regulatory demands and implementing avant-garde enhancements to keep abreast of the ever-changing risks. Published June 2021