Episode 01: Health Benefits and Spending in a COVID World
Published on October 1st, 2020
COVID-19 has upended the healthcare industry from top to bottom, including the health benefits space. In this inaugural episode, we discuss trends we’re seeing in consumer healthcare spending, what an industry recovery may look like as the pandemic continues, and emerging technology that can improve the consumer experience.
Resources mentioned in this episode:
Josh Collins is president of NueSynergy, one of the country’s largest and fastest growing third-party administrators of HSAs, FSAs and HRAs. Before joining NueSynergy, Josh was vice president of national accounts for First Horizon Msaver, one of the first HSA administrators. With more than a decade of experience in the healthcare and financial industries, Josh has helped develop and implement benefit account based products and programs for health plans and employers nationwide that support program and cost-control objectives.
Marie Elizabeth Aloisi
Marie Elizabeth Aloisi is Senior Vice President, Business Development-US Markets. She leads Commercial Payments, Acceptance and Mastercard Healthcare Solutions. Her team is responsible for increasing MasterCard’s share of commercial transactions by deploying commercial payment solutions to corporate organizations through issuing partners. Additionally, Marie is responsible for increasing commercial acceptance and her team has developed partnerships with both acquirers and supplier enablement organizations to ensure that Mastercard products are accepted whenever and wherever corporate buyers want to transact.
Additionally, Marie leads Mastercard Healthcare Solutions; a business dedicated to helping healthcare partners reduce costs, capture more revenue and protect patient health data. Bringing the scale and advanced technology of Mastercard to solve significant pain points across the healthcare eco-system. Marie’s healthcare team is responsible for increasing Mastercard’s share of consumer-directed healthcare and payer to provider transactions.
Marie has over 25 years’ of sales and marketing experience in the payments industry. She started her career at American Express and joined Mastercard in 2008.
Brian Colburn – Welcome to creating healthier futures, a new podcast from Alegeus. I’m Brian Colburn,
Anna Lyons – And I’m in Anna Lyons. In this series will reveal the state of healthcare consumerism through trends and research, our own data, and the health benefit experts that are driving our industry forward.
Brian Colburn – In each episode, we’ll uncover the technologies and opportunities that are helping save consumers money as they navigate the US healthcare system, with ideas you can put to work in your business benefit plans or life. To download the materials discussed in this episode or learn more on the topic, be sure to visit Alegeus.com that’s A-L-E-G-E-U-S dot com. Thanks for tuning in.
Anna Lyons – In today’s conversation, we examine the state of healthcare consumerism in the midst of COVID-19 and an economic recession. Since mid-March, millions of Americans have lost their jobs. Hundreds of thousands of businesses have had to shut their doors temporarily or for good, and many employers swiftly enacted cost cutting measures. From a consumer standpoint, healthcare spending dropped 50% from its average, and even more for certain subcategories within health care.
Brian Colburn – We spoke with Josh Collins, president of NueSynergy and Marie Aloisi, from MasterCard to understand the impact to employer groups and healthcare consumers.
Josh Collins – Hi I’m Josh Collins, I’m the president of NueSynergy. We are headquartered in Kansas with sales and service offices in Phoenix, Idaho and Florida. NueSynergy really is a nationwide benefits administrator with a focus on health savings accounts, health reimbursement arrangements, flexible spending accounts, COBRA administration, as well as combined billing and direct billing solutions.
Marie Aloisi – Hi, I’m Maria Aloisi. And I’m with MasterCard, I head up business development in the U.S. for commercial payments, commercial acceptance, the consumer-directed healthcare, as well as payer-to-provider in healthcare, and we launched a new practice last year called Mastercard Healthcare Solutions.
Brian Colburn – That’s great, thank you to both of you guys for sharing that. So one of the bright spots for me in this this sort of COVID reality has been getting to interact with people kind of in their home environment, I think makes it a little bit more personal. I’ve got four young kids and a puppy. So most of my meetings don’t go according to script to that end. Are there any fun work from home blunders that either of you would like to share?
Josh Collins – No blunders on my side, other than we did have the wife of one of our sales managers completely narc on him. And send me an email of him during a Skype call. Or he has very well dressed, but it stops at the waist. It was it was one of those perfect side shots where you have him sitting in his chair, standing, you know, sitting straight up computer, and then it’s shorts. And then jacket and nice shirt, pressed it was it was really funny. But he was not too happy that that that that picture got sent out now.
