While employer spending on health care may fall in 2020 as compared to 2019, it could jump in 2021 depending on several factors. (Photo: Shutterstock)

It's no secret that the economic impact of the COVID-19 shutdown, massive strain on the health care system and shelter-in-place rules large of the population have adopted have changed American life in many ways, some likely permanent. 

A just released annual report by PwC's Health Research Institute, "Medical Cost Trend: Behind the Numbers," takes a deep dive into the forces driving health care costs and likely trends through 2021, predicting that costs could rise between 4% and 10%, depending on multiple factors.  

Some of those factors involve the way health care itself is delivered, with virtual consultations and therapy sessions taking the place of face-to-face visits, allowing for savings by payers but cutting into providers' billing.

Related: Hospital costs drive overall 4.1% increase in health care costs

There is also the well-documented trend of providers individuals foregoing care — ofttimes to their detriment — out of fear of being infected, leading to leading to a "liquidity crisis" for many providers since the pandemic broke out in March. While there signs it was receding in May, new data is showing troubling signs of new spikes in several areas of the country as rules are relaxed and economies reopen.  

Projections indicate that as many as 20 million people may lose their employer-sponsored health care with unemployment reaching 15% in April, outdistancing the numbers of jobless during the Great Recession, the report said; there was a slight improvement in May, with the percentage of unemployed sliding to 13%.

Among workers who retained their jobs or will find new employment, there's still likely to be a major shift in workplace dynamics: Almost half of the corporate chief financial officers surveyed by PwC said they plan to have some employees work remotely on a permanent basis. 

Among other findings, the pandemic has accelerated a trend among employers to offer mental health benefits. According to the report, "The COVID-19 pandemic, with its attendant anxiety and social isolation, likely will drive further demand for mental health care at a time when employers are eager to expand access."

It also projected an increasing demand for high-dollar "specialty drugs," including some gene therapies and other existing drugs that could be approved for more diseases. 

While those developments may drive up costs, the report cited two "bright spots" for 2021. One is the widespread acceptance of telehealth as a "viable and desirable alternative to in person care," racing costs for employers and providers.

The other is a narrowing of provider networks as employers "shed costs and make health care providers more willing in the short term to give price concessions or take on more risks in exchange for predictable cash flows, if it helps them get patients to return for care."

The report said that while employer spending on health care may fall in 2020 as compared to 2019, it could jump in 2021 depending on several factors. 

PwC crafted three possible scenarios to assist employers and health plans gear up for the future.

In a "low spending" scenario, medical costs could rise by about 4%; a "medium spending" scenario — in which spending grows at about the same rate as it did between 2014 and 2019 — projects a 6% increase, while a "high–spending" scenario forecasts a 10% increase.  PwC said one key concern is getting people with chronic conditions who are on employer-sponsored insurance to overcome COVID-19 fear to seek treatment.

"On average, people with complex chronic illnesses cost employers eight times more than healthy individuals, with an average annual cost per person of over $11,000 — a number that could balloon even higher if their illness is left unmanaged for too long," it said. 

The report quotes Paul Hughes-Cromwick, co-director of sustainable health spending at Michigan-based Medicare and Medicaid research nonprofit Altarum Institute, saying the degree to which  Americans again seek out non-emergency care remains a big unknown.

 "Some people are assuming that all you have to do is open back up and everything will be fine," he said. "It is one thing to throw a party; you still need people to attend the party."

Read more: 

• Study: High prices still the cause of ridiculous health care spending
• 14 strategies employers can use to lower health care costs
• Cost control depends on what's driving health care prices in your region