Employers are facing sizable increases in healthcare spending as the coronavirus spreads across the US

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The coronavirus is projected to hike up employers' healthcare costs by as much as 7% in 2020, an estimate based on potential severities of outbreaks.
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Employers are facing sizable increases in healthcare spending as the coronavirus spreads across the US

This story was delivered to Business Insider Intelligence Digital Health Briefing subscribers and has been made available to share with you due to the significance of the current health crisis.

The coronavirus pandemic is projected to hike up employers' healthcare costs by as much as 7% in 2020 — and that's on top of the 5% increase that was estimated before the coronavirus landed in the US, according to a Willis Towers Watson analysis. The global advisory group based its estimates on the potential severities of US outbreaks: On the low end of the scale (if the outbreak affects 10% of the US population) additional spending for employers would tick up approximately 1%.

But if the virus afflicted 30% of patients with high morbidity, a spike of just over 7% could be generated. And we think these numbers could be even higher, since some experts think it's plausible that up to 70% of the US population could become infected.

Most consumers globally are more confident in digital health tools when they're promoted by employers

Employers are likely scrambling to boost their benefits packages with offerings that'll help curb member costs — and a multifaceted telehealth strategy is likely high on their lists.

Employers will want to load their benefits packages with coronavirus-specific virtual solutions that ensure a smooth triaging process and direct patients to higher-cost care only when it's urgent. Payers are feeling the pressure to ramp up telehealth offerings to meet the government's demands that individuals practice social distancing. Granting employees access to virtual options that channel them to lower-cost facilities — or instruct them to self-isolate in lieu of going to the hospital — could help employers facing steep care costs for severely-ill coronavirus cases shore up on spending by steering patients who need less expensive care away from unnecessary options.

For context, Wilson Towers Watson spells out exactly how the severity of a patient's infection could impact employer spending: A mild case is estimated to put employers out $250, a severe case that requires hospital admission could cost $30,000, and a case that sends the patient to an intensive care unit could balloon to as much as $100,000.

But implementing telehealth for non-coronavirus use cases — like behavioral health and chronic care management — will also help ensure workers are getting connected with the care they need amid the crisis. President Trump just extended quarantine guidelines through at least the end of April, per The New York Times. So, the ways in which patients fulfill all of their care needs will also need to change, and employers will need to alter their offerings accordingly.

Because chronic illness — including mental health conditions — eats up 90% of overall healthcare spending in the US, payers will want to make sure that members are accessing the resources they need to stay on top of management and treatments. And virtual care will become a key element as patients continue to be directed away from care facilities in nonurgent situations.

And if employers bulk out telehealth services across the board, it's likely to pay off after coronavirus outbreaks subside. We expect that the massive number of new telehealth patients now will translate into steady continued adoption in years to come. And while telehealth adoption for care types across the board remained low pre-coronavirus, the thumbs up from employers could boost adoption even further: Two-thirds of consumers say they'd be "more" or "much more" confident in digital health solutions if their employers promoted or sponsored them.

Employers looking to connect their employees with telehealth solutions are benefitting from the trend among health insurance giants to eliminate — or drastically reduce — patients' out-of-pocket costs for seeking coronavirus-related care. For context, the majority of US citizens (55% of the population) receive insurance through an employer — a large portion of which contract with a private insurer, which assumes the financial responsibility for the cost of the workers' medical claims.

And efforts among these large insurers to curb patients' out-of-pocket costs amid the coronavirus pandemic are carrying over to telehealth coverage: Cigna and Humana just announced they're waiving all costs for coronavirus treatment, including telehealth, per Forbes — following in the footsteps of Aetna, Blue Cross, and others. These efforts underscore some faults in the US' fragmented health insurance system, in which coverage varies widely per payer. And the pandemic could lead to a shift in demands — among consumers and employers on the hook for paying for their care — for a more unified system, especially as we near election season in the US.

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