Marie Aloisi – And I have to say I don’t have children. I don’t have puppies. But I have a plumber. So this particular day, my husband and I were both working at home. And there was coincidentally we both had a two hour window where we were either both presenting or we had we couldn’t be on mute on our calls because we were leaving a call. And just so we decided we were going to be in separate rooms so we couldn’t hear each other. And just as we were about to start the doorbell rings and it’s the plumber, who we’ve been waiting for for days he decides to show up. And so of course we’re trying to tell him very quickly what the issues were. And he realized that in order for him to figure out what the plumbing problem was, it required for him to flush all the toilets in our home constantly. And then when he thought he finished fix the problems he went about flushing again, all of the toilets, so I’ll leave that and you can figure out.
Brian Colburn – The pandemic has certainly affected us in a myriad of ways, some humorous like Marie’s plumber, but many more serious. When COVID first hit last spring it up ended the healthcare industry from top to bottom, including the health benefits and spending space. So Marie, MasterCard sits at a really interesting intersection of payments and health care. And as you described your role, I would say that’s, that’s equally true. In, I guess the third area is consumerism in general. So what are you guys seeing today? And have there been any big surprises from the start of COVID to where we are today?
Marie Aloisi – Early on, it was very, very hard to predict where consumer spending was going to go. And early on, no surprise there, right. We saw consumer, I’ll break it out into what consumers spent on and then how they spent. And so early on, it was really about the necessities, we saw significant spending in drugstores, groceries and merchants that sold those things. As time went on, and I can speak for myself, got tired of cooking, and we started to see transactions in restaurants relative to take out and delivery type of spend. We also started to see a significant lift in spend in home improvement. People are sheltering in place looking for things to do, there are a lot of do it yourselfers that emerged as a result of this. The home became the center of family entertainment, we started to see a spike in televisions and electronics to whether it’s supporting online shopping with iPads, smart TVs. So we saw that as well. And then more recently, as the season started to change and move into spring and summer, there were a lot of sales, online sales with retail. So we started to see apparel spend going up. And then people taking some trips, road trips. Most recently we did a survey on consumer spending going forward. And this idea of revenge spending has emerged. And so basically, there’s a pent up demand, people were not spending, they did not go on trips, they did not make normal purchases. And so the number one revenge spend is going to be travel. And people are going whatever trips that they had planned that were canceled. What they’re saying is that they’re going to do it and they’re going to do it bigger and better. Which is interesting. When we think about how they’re spending in our world. We look at it there’s card not present. So we looked at card not present soared. And that was no surprise, people were using and shopping online. And you saw the numbers with Amazon. And there were a lot of firsts people for the first time making an online purchase accessing an app that they’ve never done before. So all of a sudden technology became on the forefront of spending and how people spent as the economy started to open, we move to what we call face to face transactions. And suddenly cash was the worst thing that you can possibly use. Merchants didn’t want to accept it, people did not want to use cash. So this whole idea of contactless absolutely emerged. So you know, what they spent was no surprise. And how they’re doing it really drives the fact that technology and digitalization has really, really accelerated in the consumer experience of shopping.
Anna Lyons – Marie touched on two important trends. First, what she calls revenge spending, where consumers who have experienced a period of restricted spending are now returning to previous activities, like dining out or taking a vacation and doing them bigger and better. She also touched on the shift to contactless payment.
Brian Colburn – On the contactless payment point. What is MasterCard’s perspective in terms of how much of that sticks around post COVID? Is that something that sort of once that bell is rung consumers typically would stick with something like that? or will there be sort of regression back to older technology to save costs, if that’s a factor?
Marie Aloisi – Yeah, our expectation is that most of it will remain. We will continue to see the use of contactless card payments, digital wallets, the increase of online spend now in the early days of COVID, almost 100% of spend was online. We’re not going to see that some will stay we will continue it will revert back to bricks and mortar and face to face transaction. But there will be a lingering effect of what we call card not present transactions or online transactions. But the idea of this digital experience this contactless experience, in face to face will absolutely remain. That is our expectation.
Brian Colburn – Alegeus recently released its first monthly COVID recovery index to get a sense of how the Consumer Directed healthcare industry has fared as well as where it might go from here. I asked Josh to weigh in on what trends he’s seen in healthcare spending over the last few months.
