Most employers won't turn to healthcare cost shifting in 2021, Mercer says

By Ryan Golden
Oct. 8, 2020 - HR Dive

Dive Brief:

• More than half of employers surveyed by HR consulting firm Mercer said they would not make cost-shifting changes, such as raising deductibles or copays, to their healthcare benefit plans in 2021. That figure is up from 47% of respondents in last year's version of the survey and 44% in 2018, Mercer said in an Oct. 1 statement announcing the results.
• On average, respondents expected healthcare benefit cost increases of 4.4% next year, which is slightly higher than estimates predicted in last year's survey. Employers have placed a heavy focus on digital offerings, with more than one-fourth of the 1,113 respondents saying their organizations are adding or improving telemedicine, virtual office visits and similar resources.
• Many of the survey's responses reflected a broader focus on behavioral health. More than half of respondents said they provided or planned to provide managers with training on how to support employees' behavioral and mental health during the pandemic. Twenty percent planned to add or improve behavioral healthcare resources.

Dive Insight:

Months into a public health crisis, the outlook for employer-sponsored healthcare could shift significantly due to delays in care, according to previous studies. A survey by the Business Group on Health published earlier this year projected median healthcare costs increases of 5% for the organization's large employer members, but the Business Group noted that a resumption in care in 2021 might indicate that figure is too low.

Similarly, an April report from consulting firm Milliman predicted an increase in costs next year due to deferred care and increased demand, adding that such costs "are likely to be very significant." At the same time, COVID-19 treatment and testing could also lead to cost increases of between 4% and 7%, Willis Towers Watson said in March. The total cost to U.S. employee benefit plans from COVID-19 could exceed $23 billion, the Integrated Benefits Institute said in April.

Forecasts for benefit spending largely haven't reflected major cuts at many companies, however. Willis Towers Watson found in a May survey that nearly half of respondents were instead enhancing healthcare benefits. Voluntary wellness programs, by extension, may also avoid cuts at many organizations, according to sources who recently spoke to HR Dive.

"Many employers are avoiding health plan changes that impact employees this year, but they know managing cost must remain a priority," Tracy Watts, senior consultant at Mercer, said in the statement. "Plan member stress and care avoidance in 2020 may result in higher utilization in 2021, and struggling health systems may seek to recoup lost revenue through higher prices. On the plus side, the momentum behind digital health innovation is driving towards greater efficiency, better health management and greater member satisfaction."

Virtual healthcare delivery has emerged as a trend going into 2021 across multiple studies. The Business Group on Health's survey found more than half of large employer members included implementation of more virtual care solutions among their top initiatives for next year. Analysts and consultants in the space told HR Dive that the trend toward virtual is likely to continue even after the pandemic's effects subside, despite concerns about aspects like billing.