Counting the cost of Covid-19 for future health benefits

A study by global employee benefits provider Mercer Marsh reports that coronavirus will have a lasting impact on the shape of employee health benefits provision and support for years to come.

Ruth Holmes

4 November 2020

Among the key findings from Mercer Marsh’s sixth annual MMB Health Trends: 2020 Insurer Survey report is that cost containment is critical, yet almost seven in ten insurers (68%) are expecting claims to increase due to Covid-19-related diagnostics, care and treatment.Mental health support also remains scant, despite rising demand now and into 2021.The report further predicts medical costs in 2021 will "vastly outstrip the inflation rate again" and that remote and flexible working will drive significant changes to employer-sponsored benefits programmes.

Pent-up demand for healthcare impacts medical costs

Disruption to the delivery of healthcare and lasting changes to work patterns resulting from the coronavirus pandemic are also likely to have a major impact on both the cost and design of employer-provided health benefits, says Hervé Balzano, President, Health at Mercer and Mercer Marsh Benefits International Leader.“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.” Mr Balzano continued: “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.”

A more proactive approach to wellbeing at work?

With workplace stress and mental health issues on the rise according to recent studies, the news could be prompting more employers to take a more proactive approach to redesigning their employee health benefits, and adopt further preventative measures against some of the negative impacts of flexible and remote working. Mercer Marsh’s survey found an increase in the number of insurers offering virtual health consultations, or “telemedicine”. Six in ten (59%) said it was an active part of their current approach to plan management, up from 38% in 2019.Over half (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.

Mental health support lacking

However, the survey also found remaining gaps in mental health support, despite the increase in demand seen during the pandemic.Virtual mental health counselling is still not widespread. Globally, only a third of insurers offer it and 32% of insurers not providing plans that cover any mental health services. This despite 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.

Employer health benefits 'of greater significance'

Chris Bailey, Partner and UK Head of Corporate Consulting, Mercer Marsh Benefits, says, “The severe disruption in the health system caused by the pandemic has meant many people have been unable to access treatment for key conditions such as cancer, muscoskeletal and mental health issues.“We can expect to see a bounce back from this disruption in 2021. Whilst the return of treatment is welcomed and much needed, releasing the backlog of demand is likely to drive up costs. This will mean further challenges for companies already focused on managing cost and keeping afloat in a tough economy.Mr Bailey added: “Our survey also shows that there has never been a time when health benefits have been of greater significance and value to employees. Employers without future-ready digital solutions will find it increasingly difficult to cope with the demands of a modern workforce. By focusing on delivering services digitally the disruption in services can be managed, treatment accessed, and health and wellbeing enhanced even as the pandemic continues.”