Medical benefits in the age of COVID-19

The COVID 19 pandemic is currently sweeping the globe. The rate of infection is still on an upward trend in both first and third world countries and the numbers are staggering.

If there’s one thing that the virus made clear in the past two months, it’s the fact that it doesn’t distinguish between anyone getting infected. Male, female, young, old, rich or poor, everyone is susceptible. The average kill rate of the virus is considered low, hovering at 2% to 3% of the total population that gets infected and with fatalities higher among the elderly and people with underlying medical conditions. However, its rate of transmission is so high, higher than the other coronaviruses we’ve seen in the recent years including the flu, that the short-term effects of the pandemic to human society are just devastating. 

On March 14, the Philippine government placed the National Capital Region on quarantine for a month, only to further raise the bar of response to an enhanced community quarantine of the entire island of Luzon a few days later due to the rapidly rising number of COVID 19 cases.  

In the last two weeks of the government mandate of having people stay at home, we have witnessed how the healthcare system struggled to respond. There were just too many people getting sick for hospitals to handle. Clearly, no one was ready to deal with a Pandemic of this magnitude. 
While the crisis changed the way we all live, it also changed how companies conduct business. With the enhanced quarantine in effect, operating remotely has started to be the norm. Access to medical benefits has also started to change.  
 

What we’re seeing so far: 

1. Effect on medical utilization trend
   We have observed a downward trajectory of overall medical claims in the last month. It appears that while hospitals are treating an increasing number of COVID-19 patients, some possibly coming from the working population covered by HMOs and other medical programs, the number of elective cases has significantly gone down. People with other mild illnesses are just avoiding going to the hospitals for fear of infection. A possibility that whatever impact the rising COVID-19 cases will have on medical claims will be partly mitigated by the decrease in access to hospitals for other illnesses. 
    
2. The rise of Telemedicine
   Telemedicine or online doctor consultations is a service that has been available in the local market for several years now. It has been offered by HMOs and medical insurance & third- party providers to clients across all industries. Viewed as an industry innovation, it has struggled to gain traction in a country where face to face meetings with doctors have always been the norm. A habit hard to break-until now. A sign that social distancing in the wake of one of the biggest pandemics to hit globally, is giving a boost to doctors online. A mitigating factor to a possible increase in medical utilization due to COVID-19 cases. 
    
3. Medical benefit design
   Despite the declaration of the WHO of COVID-19 as a Pandemic, coverage of related cases by most HMOs and Medical insurers have not ceased locally. There is however one realization that’s coming into play. The traditional benefit design that most companies use is no longer bulletproof.  A typical COVID-19 patient, depending on the hospital will generally be cared for by 4 to 5 medical personnel, 24 hours a day. Each front liner needs to utilize protective personal equipment while giving care. Each PPE costs an average of Php 3,000 per set. A patient with an average maximum benefit of Php 100,000 will easily exhaust the entire amount in protective gear expense alone. Although the DOH has recently announced the government’s handling of hospital expenses related to COVID-19, the sustainability of this initiative remains to be seen. In the long term, private companies will need to address the medical expense of cases within their ranks. Should the prediction of COVID-19 eventually turning into a cyclical disease really happens, benefits need to be adjusted accordingly to be able to respond to the cost of treatment. 
    
4. Mental Health as an issue for employees under enhanced quarantine
   While working from home and not having to commute and endure Metro Manila’s traffic may be viewed as a dream come true for most, the sudden shift of daily routine including being confined within four walls can adversely affect employees’ mental health. The need to be connected socially, the anxiety of the situation, the guilt of not being able to be as productive are some of the issues that companies will need to address in the coming weeks. With mental health awareness as a serious agenda for companies in the 
   Philippines the last few years, the new norm of working remotely will urgently require companies to include support programs on mental health in medical benefit designs.
    
5. The 2nd wave 
   Countries are now struggling to contain the pandemic globally. Lockdowns and social distancing are aggressively being implemented on almost all fronts. While we all desperately try to flatten the curve to decrease infection rate and allow the healthcare systems to respond effectively, scientists are already predicting a possible 2nd wave of infection that will see COVID 19 returning in October of this year. The heat of the summer months may be able to slow down the effects of the pandemic and lower the number of cases, but as the weather shifts in the latter part of the year, the possibility of the curve rising again due to new cases or even due to possible cases of reinfection is being considered now. While still reeling from the adverse impact of the current crisis, companies will need to revisit their medical benefits now to be able to properly respond and shield employees from this possible scenario happening in a few months.  

The Pandemic has not peaked yet and adapting to the currently unfolding situation is something that companies will need to do now.  As members of the workforce become possible casualties of the COVID 19 war, medical benefits need to be recalibrated to ensure appropriate response to critical care needs. Companies need to do this, not only because of the need to appropriately respond to this pandemic, but also to prepare themselves for the next.  
  

Written by By Mr. Philip T. Samson 
Deputy CEO, Howden Insurance & Reinsurance Brokers (Phil.) Inc