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Healthcare costs decreased, but prices rose during pandemic

By Jeff Levin-Scherz, MD, MBA | July 19, 2022

The Health Care Cost Institute published its annual report on health insurance; the National Center for Health Statistics reported an increase in Cesarean section, and more healthcare news.
Health and Benefits|Benessere integrato
Risque de pandémie

The Health Care Cost Institute (HCCI) reported that total medical costs for those in employer-sponsored health insurance went down by 8.9% in 2020, and out-of-pocket costs declined by 11%. It’s no surprise that total health costs were down in 2020; the cost of COVID-19 care was more than offset by canceled or deferred elective care.

Interestingly, the HCCI data show that while utilization dropped dramatically, prices continued to rise. Utilization for all services except pharmacy declined over the four year period from 2016 to 2020, while unit price increased for all services. Utilization dropped the most (15%) and unit price increased the most (25%) for inpatient services. Additionally, over the four year period total costs increased in all categories with the highest total increase for pharmaceutical products (21%).

HCCI obtains de-identified claims data from CVS/Aetna, Humana and Blue Cross Intelligence for over 50 million Americans – over a third of those covered by employer sponsored health insurance. It releases a report in the middle of each year analyzing medical costs for the period that ended about 18 months earlier. The data is adjusted to match the U.S. census, and the effort to standardize this data to allow analysis across health plans is herculean.

Implications for employers:

  • Unit prices continue to rise and pose the largest threat to health care affordability.
  • Efforts to steer members to lower cost providers can help lower unit cost.
  • Consolidation of providers has decreased leverage to gain discounts.
  • A large portion of alternative payment models are based on fee for service rates, so increasing unit cost can diminish the ability of alternative payment models to lower total costs.

Employers can read more about pressures on rising health care costs at The Hill.

Cesarean sections rise, increasing costs, risks to mothers and babies

The National Center for Health Statistics reported that the rate of Cesarean section (CS) for a first child increased from 21.9% to 22.4% from 2020 to 2021 and is now 4% higher than it was in 2019.

Preventing avoidable CS at a first delivery is especially important because about 85% of women who have a CS for their first birth will have CS for subsequent births. Cesarean section births lead to higher risks of complications such as placenta accreta in future pregnancies.

CS cost more than vaginal deliveries (generally about 50% more) and result in longer hospital stays (four days versus two days) and a longer period of disability.

We co-authored an article with Catalyze Payment Reform in 2019, which showed that lowering CS rates could lead to $1 billion of savings for employers.

Implications for employers:

  • Employers can require health plans to report on their CS rate and their efforts to decrease CS rate.
  • The most valuable measure is NTSV. This stands for Nulliparous (first birth), Term (not premature), Singleton (not a twin or triplet) and Vertex (headfirst, as opposed to breach). Hospitals report this rate to the Joint Commission for their accreditation, but this measure is difficult to derive from claims data. An alternative measure can be calculated from claims alone.
  • Most decisions about surgical delivery are made by obstetricians, not patients, so employers should expect health plans to report on efforts to lower CS rates in their delivery system. Efforts to better educate pregnant members alone are unlikely to get CS rates down.
  • Health plans can pay hospitals using a “blended rate,” where vaginal births and deliveries are paid at the same rate. Currently, most hospitals make a higher margin on CS births, and research suggests that CS rates are higher in hospitals that have a higher margin for these surgical deliveries.
  • In many instances, obstetricians are already paid a single bundle for prenatal and delivery services, and this rate is often the same for vaginal and CS deliveries.

Midwives have a lower rate of CS deliveries even after adjusting for their lower risk population. Employers should include midwives and birth centers in their directories.

Monkeypox cases continue to rise

There are now over 1,700 cases of monkeypox reported in the U.S., and over 10,000 globally. Commercial labs including Quest and Labcorp are now able to test for this orthopoxvirus. The two-dose JYNNEOS vaccine remains in short supply, even as the Biden administration has ordered more vaccine.

