Pandemic Could Trigger Changes in Commercial Health Plans

The ripple effects from COVID-19 are creating waves across all areas of health care and the broader economy. The virus is driving higher unemployment, which in turn is significantly impacting wage levels, workforce planning and employer coverage dynamics.

While commercial payers and employers are finding their own ways of dealing with this new normal, it’s important for hospital and health system leaders to stay abreast of how the upheaval in these sectors may ultimately impact provider organizations.

A recent report from the consulting firm Oliver Wyman, “The New Normal for Health Coverage,” highlights some of the wide variations in how hard individual states have been hit by COVID-19 and the economic shutdowns that followed. The data and modeling used for the analysis signals potentially significant shifts in the health coverage mix.

States could see considerable differences in coverage mix shifts, the authors note in the last of this four-part series. The future likely will remain murky until late in the fourth quarter for millions of Americans as employers sort out their workforce needs. This will be a difficult period for those who find themselves unemployed or temporarily furloughed and is likely to cause some to defer buying new coverage due to limited awareness about eligibility (particularly for Medicaid) and coverage options. Others may remain uninsured indefinitely or until a health event occurs and they are signed up at the point of care.

3 Recommendations for Health Care Providers

Factor Shifts In Coverage Mix Into Financial and Strategic Planning

Unemployment likely will remain high through year end, and payers probably will invest differently across lines of coverage and consider new benefit designs to meet changing employer and consumer needs. Providers will need to consider local market dynamics and estimate risks to individual sites because of factors like consumers moving from the community due to economic hardship.

Consider Secondary Impacts from Market Shifts

If more consumers shift to Medicaid or are uninsured, it could drive congestion in emergency departments and boost demand for behavioral health services, the report states. Payers and providers also can expect tougher reimbursement rate negotiations and more focus on cost management due to the decline in commercial enrollment. Employers also may reduce benefits, encourage workers to use price-shopping tools and expand narrow network offerings.

Plan for Multiple Contingencies

With so much uncertainty about the path forward, it’s wise to prepare various scenarios for the future along with corresponding contingency management plans.