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Press Release

U.S. employers face significant health care benefit cost increases from COVID-19, Willis Towers Watson analysis finds

Costs could increase by 7% from testing and treatment expenses

March 26, 2020

Health and Benefits
Risque de pandémie

Arlington, VA, March 26, 2020 — As U.S. employers look to keep their workers safe and healthy as they confront a global pandemic, they could see their health care benefit costs jump by as much as 7% this year as a result of testing and treatment costs related to COVID-19. This is according to an actuarial analysis of self-funded employers by Willis Towers Watson. Any increase attributed to COVID-19 will be on top of the 5% cost increases employers previously projected for this year, according to the Willis Towers Watson Best Practices in Health Care Employer Survey.

“Despite employers and employees taking the right precautions at this perilous time, the coronavirus continues to spread and place enormous pressure on our nation’s health care system,” said Trevis Parson, chief actuary, Willis Towers Watson. “This spike in the demand for care is likely to lead to a significant jump in employer health care costs beyond previous expectations. However, the ultimate financial impact will depend on many factors, including the portion of the population infected and the severity of their illness.”

At a 30% infection level, the analysis found total costs could increase between 4% and 7%, depending on how sick COVID-19 patients become. Total costs include claims for medical and prescription drugs only. Other health care costs, including those for dental and vision care, may actually decline this year as employees will likely eliminate some discretionary care, the analysis noted.

The analysis also found that at a 10% infection level, costs could rise between 1% and 3%. In a more severe scenario — a 50% infection level — costs could rise from 5% to 7%.

The analysis considered employer health care spending would be reduced in the more severe scenarios as health care supply (e.g., available beds) may reach capacity. If that happens, the type of care patients receive will be redirected to alternative settings and likely become less costly to employers, in the short term. The analysis also considered reduced cost for non-COVID-19 patients who defer care or receive care in lower-cost settings. The estimates would increase significantly in the absence of these factors.

For this analysis, costs per infected person are estimated at about $250 for mild cases, $2,500 for moderate cases, $30,000 for severe cases requiring an inpatient stay, and close to $100,000 for catastrophic cases requiring intensive care.

“The effectiveness of our containment strategy will determine what portion of the U.S. population will become infected. 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,” concluded Parson.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential. Learn more at

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