U.S. employers are projected to spend 5% less than “initially expected” in 2020 on medical benefits … [+]
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For the first time in decades, employers are spending less this year on their employee healthcare costs thanks to the global pandemic that has triggered fewer trips to the doctor’s office and certain other medical treatments.
U.S. employers are projected to spend 5% less than “initially expected” on medical benefits per employee due to Covid-19, according to a new report by Aon, the global human resources consulting firm and risk manager. This means an employer that budgeted $10,000 per worker this year for medical and prescription drugs costs is saving about $500 per employee in “claim reductions” due to the net impact of Covid-19, Aon says.
The cost reduction comes as Americans delayed care like elective surgeries and certain trips to the doctor’s office as states and local governments implemented “stay at home” orders earlier this year. Meanwhile, doctors report lower patient volumes from patients they believe worry about catching the deadly virus.
“During 2020 plan year, we believe most self-funded employers will spend less money than what they have budgeted per employee,” Aon’s chief global actuary for health solutions Tim Nimmer said.
It’s unclear whether the dip in spending by self-funded employers will translate into lower premiums for workers though there have been efforts made by large health plans like UnitedHealth Group and others to offer businesses premium credits and discounts to their fully-insured health plans due to the dip amid the dip in medical expenses during the pandemic. The Aon survey was of more than 40 “national and regional” insurance carriers in the U.S.
Though employer costs are falling this year, Aon’s analysis sees employee spending on medical care to rise in 2021 by 2% “above normal trends” as Americans gradually return to getting their healthcare treatments and doctor office visits. Aon analysts believe the uptick in costs that will follow this year will include costs of care “postponed or skipped in 2020.”
“This is an historic occurrence for the U.S. healthcare industry, but there is still uncertainty regarding COVID-19’s impact on deferred treatments and long-term health care,” Nimmer said. “While employers navigate through different outbreak phases, our current expectation is that medical plan utilization will continue to normalize during 2021.”
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This post was originally published on https://www.forbes.com/banking-insurance/.
