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Almost a year after the beginning of the COVID-19 outbreak a lot has changed. New phrases like “social distancing” and “new normal” have entered the lexicon. Everywhere you go there are stickers on the ground showing you how far apart you must remain, signs instructing you to wear a mask, drastically reduced capacity limits on every social gathering venue, and even some fast-food bags are sealed when handed out in an attempt to at least give the perception of extra precaution. For a lot of people, 2020 has been a year of constant anxiety-inducing changes. Mandated isolation, job loss, school closures, uncertainty, and deprivation of life’s special moments such as graduations, weddings, and vacations. For most of the year, the conversation was centered around personal protective equipment for healthcare workers, medical supplies, containing the spread, treating the infected, and vaccinations to fight back against the virus. As of the writing of this article, the first vaccine in the United Kingdom was recently given to a vulnerable 90-year-old woman, and the first vaccine in the United States was given to a healthcare worker who has been on the frontlines since the beginning. Assuming these vaccines are effective in getting the virus under control, these events could be viewed as the very beginning of the shift from defensive measures of preventing spread and loss of life to proactively trying to get ahead of the virus. When this shift happens there will be no shortage of broken pieces to reassemble and healthcare issues to tackle.

One big topic that has drawn lots of attention and discussion that is already showing signs of duress will be mental health and substance abuse.

As society eventually goes back to the old normal and collectively restart their lives there will be a host of new challenges waiting. One big topic that has drawn lots of attention and discussion that is already showing signs of duress will be mental health and substance abuse (MHSA). This topic has gained more and more notoriety over time with multiple rounds of legislation with the main goals of covering benefits and expanding coverage. Within the last decade or so the Mental Health Parity and Addiction Equity Act was enacted and expanded on the Mental Health Parity Act of 1996. This act didn’t mandate coverage but rather “requires group insurers to ensure that the “financial requirements” and “treatment limitations” that apply to mental health and substance use benefits are no more restrictive than the predominant financial requirements and treatment limitations for medical and surgical benefits covered by the plan.”[1] These provisions sought to bring the limits of covered visits or days for behavioral health services to the same level as other benefits with one potential drawback, is only applied to larger groups of 51 or more employees. Next up was the Affordable Care Act (ACA) which addressed these limitations two-fold. First, the ACA mandated MHSA care to be included in its essential health benefits therefore requiring the benefits be covered, and second, it widened who would receive the benefits since the law applies to the individual, small group, and Medicaid expansion populations. Mandated benefits and expanding coverage would finally appear to tap into the neediest population since “people with behavioral health problems (mental and substance use disorders) are disproportionately represented among the uninsured population. Thus, coverage expansion will potentially have an especially important impact on those with mental and substance use disorders[1]”.

Legislation has done much to address the issues of benefits and coverage and many studies have been done to increase awareness of the need for MSHA benefits. However, COVID-19 presents yet another dynamic. The pandemic has the capacity to put much more added pressure on the system that is still working on how to best serve the population. Even though we are in the early stages of measuring its impact, so far it has been clear COVID-19 has negatively affected mental health and will drive more utilization going forward. The mantras “social distancing” and “new normal” encapsulate the main policy approaches used to slow the spread that have been the main culprits. The “new normal” has produced mandatory stay at home orders in various parts of the country leading to an economic downturn, loss of jobs, wages, and uncertainty. Long term and continual exposure to these conditions put the general population at risk of experiencing the need for MHSA benefits. Research has demonstrated, “Quarantine and lockdown might particularly affect people with pre-existing mental health problems: increased symptoms of anxiety and depression, and high rates of post-traumatic stress disorder and insomnia have been reported. Simultaneously, physical distancing has reduced the availability of many family, social, and psychiatric supports[2]”.

The effects aren’t limited to only adults in the general population, children are also susceptible to psychological issues from the pandemic. Part of the conversation of stay-at-home orders and social distancing has been school closures. Many kids haven’t been able to receive in-person instruction, socialize with friends, or engage in extracurricular activities that aid in their growth and mental health. Early surveys have suggested, “Although, severe psychological conditions of increased irritability, inattention and clinging behavior were revealed by all children irrespective of their age groups. Based on the questionnaires completed by the parents, findings reveal that children felt uncertain, fearful, and isolated during current times. It was also shown that children experienced disturbed sleep, nightmares, poor appetite, agitation, inattention and separation-related anxiety[3]”.

Few events have been as widespread and far-reaching to the healthcare system as the COVID-19 pandemic. Society has been in the grip of lockdowns, stay at home orders, and school closures for almost the entire year. The healthcare system has been tested and pushed to its limits in multiple waves with more surely on the horizon. As we progress further and realize the full effects of the pandemic a wave of MHSA costs will be on the way. The combination of mandated benefits, more coverage, and a large shock event will undoubtedly increase utilization and costs to the system, and the costs will be felt in many different avenues. Many payers outsource their MHSA benefits to specialized providers and are reimbursed on a capitated pmpm basis for it. The pressure will be felt by providers to manage the patients but will undoubtedly require increases to handle the increase in required resources. Medicaid and other government programs are the largest payers of MHSA benefits across the country so government budgets will be stressed and forced to create innovative care delivery systems. In any case, Actuarial insight and expertise will be at the forefront of analyzing these changing dynamics. Cost modeling, utilization and financial projections, provider reimbursement and cost-sharing methods will be the tools to help payers and providers stay on top of the influx of demand for services to come.





About the Author

Sean Lorentz, FSA, MAAA is a Consulting Actuary at Axene Health Partners, LLC and is based in AHP’s Murrieta, CA office.