On Monday, HUM presented at the JP Morgan Health Care Conference. Was it me or were more than the usual number of softballs tossed? HUM made note of an important trend - one we have been following closely - excess deaths. Their report that excess mortality has run at about 20% higher than normal, persistently, translates into lower benefit costs. They credit COVID with the demographic headwind but conclude that members with more comorbidities died thus reducing the overall risk profile of their member pool. There was no follow-up on what fewer comorbidities means to risk scores.
HUM makes the third official mention of excess mortality's impact on normal operations. DVA noted that it had not abated by 3Q. Federal Reserve Chairman Jerome Powell mentioned it at the Q&A portion of his Brooking presentation a few weeks ago.
The Society of Actuaries Research Institute has taken to producing quarterly reports on pandemic-era mortality. Their report, you can read it here, is based on a survey of group life insurance carriers that, of course, serve a large number of working age people. They concluded in their November report- based on data through 2Q- that excess mortality among younger people is running about 15% above baseline in some areas. This conclusion makes HUM's 20% quite reasonable.
Excess mortality, especially among the young, has implications beyond just health care. A decline in the working age populations means a fed pivot is a long way off as labor costs will continue to pressure all sectors. That is particularly true in health care. Medicare is dependent on taxes from the working age population and that ratio has been in decline for years. Early death is not going to help.
A population crisis like this is solved but two ways - innovation and immigration. Things may finally be softening up and the latter. For health care, the former is long overdue.
I believe we will be marking this month down as the beginning of more widespread recognition that vaccinations are probably still a good thing but perhaps too many boosters, too much time on Zoom, too little social engagement and a whole lot of fear is and was a bad, bad thing. (Don't @ me. My tinfoil hat fits just fine.)
Let me know if you have any questions.
Emily Evans
Managing Director – Health Policy
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