Impact Blog
The role of managed care in reducing inequality in health systems

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      By Laura AhmadiESG Research Analyst, Calvert Research and Management and Henry MasonESG Research Associate, Calvert Research and Management

      Washington -- As the COVID-19 pandemic makes its way through the United States, concerns have rightly been raised about the disease's disproportionate impact on vulnerable populations, including low-income families and individuals. High health care costs, even for the insured, can deter patients from seeking medical care and lead to worse health outcomes for these individuals and the people around them.

      Encouragingly, many managed care companies (MCOs) have taken measures to reduce cost-sharing burdens that serve as barriers to care for their members, including the elimination of patient costs for COVID-19 diagnostic tests and telehealth services1. These actions not only reduce unequal health outcomes across income groups and stem transmission of the virus, but can lower overall member health care costs and translate into long-term savings for companies.

      Shifts toward prevention and early detection will become increasingly important, given emerging health trends. Climate change is expected to have many harmful health impacts as it worsens, including increased prevalence of food- and water-borne illnesses and other infectious diseases, increased respiratory disease and threats to mental health2. In terms of chronic disease trends, cases of cardiovascular disease and diabetes have been on the rise and cost the US as much as $484 billion per year in direct health care expenses3. Intensification of these trends will present new challenges for MCOs with regard to cost containment and the inequality of health outcomes.

      While reducing financial barriers to diagnostic and preventive services can help mitigate these challenges, MCOs best positioned to positively impact population health in the long run - and their own bottom lines - will work further to address social determinants of health for their members. Social determinants of health, which include factors like income and education levels, physical environment and access to social support, are estimated to explain between 20%-60% of health outcomes and costs4. By offering benefit plans that ensure access to resources like nutritious foods and transportation to health appointments, MCOs will be better able to tackle these emerging health trends in a cost-effective way while simultaneously reducing health disparities across patient demographic groups.

      Bottom line: Taking a longer-term view on member health that addresses health conditions at their origin can improve outcomes for both companies and patients. Covid-19 presents an opportunity for MCOs to embrace these strategies ahead of similar health challenges to come.