Health Care Payers COVID-19 Impact Assessment: Lessons Learned and Compelling Needs

In contrast with other high-income countries, health care insurance and payment in the United States is highly fragmented. America’s multi-payer system spans an array of entities, including publicly financed programs (e.g., Medicare, Medicaid) and commercial insurers and health plans. Figure 1 provides an overview of the different types of payers and populations in the U.S. [1] This paper will focus on the perspective of payers covering Medicare, Medicaid, and adults with fully insured employer health plans, which together encompass the majority of Americans. Open in a separate window FIGURE 1 Overview of America’s Multi-Payer Landscape These payers aim to serve several functions in the U.S. health care system, including offering protection against the financial impact of unexpected health events, providing patients with access to a broad set of health services delivered by a network of health care professionals, coordinating those services, and using measurement and incentives to increase the affordability and quality of care delivery [2]. Yet the common functions of payers can take many different forms with regards to operational arrangements (e.g., stand-alone plans versus joint ventures with delivery organizations), benefit design (e.g., covered services, cost distribution), and payment methodologies (e.g., volume- versus population-based payments). A key area of change for payers over the past decade has been the advent of so-called “value-based care,” in which payers in both the public and private sector have sought to transition away from fee-for-service (FFS) arrangements to alternative payment models (APMs) that link reimbursement to the quality and outcomes of care delivery [3]. It is amidst this period of renovation to the architecture of the U.S. health care system that COVID-19 struck. The public health emergency—which remains ongoing at the time of this paper’s publication—has had tremendous consequences for the health of American society and the financial stability of the American health care system. During the spring of 2020, payers took steps based on regulatory requirements and recommendations to expand access to health services for both COVID-19 and non-COVID-19 health conditions (e.g., waiving administrative requirements, reimbursing telehealth). Many payers also independently deployed financial support and capital to stabilize providers, and leveraged their technological capabilities and community relationships to support outbreak response, from coordinating non-medical services to supporting immunization campaigns. However, payers’ pandemic response capabilities and their obligations to regulators, employers, providers, and patients evolved as high caseloads persisted and the downstream consequences of COVID-19 began to manifest. For example, trends in medical spending and utilization shifted as outbreaks escalated over the course of 2020. Payers initially experienced cost reductions due to care delays, but then experienced a subsequent increase in operating expenses due to the growing volume of COVID-19 patients and the resumption of deferred health services. Likewise, as insurance is an industry premised on forecasting and risk assessment, the fundamentally unpredictable nature of a pandemic created significant challenges for payer operations in 2021 (e.g., pricing, enrollment). In this paper, leaders from the payer sector seek to describe the experience of health insurers during COVID-19 and identify the key challenges and opportunities learned from the pandemic and beyond. It is important to acknowledge that as an ongoing public health emergency, empirical evidence on health care costs and payment policies for COVID-19 remains nascent at this time, and data on the specific actions of payers may vary according to differences in health insurance products, local market needs, and regulatory requirements. Nevertheless, one year into the pandemic, it is evident that the unprecedented disruption to the health care system as a result of COVID-19 provides a unique opportunity for payers to improve the efficiency and equity of health care financing in America. Consequently, the goal of this paper is to provide a preliminary review of payers’ experiences during COVID-19 to date, and to highlight the key lessons for how payers and regulators can navigate the uncertainties of COVID-19 and leverage the newfound momentum for health care reform, with a particular focus on improving affordability and accessibility.