With December now in the rearview mirror, we finally have a complete picture of our clients’ 2020 plan year costs and the results have been VERY favorable. Taking a high-level review of tens of thousands of members’ claims, the total plan year costs for our Northeast clients ran about 10% under the budgeted rates for the year – more favorable than anticipated at the beginning of the pandemic.

Viewpoints from Adam Okun

While it was clear Q2 plan costs were heavily suppressed due to the wholesale shutdown of the healthcare delivery system as it focused nearly exclusively on COVID-19, much uncertainty remained for Q3 and Q4.

In fact, many clients were concerned that despite running 30%+ below budget in Q2, it was plausible much of the care was deferred and there would be a snapback in Q3 and Q4, with claims exceeding budget in those later months neutralizing the earlier reduced spend.

We have been closely monitoring these trends over the last several months and indeed saw health plan costs revert to higher levels than the heavily suppressed Q2.

And it appears that the Q4 numbers have returned to levels that are closer to historical norms – after considering seasonality and deductible and stop-loss accumulations that always affect Q4 numbers. However, that only returned claim costs to budgeted levels. Claims did not wildly exceed budget later in the year to offset all the suppressed utilization in Q2. Considering the fact Q3 also saw claims moderately under historical levels, the plan years have concluded with meaningful surpluses for the overwhelming majority of our clients.

That said, one thing the end-of-year numbers do portend is a likely return to the trend line in 2021 for healthcare plan costs.

It appears claims have rediscovered their historical levels and clients will likely have a 2021 plan year that is more in line with traditional budgets. Of course, the situation remains fluid and another unforeseen mass-scale shutdown could change that calculus. But it appears we have finally achieved some level of price discovery in the COVID healthcare claims cost environment.


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Adam Okun

Northeast Region Employee Benefits Practice Leader – New York, NY