Josh Collins – Well, it’s been pretty interesting when we went back and looked at our block, the main the debit card spend was relatively flat, compared to last year, I mean, we didn’t see any huge drop off or any huge spike. And that was honestly a little bit against what we thought was going to be the case based on what we’re hearing from spending trends. But then we went and looked at regionally where our clients were located, and where some of that spending was occurring. And we’ve got large pockets throughout the country, either a West Coast, East Coast or Midwest, and certainly some of our Northwest areas, maintained their spend along with the Midwest. And then on markets where you would, you know, you’ve heard where there are high pockets of COVID, where the shutdown is continued to be maintained. California, Arizona, parts of Texas, Florida, New York, the Northeast, we’ve seen we did see a drop off in some of those spends. So you could see a correlation between, you know, historically, where you see, you know, maybe they can’t get care, or maybe there’s an added sense of concern to go in and getting care, we did see that impact. But even more so what was interesting was we saw a huge spike in manual claims, which for us manual claims tend to be sometimes your larger ticket items, there’s no you know, that’s your hospital visit or some type of service where you don’t necessarily use a debit card right then and there, you get a bill later on after the fact. And in June, we processed almost 300% more manual claims than we did in June of last year of 2019. And we processed I mean, it was almost next to no manual claims in April in May. And I think that’s maybe twofold. One, people aren’t in the office. So maybe they don’t have the means to submit manual claims as easily as they normally might. But then two, I think, as you would expect a number of doctors offices, hospitals do a really good job of making people feel comfortable trying to get back and get the procedures taken care of. And you’re seeing, you know, the I don’t know that call revenge spend, but they’re going and getting their procedures taken care of that, you know, maybe they’ve been put off for the last several months.
Brian Colburn – It’s very helpful. As you think about your book itself, and think about employment levels. Anything interesting that you’ve seen there since COVID?
Josh Collins – Well, when we look at our block, and we did a lot of big analysis along with Alegeus of our block back in March, when everything came down to see really what the impact might be based on where you’re seeing the layoffs, the layoff trends and in our block, thankfully, is not really heavy in the service industry business. So by and large, we haven’t seen a ton of furloughs or a ton of drop offs on that side. However, what we are starting to see interestingly enough is as rate renewals are coming out, and groups are starting to get 30 and 40% rate increases from their carriers, we are getting a lot of calls to either look at different plan designs from an HSA or an HRA standpoint, and in some honestly moving, moving away from your standard benefits altogether. And looking at your ICHRAs as an example or PEO models, depending on what those rate increases come in at.
Brian Colburn – And from an ICHRA perspective on that one, because that’s unique. How much of that do you think happens in 2021? versus it really becomes socialized in this first year, and then there’s uptick on it in subsequent years? Seems to be the million dollar question.
Josh Collins – Yeah, I think there’s still some hesitation where we’ve seen the adoption come in from an ICHRA standpoint has really been more around the startup arena, where by and large, their average population is under 35. Not necessarily what you would think of stereotypical, you know, entrenched family scenarios with kids. But I, they’ve still been the outlier, if you will, from a planning standpoint. So I think given the economics This may be one of those catalysts that really pushes the ICHRA, maybe more mainstream, and allows employers to feel more comfortable pushing it out there. I think a lot of times it takes big economic downturns like this to allow employers to feel confident about making those big changes. I mean, the HSA went through that in ’06-’07 into ‘09, we had the big economic downturns and, you know, oftentimes you need a catalyst like that to really give employ empower the employers to make those big budgetary changes to their plans.
Brian Colburn – Yeah, I agree. And I think that’s similar to what we talked about with contactless payments. Certainly similar to what we’ve seen in telehealth where there has been this catalyst that has driven pretty dramatic change.
Anna Lyons – Alegeus deployed surveys to get a pulse on how consumers are returning to health care. And one, we asked if people are ready and willing to reengage with their healthcare, and 75% said that, yes, they are somewhat comfortable or very comfortable going in person to healthcare appointments.
Brian Colburn – Data from the Alegeus platform seems to confirm this, after an initial 50% drop in consumer health care spending in mid March due to COVID shutdowns, spending levels stabilized and then steadily increased spending at the end of the summer reached 70 to 75% of pre COVID levels. But even as we’re seeing people get back into health care, it should be no surprise that the experience has changed. Here’s Marie on how COVID has served as a catalyst to speed the adoption of other changes, or advancements in the industry.