Most cases are transmitted by skin-to-skin, often intimate contact, but not all cases of monkeypox are associated with men who have sex with men. Symptoms include fever and chills, headache, muscle aches, swollen lymph nodes, exhaustion, and a rash that looks like pimples or blisters and can initially appear in the genital area but can spread over the body including palms and soles.

Implications for employers:

  • This disease is not usually spread through respiratory secretions, although it is possible to contract monkeypox through droplets.
  • Employees who suspect or know they have monkeypox should not come to a workplace and should seek medical diagnosis and treatment.
  • Employees who believe they have been exposed to monkeypox should monitor themselves for symptoms for 21 days and seek medical care if they have any symptoms. They need not be excluded from the workplace unless they develop symptoms.
  • A two-dose monkeypox vaccine is available under emergency use authorization, although it is currently in short supply.
  • Good ventilation and handwashing can help prevent spread, although most cases will be close or intimate contacts as opposed to coworkers.

COVID-19 update

Those with COVID-19 might be contagious longer than we thought. The New England Journal of Medicine published disheartening data about how long people might be contagious after a case of COVID-19. This small study (66 people) cultured patients daily and found that three-quarters still had viable virus five days after diagnosis, and over a third of people with Omicron continued to have viable virus 10 days after their initial diagnosis. The researchers did not include data on symptoms, although most were likely symptom-free when they continued to have some viable virus in their upper airway.

Implication for employers: Those who have recovered from COVID-19 should consider using high quality masks for longer than the 10 days from diagnosis recommended by the Centers for Disease Control and Prevention (CDC), especially in crowded indoor settings.

Vaccination prevented 1.6 million hospitalizations from December 2020 to September 2021

Researchers in JAMA Network Open found that vaccinations prevented 1.6 million hospitalizations and prevented 235,000 deaths through fall 2021. Since Omicron became dominant in January, vaccinations have proven less reliable at preventing infections, but immunity from both vaccinations and prior infections has been able to substantially lower hospitalization and death.

Even critics of this study agree that we need better communication to help persuade those who have not been vaccinated or who have not been boosted. Future vaccinations that are nasal or that protect against all coronaviruses would help us further extend coverage and decrease risk of disease for all.

Implications for employers:

  • Employers can maintain their communication efforts to encourage vaccination and continue to offer time off to get vaccinated. Vaccinations are now available widely, although some employers with highly concentrated workforces can improve vaccination rates by offering onsite options.

The U.S. Government has purchased 3.2 million doses of Novavax vaccine

The protein-based Novavax vaccine, which does not use mRNA, received emergency use authorization from the Food and Drug Administration on July 13. Novavax is a two-dose primary series for adults 18 and older. The CDC is expected to approve the FDA’s recommendation at its July 19 meeting.

Implications for employers:

  • Some who have been unwilling to get vaccinations that are based on mRNA, which is a newer type of vaccine, might be more willing to get Novavax’s vaccine because protein-based vaccines are common and been used for over 50 years.

Summary of current COVID-19 vaccination recommendations

*Note: Pfizer and Moderna have different age cutoffs for young children, and the J&J (Janssen) vaccine is no longer recommended for routine use. Stay up to date with vaccine information for the general population and for those who are immunocompromised.
Age group Pfizer Moderna
6 months – 4 years 3 doses
3 even if immunocompromised
6 months – 5 years 2 doses
3 if immunocompromised
5 – 11 years 3 doses
4 if immunocompromised
6 – 11 years 2 doses
3 if immunocompromised
12 – 17 years 3 doses
5 if immunocompromised
2 doses
3 if immunocompromised
18 – 49 years 3 doses
5 if immunocompromised
3 doses
5 if immunocompromised
50+ years 4 doses
5 if immunocompromised
4 doses
5 if immunocompromised

Population Health Leader, Health and Benefits, North America

Jeff is an internal medicine physician and has led WTW’s clinical response to COVID-19 and other health-related topics. He has served in leadership roles in provider organizations and a health plan and is an Assistant Professor at Harvard Chan School of Public Health.

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