Employer Costs May See Drop as Healthy Workers Seek Less Care

The Covid-19 pandemic could reduce employer health-care costs by 4% in 2020, according to consulting firm Willis Towers Watson.

The possible cost savings is the result of reduced medical care for people who haven’t been infected with the virus, the consultant, which also provides health insurance brokerage services to employers, said in a report released Friday.

The consultant said the report, based on an analysis of large employers that directly pay for employees’ medical care, updates a similar study released a month earlier that found sharply different results. The earlier study projected employer costs could rise by as much as 7% due to Covid-19 related costs.

The disparity in the findings just a month apart illustrates the uncertainty of whether high costs to treat Covid-19 sufferers will be outweighed by the reduction in health-care costs resulting from people putting off non-emergency medical care.

Reduced Non-Emergency Care

“People have been putting off non-emergency medical care, including routine office visits and elective procedures at hospitals,” Trevis Parson, chief actuary at Willis Towers Watson, said in a news release. “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.”

The updated study is based on recent estimates of infection levels in the U.S., and it shows significant variation by geography, Willis Towers Watson said. At a 1% infection rate, such as in rural areas, employer costs could decline 1% to 4%, while a 20% infection rate in urban areas could lead to cost increases as high as 3%.

Social distancing and other measures being taken to mitigate the effect of the virus are likely to lower costs by reducing exposure to other diseases like the flu and cutting the rate of sports injuries, the consultant said.

The analysis reflects costs for 2020 employer medical and pharmacy claims. Other health plan costs, such as dental and vision, will likely see lower costs this year, Willis Towers Watson said.