COVID-19 outbreak could drive up employers’ healthcare costs by 7%

Employers could face significant benefit cost increases due to the COVID-19 pandemic, a new analysis shows.

Analysts at Willis Towers Watson found that employers’ healthcare costs could rise by as much as 7% this year in 2020, depending on how far the virus spreads and how deadly the outbreak proves to be.

On the low end of the spectrum, should the outbreak infect just 10% of the population and prove to have low morbidity, costs will increase by under 1%. However, if the virus infected 50% of the population with high morbidity, costs could increase by 6.8%, the study found.

The scenario with the highest cost increases is if the virus 30% of people with high morbidity—a combination that could lead to 7.2% in cost increases, Willis Towers Watson found.

“Despite employers and employees taking the right precautions at this perilous time, the coronavirus continues to spread and place enormous pressure on our healthcare system,” Trevis Parson, chief actuary at Willis Towers Watson, said in a statement.

“This spike in the demand for care is likely to lead to a significant jump in employer healthcare costs beyond previous expectations,” Parson said.

Willis Towers Watson estimates that employer costs per infection would also range depending on the severity: $250 for a mild case, $2,500 for a moderate case and $30,000 for a severe case the requires hospital admission. Should an employee develop a catastrophic case of COVID-19 requiring a stay in an intensive care unit, costs are likely to be $100,000, according to the analysis.

Two key factors could impact employers’ costs in the short-term, according to the report, were built into the analysis. For one, a severe outbreak that puts hospitals at capacity could lead some patients to be treated at lower-cost facilities when possible. In addition, some patients with lower-acuity symptoms may choose to simply stay some.

“The effectiveness of our containment strategy will determine what portion of the U.S. population will become infected,” Parson said. “And that will have an impact on additional costs, which employers will need to consider as they design and finalize their benefit strategy and plan for 2021.”

The analysts noted that the increases related to COVID-19 would be in addition to an expected 5% increase in costs for the year.

https://www.fiercehealthcare.com/payer/covid-19-outbreak-could-drive-up-employers-healthcare-costs-by-7-analysis