Healthcare In 2021: What HR Leaders Need To Know And Prepare For

Steering employees toward high-value care

When the Supreme Court hears California v. Texas beginning November 10, the Affordable Care Act (ACA) will be on trial. If SCOTUS strikes down the ACA, Americans could lose preexisting condition protections, and 20 million people might lose their insurance altogether. 

The duration and outcome of California v. Texas are uncertain. Even though President-elect Joe Biden plans to preserve the ACA and build upon it, Washington will still face pressure to make healthcare more accessible, affordable, and transparent for Americans.  
 

The President and Congress could make sound reforms, or an already broken healthcare system could become even more expensive for employers and less protection for employees. Here’s what HR leaders need to know and prepare for in the unpredictable year ahead.

1. An ACA repeal could strip essential health benefits from plans, leaving HR teams with tough decisions. 
The ACA defined 10 essential health benefits that must be covered by every health insurance plan. These services center around disease prevention and cost reduction. Preventative services, such as colonoscopies for adults over 50 and breast cancer mammography for women over 40, must be covered. Same with prescription drugs, mental health services, laboratory services, rehabilitative care, and more. 

Spending on prevention and early treatment can lead to better health outcomes and lower costs for everyone involved, depending on the type of intervention. Diseases like colon cancer are less expensive to treat if they’re caught early. Similarly, it’s less expensive to prevent Type 2 diabetes than to treat it.
 
Coverage for essential benefits has already been called into question. In July 2020, SCOTUS ruled that employers may opt-out of providing contraceptive coverage on religious or moral grounds. Just as this ruling put a consequential choice in employers’ hands, the next ruling on the ACA could make essential benefits optional for health plans. 

If HR leaders must decide what benefits to cover in the future, they should err on the side of prevention. The return on investment goes beyond direct healthcare savings. Wellness programs, for instance, have been shown to reduce healthcare costs and sick days, but good health could also enhance productivity, creativity, and interactions with customers. If a company can help its employees avoid suffering from chronic diseases while reducing costs (and maybe improving performance), why not do it? 

2. The more the healthcare system is rattled, the more employers will be forced to pay.
Research from the Kaiser Family Foundation found that healthcare deductibles and premiums have grown much faster than inflation and wages. Between 2009 and 2019, deductibles went up 162 percent and family premiums climbed 54 percent. Meanwhile, wages only climbed 26 percent and inflation 20 percent. As costs increase, employers must decide whether to increase spending on health benefits or wages. Most cannot afford to do both.

Healthcare costs increased even with millions of people insured through the ACA. If 20 million people suddenly lose insurance because the ACA is struck down, hospitals are likely to rack up unpaid bills and see sicker, more expensive patients (who might have sought care sooner and in better condition if they were insured). 

For providers, the best way to offset costs for uninsured patients is to raise rates on insurers, which, in turn, pass rate increases on to businesses. Employers bear the cost burden because providing insurance is either legally mandated, necessary to attract talented employees, or both.  

If the ACA is deemed unconstitutional, the cost of health benefits is likely to grow even faster, further suppressing wage growth and leaving lower-income workers even more vulnerable to unexpected healthcare bills. HR teams need to develop budgeting scenarios that account for this possibility.   

3. If the ACA is struck down, the landscape for healthcare performance will change. 
Before the ACA, it was extremely difficult to compare healthcare providers on quality and cost. Businesses had little to no insight as to why they were paying certain prices for employee healthcare. The ACA established a way to make provider performance more transparent: the Centers for Medicare and Medicaid Qualified Entity (QE) Program. QEs have access to years of de-identified Medicare claims in exchange for producing public reports on provider quality and cost of care.

If the ACA is struck down, the QE program could be in jeopardy. If there’s no longer publicly-available data on provider performance, employers and insurers will end up paying more for less. HR leaders may need to take that possibility into account as they plan their health benefits strategy for 2021 and beyond.

In addition, SCOTUS could dissolve the Centers for Medicare & Medicaid Services Innovation Center (CMMI) if it rules against the ACA. CMMI is charged with developing new payment and service delivery models that can improve outcomes and reduce costs. Value-based insurance design is one of its signature efforts. 

Right now, we have a fee-for-service healthcare system. We don’t pay based on the outcome or quality of care—we pay based on how many things a doctor does to us. Without the ACA, CMMI’s progress towards validating value-based care could end, cutting short ten years of promising research and testing. As a result, the fee-for-service system may persist indefinitely, keeping healthcare costs punishingly high for employers and employees.   

Until Congress builds consensus around developing a value-based, inclusive healthcare system that covers all Americans, costs will rise for employers and employees. Depending on what happens to the ACA, HR leaders may be forced to make difficult decisions about who and what to cover.

Whatever it costs, I urge HR leaders and departments to make thoughtful decisions for your employees and steer them toward high-value care in 2021 and beyond. It will make a significant difference for your employees’ health and your program’s costs.

David Vivero is Co-Founder and CEO of Amino. He guides the vision and strategy of the company, which combines data, design, and consumer-first thinking to curate personalized provider recommendations for specific healthcare needs. A Forbes “30 Under 30” entrepreneur, David has been quoted in Forbes, The New York Times, TIME, TechCrunch and more.   Visit www.amino.com  Connect David Vivero Follow @davidvivero