Many companies are seeing higher healthcare costs, partly because people deferred treatment. Ellen Kelsay, CEO of the Business Group on Health, outlined employers’ concerns in an interview with Chief Healthcare Executive.
Large employers say they are seeing higher costs in cancer care and expect those costs to grow.
The Business Group on Health, a non-profit organization that represents large employers, released a report this week surveying the concerns of business leaders regarding rising healthcare costs.
Cancer surpassed musculoskeletal conditions as the top factor driving healthcare costs, the group said. The survey found 13% reported a higher prevalence in late stage cancers, while 44% of those surveyed anticipated more late stage cancers in the future, with some employees deferring treatment or postponing screenings during the pandemic.
Employers are seeing higher costs with workers putting off non-COVID healthcare needs during the pandemic, said Ellen Kelsay, president and CEO of Business Group on Health.
“We think it is largely attributed to individuals foregoing care during the pandemic, missing screenings,” Kelsay told Chief Healthcare Executive in an interview.
Researchers have found sharp drops in cancer screenings, according to a study published in Cancer in March. Companies are encouraging workers to resume annual screenings, and covering different types of exams, such as 3-D mammograms, Kelsay said.
Employers are paying more in healthcare costs. Employers reported a median cost increase of 8.2% in 2021, the survey found. Healthcare costs were actually stable from 2019 to 2020.
Kelsay said the spike last year may reflect patients resuming getting healthcare services, and employers anticipate increases of around 5% to 6% in the next couple of years. “That’s still high,” she said.
Large employers are “quite concerned” about the prospect of higher healthcare costs in the next couple of years due to patients delaying treatments or screenings during the pandemic.
“The population is getting sicker,” Kelsay said. “These conditions seem to have gotten worse. Chronic conditions continue to be a concern.’”
Concerns over drug prices
Virtually all employers (99% of those surveyed) said they are concerned about the costs of prescription drugs, which accounted for a median of 21% of employers’ healthcare costs in 2021, the Business Group reported.
“It is not a new concern but the level of concern is growing to quite alarming levels,” Kelsay said.
Companies are concerned about the high costs of specialty drugs, which make up a big chunk of the market, Kelsay said.
To reduce costs, more companies are starting to look at biosimilars, products that are biologically similar to federally-approved treatments and have no meaningful clinical differences.
“We do see employers looking increasingly at biosimilars, adding them to their formularies,” Kelsay said, adding, “From many different perspectives, employers are advocating for biosimilars. It is growing in interest and awareness.”
Mental health costs
Employers said they expected to cover 82% of the cost of the healthcare coverage of their workers in 2022, up from 80% in 2021. Employers are paying 80% of family coverage, which held steady from the year before.
Employers say they are increasingly worried about long-term mental healthcare costs, which they identified as the leading health-related impact of the COVID-19 pandemic, just ahead of concerns over higher costs due to deferred care.
The survey found 44% of employers have already seen long-term mental health issues stemming from the pandemic.
Employers expect to see a long-term impact from the pandemic on mental health, ranging from anxiety to substance use issues. “Employers don’t see that dissipating,” Kelsay said.
Integration of virtual care
Employers are also increasingly seeing the merits of virtual care, although they have some concerns, the survey found.
Nearly three out of four large employers (74%) said they think virtual care will be an important part of the healthcare system. However, an even higher number (84%) said they viewed the integration of virtual care and in-person care as critical, according to the survey.
Roughly a third (32%) of large employers said they would offer virtual primary care during 2022, while 69% said they would offer or consider offering virtual primary care by 2025.
Employers view virtual care “as part and parcel of healthcare delivery,” Kelsay said. But she said employers are concerned about the potential for waste or duplication of services, such as a provider approving a virtual appointment and then calling for an in-person visit.
“The more those things are integrated and part of the delivery of healthcare, the better off they will be,” Kelsay said.
Cost pressures are 'untenable'
Healthcare leaders have said they are seeing more people arriving in hospitals after delaying treatment, and that has come at a cost. Patients are showing up at the hospital with more advanced illness, and they are requiring longer and more costly hospital stays.
The American Hospital Association released a report earlier this month that stated hospitals are seeing sicker patients, beyond those infected with COVID-19, because some of those patients postponed going to their doctors or the hospital.
The average patient length of stay rose nearly 10% in 2021 compared to 2019, according to the AHA report, which cited data from the Kaufman Hall consulting firm. Certain cancers and conditions saw much sharper increases in the average lengths of stay.
Employers are making it clear that they are very worried about the growing cost of healthcare, and Kelsay said she hopes that’s a message hospitals and health system leaders are getting.
“At a macro level, cost pressures for patients and affordability for patients and plan sponsors are untenable,” Kelsay said. “They will look to health system partners to collaborate on healthcare quality, healthcare pricing, in all ways possible.”
For its survey, the Business Group on Health polled 135 large employers between May 31 and July 13, 2022. Those employers who participated cover more than 18 million people in the U.S., the group said.