In Part 1 of our November Edu-Blog series on health insurance, I want to start with the obvious. The healthcare industry was not ready for COVID-19 and therefore the future of health insurance is in flux. We expect to see a rollercoaster in healthcare costs and premiums no matter what type of plan you have.
If you are still working you may find yourself getting anxious each year over the possible changes to your employer-based healthcare plan. Chances are, your employer is feeling the economic strain as a result of the pandemic. This only serves to exacerbate longstanding challenges of managing the healthcare costs of their employees. A study conducted by Covered California shows an expected 4% rise in the cost of employer-led health insurance, and you can bet you are going to feel the brunt of it.¹
Regardless of what type of plan you have, let’s take a look at what may inflate healthcare costs in 2021 and what we should be prepared to encounter in this open-enrollment season.
Healthcare Cost Inflators
1. COVID-19 increases use of mental health resources
Both employers and individuals have made mental health a priority over the past few years. Mental health benefits are expanding proving that the stigma around mental health conditions is improving. However, the pandemic caused an increase in mental healthcare usage due to a sharp increase in anxiety and social isolation. We should expect to see this increased demand result in an increase in costs to both general medical coverage and a la carte options.
2. New specialty drugs and expanding indications for approved specialty drugs increase spending
Most medications in the pipeline awaiting approval are specialty drugs. Some of those drugs are curative gene therapies that could come with multimillion-dollar price tags. On top of that, existing specialty drugs also are driving spending as the conditions for which they are approved expands.² When choosing a plan, it is going to be increasingly important to pay attention to and compare drug coverage regardless of whether you are taking medication now or not.
There are many reasons healthcare will increase this year. Many of them are COVID-19 related and therefore unprecedented and while we have solid data on the impact on mental health services, I feel it is too soon to assess how the virus will affect healthcare costs overall.