As Guy Carpenter helps clients, the societal, operational and human costs associated with COVID-19 are primary in our thoughts, discussions and efforts. While these costs are undoubtedly high, health insurers and reinsurers are also closely monitoring the direct and indirect financial impact of the virus. The growing use of telemedicine and capacity constraints within our healthcare system will potentially dull utilization increases; however, the financial costs will still be significant.
As payers respond to the COVID-19 pandemic, they are moving quickly. They are waiving fees, assisting providers, and communicating constantly with members. In the meantime, they should also be taking the long view, thinking carefully about the future and what the new normal may look like once the curve flattens out, according to Oliver Wyman Health & Life Sciences Partner Howard Lapsley and Principal Greg Berger. Oliver Wyman is an affiliate of Guy Carpenter.
While the broader repercussions of the pandemic are still unfolding, reinsurers are working to better serve the needs of clients by curating partnerships with capital and service providers that highlight the advantages that each party brings.
Though it is unclear how long the pandemic will last and how quickly the economy will rebound, one thing is clear: The “Corona Effect” will have a profound influence on what consumers want from their employer health and well-being benefits, and what employers can afford and desire to offer. Payers who remain out in front with effectively marketed new product offerings will be well-positioned to serve their members as people adjust to this new normal.
The “Corona Effect” will broadly redefine the outflow of lives from the employer ranks to Medicaid, Affordable Care Act (ACA) exchanges, and the uninsured. If this outflow becomes permanent, payer economics, line of business focus, product portfolio, sales and broker alignment, and more may look very different in time. For those who remain on commercial insurance, employees will demand more holistic healthcare and greater financial protection. Virtual, easy access to primary care could be the norm. Employers will focus even more on value and administrative burden reduction and be open to trying more innovative products and serving their employees more effectively and affordably given future threats of sudden employment disruption. And, depending on the administration, the government might ease some ACA restrictions and impose others to stimulate employer coverage, particularly at the lower end of the market. Even if there is a return to the status quo in terms of funding sources, consumer, employee, and employer needs will be forever altered.
Guy Carpenter has been developing a view of how COVID-19 may impact the medical (re)insurance market.