Marie Aloisi – When I think about healthcare, and you know, what, what are the trends, it’s really all about technology. And so you know, when you think about telehealth, it’s technology based when you think about, you know, having this using digitalization of technology to create a seamless end to end experience for not only consumers, but also for patients. So it’s really about thinking for HSA and FSA cards you don’t want when they have to pull that out to be a manual process, right where they feel that this is an inconvenience. So it’s about thinking about enabling those cards to be part of the digital wallets, the Apple pays the Samsung pays, so that the healthcare payment experience is just as secure and simplified as it is as a consumer.
Brian Colburn – Technology and healthcare has exploded during the pandemic, both out of necessity and convenience. Specifically, 40% of consumers would like their health care provider to offer telehealth services, and 22% expect their employer to offer more support and tools to guide healthcare spending and saving decisions. I asked Marie what she sees from consumers going forward.
Marie Aloisi – I think, first of all, COVID whether or not you were impacted by it physically, you know, it creates this idea for people, we’re all vulnerable. And, and it can happen to any one of us. So the first thing is you’re much more aware of your health, your personal hygiene, and you’re also aware of what you have in terms of healthcare insurance. So I think, you know, open enrollment could be different this year, because all of a sudden now, people are going to be a lot more cognizant of what their healthcare is, what their healthcare coverage is, what it is for catastrophic. And what it is for BAU or they should be right, they should be running those scenarios. I think, you know, in January, right, there’s going to be some regulation around transparency and pricing. So I think this is really going to accelerate the idea of consumerism, towards in health care. So as we look at more organizations adopting HSAs, and high deductible health plans as a way of offering health care, people all of a sudden have more out of pocket. So they’re going to they’re going to be much more aware of what it’s going to cost them that coupled with a government having regulations that say for some kinds of certain services have to be shoppable. And you have to post your pricing and that I think is really going to make consumers are smarter and think about the way they buy health care. The experience in health care should look more like BAU in just the traditional shopping experience.
Brian Colburn – So that’s really interesting as I think about that, because I would agree, number one, number two is we think about how employers are thinking coming out of COVID or in the midst of COVID. So we’ve talked again about switching being laser focused based on costs, looking to make changes to those plans to drive down their costs. That’s one side of the coin. Josh, the second side of the coin is, when we do studies in the market, we also hear from employees that most are planning to simply select the same benefits they had last year, which, you know, to Murray’s point really makes no sense. And there’s sort of current context where needs may be very different. And as we think about what employers are offering may be very different. So any advice from your side for consumers, given all these changes that are happening, and given the attitudes of sort of sticking with what you’ve got, as you think about open enrollment for this year?
Josh Collins – Sure. So it, I think it very much ties to basic human nature, you know, if you look at the last, you know, four or five months, I mean, it is, I think the average person is just overloaded with changed uncertainty, the unknown. And I think that the natural tendency, is just take a step back and almost retract to I want to, at least hold on to as much or as little as I can, that at least I know, and, and even though it does, as you would think, go directly in the face of what we’re hearing and what the trends are, which is, you know, employers are, you know, they recognize that costs are going to go up with the rate increases, and, and they need to make changes. However, even those same employers, on the on the same breath, say, Gosh, I don’t really want to make a change. I don’t, I’ve got so much on my plate, given everything COVID related, and just trying to maintain my day to day businesses that I don’t really have the bandwidth to do a deep dive and make all these monumental changes to my plans. But, you know, I think, for those employers that are making either that switch to the high deductible health plan, or looking at more creative plan designs with HRA, in an effort to at least make the cost curve more manageable, what we would say, from an employer standpoint, to educate the employees really is, you know, help, you know, we’re helping try and provide as much to as an individualized decision making process as possible. You know, one of the examples I’ll give to that, really is the mobile app that just was rolled out recently, that takes a pretty giant leap forward in helping somebody receive, you know, really personalized cost saving recommendations, personalized decision making resources, because at the end of the day, you know, they want somebody to sit them down and say, choose door one or choose door two. And, and they just need that guidance. And so I think with what we’re seeing in the in from a technology push, you know, whether it’s open enrollment tools, I mean, the reality is the the on site, open rolling meetings, they’re not happening, that we don’t have a single group, and I’d argue most would follow suit that are going to be doing on site open rolling meetings this year. And so the technology is having to step in and fill that gap. And while there are certainly resources out there today, I’m more than a little excited to see what the next several months holds. Because whether they meet that need this open enrollment, I absolutely believe there’s going to be some significant development in the next 12 months, as I believe the trends will continue to wear on site meetings may just they may be going away. And this may be driving the change for where whether groups or individuals are finally going to get those personalized decision making tools they’ve been asking for.
