How Climate Change Will Increase Pressure on Your Payer Business: Part One

Will health insurers be prepared for a climate health crisis? They should be.

The climate crisis is no longer limited to our TV set on National Geographic, it is on our doorstep. From forest fires that smothered the country last year to extreme heat that claimed lives, the idea that climate change is affecting our health is no longer an argument, it’s a reality.

For evidence of climate impacts, look no further than last year, also known as the hottest year on record. Last year alone there were 28 climate disasters that cost the US a whopping $92.9 billion.

Of course, not every storm, fire and drought is caused by climate change. However, climate scientists say that a warming planet will increase the likelihood of more storms, more extreme heat waves, more droughts and more forest fires. If that’s not something that affects our health, what is?

What does that mean for the population? More health crises. What does that mean for health insurance? Sky-high utilization.

Climate change and health insurance

Climate change is already impacting things like home insurance, making it more expensive and harder to obtain; Health insurance is next in line.

A report from the Boston Consulting Group looks at the impact of climate change on health insurance: “In addition to the impact on individuals, global warming is putting a strain on healthcare systems, causing lost work hours and increasing economic costs. It also leads to increasing claims and costs for health insurers.”

In addition to experiencing these catastrophic climate events, climate-induced anxiety and depression also play a role. From trauma and loss caused by these events to existential concerns about an unstable future, the climate crisis is also impacting our mental health. This factor has the potential to increase utilization and costs in mental and behavioral health care as well.

The CommonWealth Fund describes it as “further burdening a health care system that is already in crisis.”

What does this mean for payers?

So how do health plans even begin to address such a problem?

One state that has experienced drastic climate impacts, perhaps more than anywhere else in the country, is California; from fires, floods and droughts to record heat, the state is no stranger to extreme weather.

HealthLeaders spoke with Baylis Beard, director of sustainability at Blue Shield of California, to get their thoughts on climate change’s relationship to health insurance, its effect on healthcare and what the organization is doing to prepare.

“We have seen our health care systems overwhelmed time and time again – from Hurricane Katrina to Hurricane Maria and Sandy to the wildfires and flooding we see here in California,” Beard said.

Health plans are often less exposed to the frontline issues that physicians face, but they are nevertheless responsible for providing sustainable care and providing resources to make the health care system more resilient, Beard explains.

Beard also pointed out that the health care system is not entirely a victim of this problem. The US healthcare system contributes 8.5 percent of US emissions. In turn, climate change costs healthcare billions.

“And financially, pollution and climate change cost $820 billion in annual health care costs. According to the National Resources Defense Council, doing nothing will cost $8 trillion over the next decade,” Beard said.

Not every disaster is created equal

While we can’t say we know for sure how climate change will impact our health, we do know that some communities are more affected than others. We cannot talk about climate change and its solutions without at least recognizing the disproportionate impact it has on minority groups. The health impacts of climate change are not being felt equally.

The National Institute of Health explains that there is evidence of racial disparities in climate change in mortality, respiratory and cardiovascular disease, mental health and heat-related diseases. It also notes that children are particularly vulnerable, and that babies of color have experienced poorer perinatal outcomes, heat stress and higher rates of emergency room visits due to extreme weather.

According to the National Institute of Health, “The evidence strongly suggests that climate change is an environmental injustice that is likely to worsen existing racial inequities across a wide range of health outcomes.”

“(…) We know that certain communities – especially communities of color, the communities that contribute the least to the damage to the planet – are the ones already bearing disproportionate burdens of environmental pollution and climate impacts on health,” Beard said .

Looking forward

Health insurers are already well positioned to tackle this problem; Being able to predict, manage and prevent risks is a philosophy that health insurers know well.

In other parts of the insurance industry, such as property and home insurance where climate change is already having an impact, these companies are responding by withdrawing from high-risk areas or limiting coverage, including in California, Beard explains. But this is not a sustainable solution.

“As the climate crisis continues to evolve and exacerbate our big problems – cost, affordability, quality, access, equity and satisfaction – we must look at this as a catalyst for systems transformation – for reshaping our healthcare system as a whole,” Beard said. . “We can no longer accept the status quo.”

Now that you know why payers should care about climate change, jump back to part two, where we’ll dive deeper into what payers can do about it.