Although the pandemic may be receding, the costs of the disease continue to be severe. A new study by health data analytics company Springbuk has estimated that in the six months following a diagnosis, patients hospitalized for Covid-19 cost their employers a total of $34,851 more than they otherwise would have.
More mild cases also resulted in higher-than-expected costs. Over the same period of time, patients who were diagnosed with Covid-19 but not hospitalized cost their employers a total of $1,037 more than expected.
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These costs may hit smaller firms especially hard, as those tend to be more financially fragile than larger businesses. As one study found, the median small business with more than $10,000 in monthly expenses had only about two weeks of cash on hand.
With these costs in mind, here are some things that employers should consider and prepare for.
Risks (and Costs) Ahead
Recent predictions suggest that up to 100 million Americans may be infected with Covid-19 next fall due to waning immunity, new variants, and relaxed safety protocols. Still, prevention and early treatment in the event of infection can reduce the costly consequences of severe disease. Vaccination and booster shots remain the best defense.
Employers would be wise to ensure employees and their families are also aware of newer treatments for Covid-19. Oral antiviral medications Paxlovid and Lagevrio have been shown to decrease the risk of severe disease in infected individuals by 90 percent and 30 percent, respectively, but must be taken within five days of the onset of symptoms.
Covid-19 has already taken a financial toll on employers. From May 2020 through January 2022, approximately 287,298 people in the United States were hospitalized with Covid-19, according to the CDC. Of those, around 160,000 were of working age.
Employers may have to pass along some costs to their employees. There is some evidence that this is already taking place. In the United States, the yearly increase in health insurance premiums in 2022 is expected to be around 5 percent.
The costs to employers are just a fragment of the total economic toll of the coronavirus pandemic, which has up-ended the global economy in ways not seen since the Great Recession—or even the Great Depression.
Long-term Trends
According to several different estimates, the long-term economic costs of Covid-19 will be high. The International Monetary Fund (IMF) estimates that the median global GDP dropped by 3.9 percent from 2019 to 2020—the worst economic downturn since the Great Depression. The World Bank estimated the toll at 4.3 percent. In total, the IMF estimates the cost of the pandemic will be $12.5 trillion.
One 2020 study suggested the total costs of the virus would be $16 trillion in the United States alone. That may be an undercount, as that study predicted the virus would be more or less contained by the fall of 2021. (More information about the economic costs of the pandemic can be found in this report from the Brookings Institution.) Whatever the total, these costs will not be paid in a single year. According to McKinsey, the yearly incremental increase in healthcare costs in the United States will be $125 billion to $200 billion.
Although the current estimate adds to our understanding of the economic costs of the virus, it's important to stress that the future remains uncertain. If there is one thing that Covid-19 has taught us, it's that predictions will evolve as the virus does. Businesses would do well to keep this in mind as they make healthcare cost projections and build their financial resiliency.
Dr. Janet Young serves as lead clinical scientist on Springbuk's Data Sciences and Methodologies team.
From: BenefitsPRO
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