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How Climate Change Will Turn Up The Heat On Payers: Part Two

Analysis  |  By Marie DeFreitas  
   May 20, 2024

A big problem for payers will call for big solutions.

Editor’s note: Part one of this two-part article discussed the impacts that climate change will have on healthcare, and the role payers will need to step into to address climate change and protect their businesses. Part two looks at more detailed solutions that payers can implement so their business doesn’t get washed away.

Climate change is bound to majorly impact every health plan on the planet, but payers don’t have to be left stranded. Getting an early start on climate change planning before it gravely threatens health plans is the best option for insurance businesses to not be left high and dry.

“The climate crisis is a health care crisis,” says Baylis Beard, director of sustainability for  Blue Shield of California., “As insurers, we are part of the healthcare industry, which means we have a responsibility to decrease our emissions and use our voice to lead the way to a more sustainable, healthier future.”

Climate change will impact payers in three key ways: high utilization, high costs, and weather-related events that will affect healthcare workers.

High Utilization

Creating a Plan

Payers should develop climate change response plans to focus on their high-risk areas, the areas that will eventually cost them the most to cover. That might include implementing digital care and telehealth solutions. Payers can create ways for consumers to educate themselves about high-risk areas, possible health effects, precautions to take, and resources available to them if they are located in a high-risk area. By leveraging care-management platforms, payers can provide information like inclement weather alerts and educational content to allow their members to stay informed in an accessible way.

Keeping track of member health will play a greater role as climate change advances, particularly with seniors and the Medicare Advantage population. Studies show that seniors in particular will be greatly affected: “Among other alarming facts, heat-related mortality for people above age 65 has increased by more than 50% in just the past 20 years,” according to a report from the Patient Safety Network.


High-risk areas might not always be easily identifiable, and this may take some research to create an accurate response plan.

For example, California experiences frequent wildfires, and long-term exposure to smoke inhalation kills thousands each year. However, according to one study , only about 1,700 of the 6,300 deaths that occurred each year from smoke inhalation between 2006 to 2018 occurred in the West. This study shows that wildfire smoke had the most prevalent effects in the East because of how fast the smoke traveled. The point: don’t make assumptions without looking at all the data.

“Much of the research on the effects of climate change on health has been done with clinical data to understand health outcomes,” said Blue Shield of California’s director of sustainability Baylis Beard, “but the impact on healthcare utilization and costs is less understood.”

In order to uncover the true cost of climate change for health insurance, payers should focus on using science and evidence-based strategies. An article by the Patient Safety Network states: “Evidence-based strategies are required to accelerate healthcare decarbonization and avert the worst predicted harms to health and healthcare systems.”

Further, insurers can collaborate with climate change researchers and weather institutions to create comprehensive plans that take into account a vast array of climate data.This avenue can ensure the most accurate results can be reflected when payers analyze the financial impacts.

High Costs

Perhaps the biggest and most obvious effect of climate change will be higher costs. High utilization leads to high costs for payers, but what will also step into the spotlight? Supply chain malfunctions.

The United States’ healthcare sector emits about a quarter of total global healthcare emissions. In other words, the U.S. healthcare industry uses a lot of energy, and transports a lot of supplies. Climate change will bring about disasters that are very difficult to prepare for in this sector.

For example, a tornado that ripped through a Pfizer drug warehouse in North Carolina in July of 2023 destroyed medications as well as pharmaceutical raw materials, exacerbating the shortage of drugs used in surgery and cancer treatment.

Payers can work with outside organizations to create communication plans on how they will handle these events. But they must make sure the select the right partners. “We play a role in creating the right incentives in the value chain and choosing sustainable partners,” said Beard.

Climate Change Affecting Healthcare Workers

The biggest issue in healthcare is the labor shortage. Climate change will worsen this. Extreme heat and weather will affect certain occupations more than others.

For example, studies show that climate change will have a big effect on emergency response workers. The Journal of Emergency Medical Services published an article stating: “Prolonged heat waves strain EMS staff and resources, emphasizing the need for strategic planning and collaboration with other agencies.”

Payers should collaborate with their health systems to ensure there are resources for these workers when they feel strained. Along with EMS workers, doctors and nurses facing intense burnout from high volumes of patients after weather-related events will also increase. Implementing AI and automation to cover tedious tasks and mitigate stress is one tactic that can help.

Virtual Care

Virtual care is going to play an even bigger role as the climate crisis worsens. The healthcare industry has already gotten a jumpstart on this type of care because of the COVID-19 pandemic. Telehealth and virtual care have been shown to decrease emissions as well as water use. While virtual care can have its limitations, including broadband issues and limited access to technology, it can provide care when physical access to a health system is just not possible. Payers should look at updating their virtual care models and implementing new forms of virtual care. For example, Blue Shield of California has implemented a new virtual care platform that connects members with virtual primary care services for patients to access providers via mobile phone, tablet, or personal computer.

“This virtual care platform also helped provide critical health care services to a town badly damaged by the Camp Fire where many residents were forced to drive long distances to see a doctor,” Beard said.

The Opportunity to Lead

Health insurers can take the lead on climate change in several ways.

For instance, the Boston Consulting Group suggests that “Insurers should collaborate with climate research and university institutions and should assist governmental and academic institutions in climate-health policymaking discussions.”

Health plans can look to create new insurance products and specified insurance models to address climate change health effects. Payers can explore implementing wider disease coverage and climate specific products. Looking to other countries may also help in generating new ideas. For example, Japan has implemented heatstroke insurance in response to climate change, costing members roughly 70 cents a day; in a single day they sold about 7,000 policies in June 2022.

Payers should also focus on underserved populations, as these groups often experience the worse climate change effects while contributing the least to pollution and carbon emissions. Collaborating with other institutions and agencies could be beneficial in this implementation.

Payers can also look to generate new opportunities by establishing health services that go beyond insurance. Climate change is already having an impact on payers’ portfolios, and this is a great way to diversify. Partnering with private equity firms to expand care delivery and creating tools for optimizing emergency-room triage and resource allocation are a couple of options that payers can explore.


Marie DeFreitas is the finance editor for HealthLeaders.


Climate change will affect healthcare delivery is several ways, ranging from higher utilization and costs to supply chain disruptions.

As climate change begins to affect healthcare delivery, payers will need to develop care management strategies to address those issues

Payers will need to not only educate their members but bring themselves up to date on how climate change will affect their business.

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