The earth is warming — and it is warming faster. For the contiguous United States, the five warmest years on record have all occurred since 2012, and 2020 was the fifth-warmest year on record. This frightening trend is resulting in climate change, including extreme weather events, which has both direct and indirect impacts on health outcomes and healthcare costs.
Some sectors are responding to climate change. The U.S. military sees it as a major security threat and is preparing for harsher climates. Energy utilities are growing renewable energy sources and automotive manufacturers are developing electric vehicles. Some insurers are increasing premiums for homeowner’s insurance in areas prone to wildfires and flood insurance in high-risk flood areas. In stark contrast, health insurers (payers) have their heads in the sand.
Rising temps and costs
Heatwaves are more intense, more frequent and lasting longer. In addition to heat exhaustion and heatstroke, high temperatures can exacerbate heart and lung conditions. The recent heatwave in the Pacific Northwest is a good example of how heatwaves affect payers’ costs. This extreme heat resulted in a record-breaking number of calls for emergency medical assistance, and emergency department visits surged.
Heatwaves and droughts dry the air and vegetation, and in western states these conditions have resulted in more frequent wildfires — fires that are increasingly bigger, more severe, faster and more destructive. The smoke from these fires includes a mix of gases and fine particles from vegetation, buildings, and other material, putting people with asthma, COPD, or heart disease, along with children and pregnant women, at greater risk of becoming sick. Numerous studies have shown how wildfires can result in surges of emergency department visits from patients seeking treatment for respiratory illness.
Warmer oceans increase the amount of water that evaporates into the air and, as a result, heavy precipitation events are more intense and more frequent. Flooding results in deaths, injuries, and outbreaks of waterborne diarrheal disease. The risk of waterborne illness is expected to increase in the Great Lakes region because of extreme rainfall and warming water temperatures.
It may seem counterintuitive, but warmer oceans also result in heavy snowfall, which has become more frequent in the eastern states. One study found an elevated risk of myocardial infarction, severe arrhythmias/cardiac arrest, and cardiovascular hospitalization in the 2 days following a moderate (5- to 10-inch) snowfall. It stands to reason that an increase in snow shoveling may result in more cardiovascular hospitalization.
The vast majority of malaria cases in the United States occur in travelers arriving from other parts of the world where malaria transmission occurs. This transmission risk increases as the minimum temperature rises. In addition, the risk of locally transmitted cases of malaria may re-emerge because of warming weather, especially in the Southern states.
Extreme weather can make supply chains less reliable. Such shortages will increase the need for safety stocks of drugs and other materials (e.g., personal protective equipment). These additional costs will likely get passed to payers. In addition, high levels of anxiety and post-traumatic stress disorder can follow extreme weather events.
Ignoring the writing on the wall
As the globe warms, payers’ costs will rise. For payers, talking about, measuring, and acting upon cost drivers is a normal course of business. Yet payers have not yet connected the dots between global warming and their costs. There are several reasons why payers are neither talking about nor measuring the impact global warming is having on their costs:
- It is not easy to measure the impact of climate change on health and healthcare costs
- Payers focus on larger cost drivers and, at least for now, climate change may be a relatively smaller cost driver
- Payers focus on short-term cost drivers, and the more significant impacts of climate change are still years in the future
- Competing priorities, especially the acute ones (e.g., COVID), suck all the oxygen out of the room
- It is difficult to identify cost-effective responses to climate change that could yield meaningful clinical and financial returns
But these explanations should not be excuses.
A prescription for payers
Like other corporations, many payers are taking steps to reduce their carbon footprint. That’s great, but that’s not enough. Payers should swiftly take three steps.
1: Talk. The impact of global warming and climate change on health and healthcare costs should be discussed among senior managers, be described in annual reports, and be a topic of conversation when engaging clients, providers and members. Meaningful dialogue can help reveal problems, assumptions, and solutions.
2: Measure. Researchers have used claims data to conduct rigorous research into the impact of climate change on health and healthcare utilization and costs. Most importantly, metrics and related reports could help make the impacts visible and, hopefully, stimulate conversation (Step 1, above). And if payers do not include climate-change impacts in actuarial models, the effects of these omitted variables will be attributed to the variables included or will remain a portion of the unexplained variability.
3: Act. Do something. Consider this: Planting trees could help to combat climate change, and payers could play a small role by giving each provider and member one tree to plant per year. This simple act may even help to improve provider and member relations and retention. Further, there is suggestive evidence that caring for a tree may provide emotional and mental health benefits, such as reductions in anxiety, stress, and depressive episodes. Just maybe, these trees might yield a medical cost offset. Talking and measuring (Steps 1 and 2, above) would help identify other potential actions.
Global warming and the resulting climate change may prove to be the ultimate “tragedy of the commons” whereby individuals act in their own self-interest and contrary to the common good. But by talking about the problems, assumptions, and solutions, by measuring the impacts on health and healthcare costs, and by taking action, payers could make a very small but meaningful difference. Hopefully, payers will warm to these ideas before it is too late.
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