June arrived with a splash at Chelko, as we explored findings from our sixth annual Deep Dive employer survey. While we were limited to a virtual presentation for the second straight year ― a departure from our traditional all-day gathering in Columbus ― we were still able to provide a robust discussion around what is driving medical and drug spend for the 50 participating employers in markets across Ohio and beyond.

As in prior years, our approach involved collecting a number of health plan data points ranging from reported medical network utilization percentage to annual specialty prescription drug spend. Our analysis enabled participants to benchmark their 2020 plan metrics against peers’ results. In addition to this snapshot examination, we were afforded the opportunity to reflect on multi-year Deep Dive trends from a cohort of 20 employers who have submitted data annually since 2016.

While some trends persisted from prior years (i.e., the ever-growing share of specialty drug spend), other results surprised us. Here’s what we learned:

  • Despite the widely reported reduction in medical utilization due to the COVID-19 pandemic, actual claims experience among participants showed costs nearly flat with the prior year. While this result falls about 4% below expected trend for the employer group, the drop-off in claims was not nearly as precipitous as predicted by various firms, nor had the expected surge in deferred care yet materialized as of mid-June 2021.
  • While medical claims overall fell slightly, large claims increased significantly over the prior year. On an enrollment-normalized basis, $1.0M+ claims rose 11% between 2019 and 2020. Further, we found that the top 5% of patients accounted for an average of $57,000 per claimant during 2020, compared to only $2,000 for the other 95%!
  • This burgeoning share of healthcare spend borne by high-cost claimants’ is being reflected in stop loss premiums, which rose to 7.5% of overall plan costs in 2020 and are projected to reach 10% of total spend by 2025. This, coupled with the ongoing trend of increasing stop loss deductible levels, leaves plan sponsors exposed to more severe catastrophic risks than ever before.
  • Contrary to prior years, the most recent data showed an inverse relationship between reported network discount and medical plan spend, suggesting that buying medical TPA services based on network match/discounts could lead to lower overall costs. However, at the same time, we couldn’t help but notice a correlation between employer size and reported discounts. So, maybe we are really seeing an advantage of scale when it comes to larger employers controlling medical benefit costs.
  • The relationship between an employer’s dependent ratio and overall plan cost was stronger than ever in 2020, with an increase in member ratio of .1 associated with an extra $540 in per employee costs for the year.
  • Consumer driven health plans have yet to realize the promise of controlling overall plan spend. In fact, one reputable benefits surveyor found 2020 to be the first year in recent history in which market-wide plan enrollment shifted back toward PPOs from CDHPs.
  • Finally, we learned that one member of the Chelko team has a particular affinity for Beyoncé (post-2015 albums only).

We appreciate everyone who shared their data and joined us for the online discussion. If you were unable to participate, please plan on joining us next year ― hopefully in-person ― as we expand and refine our data in a collective effort to become better plan managers.