Brian Colburn – So Josh, if we look at the data that we’ve got, about 40% of consumers are looking for more attractive benefit options this year and a third are saying they want more resources and support from their employers around the topic of health care and navigating for the pandemic. Are there other things that employers can be doing today to make sure that employees are taking advantage of the of the benefits that are available to them?
Josh Collins – For us it was when we talked to our employer groups, it was really something we were going through as well, where we really had to make sure we had a handle on all the aspects of our plans that maybe were now important to employees that maybe weren’t as important previously, and do a better job of helping them understand, you know, what resources were available to them, whether that’s, you know, some of our mental health programs that we offer up or, once again, the telehealth piece or, you know, all the way down to our vacation time and our vacation policy. So, but the way we did that is we honestly we revised our own internal employer site through SharePoint. And instead of being the daily updates, we revised it and added things that were more relevant to the circumstances at hand regarding what our health insurance was and what it was covering and aspects of it once, as I mentioned earlier, that we were we’re now finding were important, and we’re getting a lot of questions on. And if I could add one additional thing to that as well. We’ve worked with employer groups that are curious how their plans being utilized. And once again, the FSA, you know, average enrollment of an FSA is around 30 to 35% of the total group population. That’s a pretty healthier or standard enrollment trend. HSA, similar enrollment percentages, HRA tend to be 100%, just based on their overall design. And one of the pieces where I think we’ve always had this ability, but they’ve leaned on us more as of late is providing those claim trends back to them as employers, you know, how are, you know, has anybody used our HRA because if they’re not used or HRA, one of two things have happened. They’ve either not gone to the doctor at all, or they’ve not turned in their receipts to get reimbursed. And then from the FSA, HSA standpoint, where are the utilization? You know, what is the utilization in terms of what types of procedures are they going and getting like going to hospital, they just go into the standard pharmacy. And though we can’t give, you know, drill down too far and participant level, that aggregate data is helping those employers better understand, you know, really where some of the gaps might be going into open enrollment so that they can address those from a question standpoint.
Brian Colburn – Based on your conversations, do you think employers are ready for this open enrollment, given what employees are going to need for support?
Josh Collins – I’d give it a 50/50. To be perfectly honest, because I think that, you know, we think we have a pretty good handle and talking with groups about what employees and participants are going to want to address. Once again, regarding, you know, a new plan designs, new offering, I know that a lot of it now is because it’s been changed quite frequently from what carriers are covering the COVID testing, you know, there for a minute, it was covered at 100%. And then they retracted said, Well, now you need to show these three symptoms. And some of that’s even been regionally based on a carrier by carrier basis, in terms of just simple COVID testing and when it is covered, 100% versus when you’re gonna have to pay a copay for that plan for that procedure. So, you know, to your point, are they ready for open enrollment, I think is ready as they can possibly be. But I’m certainly keeping an open mind. And we’re having regular meetings with some of our top employers getting feedback as they go into their open enrollment season starting up in the next week for their start of their meetings, to see what we need to do to help pivot on some of our messaging. And certainly, that will help assist us with all of our other groups as well, based on the feedback they’re getting.
Brian Colburn – Consumer behavior is without a doubt going to look very different moving forward. While spending levels may be getting back to normal, the ways in which we interact with and pay for health care has forever changed. And as we’ve heard, the expectations employees have, their benefits will be put to the test this coming year. So as we enter open enrollment season and the new plan year, make sure you’re having informed data backed conversations with your employer groups and consumers. Thanks for listening.
Anna Lyons – Our thanks to Marie from MasterCard, and Josh from NueSynergy for being part of our first episode and sharing their perspectives. If you’d like to learn more about this topic, our guests, or download the research discussed in this episode, visit alegeus.com/podcast. And be sure to subscribe on Apple podcasts or wherever you get your podcasts. While you’re there, leave a rating and review. We’d really appreciate it.
Brian Colburn – You’ve been listening to creating healthier futures with Alegeus, the industry’s leading benefit administration platform.