The sudden and wide-ranging market changes seen in response to the global health pandemic are creating uncertainty for an organization's current and future economic position – including future healthcare costs. The rising cost of healthcare is eroding margins and forcing many organizations to make trade-offs between their people and their future growth potential. As such, many employers are left wondering what 2022 will bring and how to mitigate the potential impact. Understanding the dynamic forces impacting employers and the top drivers of self-funded health plan spend are a critical first step to improving outcomes and making targeted intervention strategies.
As of 2021, 60 percent of adults in the United States have been diagnosed with a chronic disease and are the leading causes of death and disability and the leading drivers of the nation's $3.8 trillion in annual health care costs.1 The CDC reports that 90 percent of national healthcare spend is attributed to chronic disease management and behavioral and mental health.2 These costly and chronic conditions are often linked to unhealthy lifestyles and can become a precursor to future dangerous and costly conditions. As a result, strong prevention strategies can help combat the rising cost of self-funded health plans.
Mental Health and Substance Abuse
Due to the stress caused by the COVID-19 pandemic, mental health conditions and substance abuse among employees have risen drastically, with over 40 percent of U.S. adults struggling with a reported condition.3 Mental illness has long been a hidden issue in the workplace, with 85 percent of employees reporting the workplace itself as the primary driver.4 Prior to the COVID-19 pandemic, about 20 percent of all adults experienced a mental health condition, equivalent to nearly 50 million Americans. 5 Today, more than half of the 40 percent of U.S Adults who are struggling with a mental health condition do not receive treatment.5 When left untreated, the estimated cost to employers is $100 billion annually.6 Mental illness is an area that continues to affect children as well, with 10.6 percent of youth suffering from severe major depression in the United States.4 To combat the prevalence of mental health conditions and substance abuse, employers should identify the root causes of burnout to help reduce anxiety and depression in the workplace.
While COVID-19 has usurped the public spotlight of increased cancer diagnoses due to postponed screenings during the pandemic, cancer has been the second leading cause of death in the United States for many decades, and as such, is an obvious and significant driver of health plan spend.7 It is estimated that 9.6 percent of adults aged 18 or older have been diagnosed with cancer.8 For women, the most common cancers include breast, lung and colorectal which collectively account for an estimated 50 percent of all new cancer diagnoses.9 For men, the most common cancers include prostate, lung and colorectal which collectively account for an estimated 43 percent of all new cancer diagnoses7. Current estimates place the cost of treating cancers in the United States alone at over $200 billion in 2020.10 However, many kinds of cancer including breast, cervical and colorectal may be caught early through routine screenings, placing a heightened emphasis on pre-emptive and preventive care. To combat the prevalence of cancer, employers should ensure that cancer screenings are covered annually through their health plans and consider a cancer narrow network with high-quality local providers.
1 CDC, "Chronic Diseases in America," https://www.cdc.gov/chronicdisease/resources/infographic/chronic-diseases.htm
2 CDC, "Health and Economic Costs of Chronic Diseases," https://www.cdc.gov/chronicdisease/about/costs/index.htm
3 CDC, Mental Health, "Substance Use, and Suicidal Ideation During the COVID-19 Pandemic," https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm?s_cid=mm69 32a1_e&deliveryName=USCDC_921-DM35222
4 Mental Health America, "MHA Workplace Health Survey" https://mhanational.org/sites/default/files/Mind%20the%20Workplace%20-%20MHA%20Workplace%20 Health%20Survey%202021%202.12.21.pdf
5 Mental Health America, "The State of Mental Health in America," https://mhanational.org/issues/state-mental-health-america
6 International Risk Management Institute, "Mental Health and Well-Being in Workers Compensation," https://www.irmi.com/articles/expert-commentary/mental-healthand-well-being-in-workers-compensation
CDC, "An Update on Cancer Deaths in the United States", https://www.cdc.gov/cancer/dcpc/research/update-on-cancerdeaths/index.htm#:~:text=Cancer%20was%20the%20second%20leading,females%20and%20317%2C731%20among%20males
7 CDC, "Fast Stats, Cancer," https://www.cdc.gov/nchs/fastats/cancer.htm
8 National Cancer Institute, "Cancer Statistics," https://www.cancer.gov/about-cancer/understanding/statistics#:~:text=The percent20most percent20common percent20cancers
9 National Cancer Institute, "Financial Burden of Cancer Care," https://progressreport.cancer.gov/after/economic_burden
10 CDC, "Adult Obesity Facts," https://www.cdc.gov/obesity/data/adult.html