Outside the US, A Shift in Benefit Strategy is Underway: MMB Health Trends 2020 Preview
Out of necessity, benefit managers in the US have taken an active, data-driven, strategic approach to ensuring their programs keep up with the times. Health system complexity and the high cost care in the US has bred proactive management -- you may be sure that many employers in the US are already working on strategies for 2022 to deliver more value to their organizations and plan members. Outside the US, benefit managers contend with stable, albeit slow moving, public health systems or more traditional private sectors. Less innovation brings different challenges and typically we may not see benefit managers outside the US being quite so aggressive on annual changes or reviews. But this year is different.
Rocked by the global COVID-19 pandemic, the world has changed drastically since we released last year’s MMB Medical Trends report, which looks at key markets outside the US. For employer plan sponsors, the impact of the pandemic on cost has varied based on factors such as the nature of expenses typically covered under the plans, the duration/scale of lockdowns affecting utilization, and supply-side factors like provider consolidation and pricing.
But the pandemic has also demonstrated that a more expansive view of health and benefits is needed -- one that goes beyond medical insurance and considers holistic physical, emotional, social and financial health and wellbeing. Business leaders who push boundaries, innovate and even redefine their benefit offerings as a means of establishing a true culture of health for diverse workforces are likely to reap long-term success and ROI as society continues to navigate through this global crisis.
Expect Medical Trend Variation
Echoing the uncertainty in broader economic forecasts, the insurers surveyed for our 2020 Medical Trends report -- from Asia to Latin America to Europe – expressed serious concerns about forecasting medical costs. Even insurers within the same country varied in their views about what will happen to medical trend rates as the COVID-19 crisis unfolds.
Overall, insurers expect a slight dip in the 2020 medical trend rate, which is smaller than expected given the global widespread reductions in consumption of elective care. It is important to highlight that most of this survey data was collected in June and July and may reflect an optimistic “return to care” view. If care resumes less actively than contemplated, the figures below are likely to be overstated, with further catch-up taking place in 2021 or beyond.
Looking ahead at 2021, almost two-thirds of insurers globally expected medical trend rates to be higher than 2020 and we agree that this is a realistic scenario. We expect there are a number of factors going into this prediction, such as rebound in elective diagnostics and treatment, delays leading to greater need for care, new claims linked to remote working, ongoing COVID-19 concerns, greater usage of local private systems, and new costs for personal protective equipment (PPE). Concerns about currency fluctuations may also be a factor.
Design Your Benefits for an Uncertain Future
It may seem counterintuitive to make structural benefit changes during a period of such uncertainty, but we believe the current times call for employers to reassess offerings and strengthen their commitment to employee benefits that truly provide value. Approaches to employee health and benefits that have worked in the past, like aligning exclusively to market practice, may not apply in the post-COVID-19 environment.
While traditional insurance-based products will continue to provide a critically important foundation of any benefits package in many markets, they will just be one part of the solution in the future. And although cost containment remains a factor, all employers – especially now – need to nurture a healthy and resilient workforce to drive a healthy and resilient business. Supporting employees with greater emphasis on prevention, mental health and new delivery models is now a global imperative. Organizations that take the time now to modernize and adapt to seismic market trend changes are the ones who will weather the storm more successfully and emerge from it in a position to thrive.