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COVID-19 Could Reduce Employer Healthcare Costs by 4%

Analysis  |  By Jack O'Brien  
   May 01, 2020

A Willis Towers Watson analysis released in late March estimated that employers could see healthcare benefit costs rise by 7% due to the pandemic.

The coronavirus disease 2019 (COVID-19) outbreak might reduce healthcare costs for employers by as much as 4%, according to a Willis Towers Watson (WTW) analysis released Friday morning.

The study is an update to a WTW analysis released in late March that estimated employers could see healthcare benefit costs rise by 7% due to the pandemic.

At the time, WTW estimated that at a 10% infection level, benefit costs could rise by 1% to 3%, while a 30% infection level could see costs rise by 4% to 7%. At the highest rate included in the analysis, a 50% infection level, costs could rise between 5% to 7%.

Related: Healthcare Benefit Costs Could Rise by 7% Because of COVID-19

The new analysis projects that an infection level of 1% could lead to employer healthcare costs declining between 1% to 4%.

A 15% infection level would see employer costs rise by 1% depending on care deferral, while a 20% infection level could see costs rise by 1% to 3%, according to the study.

Related: COVID-19 Outbreak Threatens Health Systems With New Financial Challenges

"With treatment for COVID-19 top of mind, people have been putting off nonemergency medical care, including routine office visits and elective procedures at hospitals," Trevis Parson, chief actuary at WTW, said in a statement. "Given this reduction in use of medical services, we expect cost reductions due to care deferral to more than offset projected cost increases associated with COVID-19 infections."

Related: Emerging From Pandemic: LCMC Health CEO Details How the New Orleans System Is Moving On

The study was released days after the American Hospital Association, America's Health Insurance Plans, and the U.S. Chamber of Commerce sent a letter to congressional leaders that called on them to protect and expand health coverage for employers and workers.

"Employers need more support – and workers need to be able to continue their stable, secure coverage," the letter read. "As you consider the next round of legislation to overcome COVID-19, we urge you to prioritize maintaining private health benefits for individuals and families and to increase coverage options for those who are already uninsured."

Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.

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