As the pandemic continues to spread throughout Canada, albeit at a lower rate than during its peak earlier this spring, employers have to determine what the potential costs will be for their businesses should their employees get infected in the future.
Recently, Aon launched an interactive web application that forecasts the impact of COVID-19 on employee populations throughout Canada, with the aim of helping employers anticipate the impact on employee benefit plan costs, absenteeism, and the potential need to adjust operations because of the virus’s spread, according to a release.
“Business still has to carry on for our clients and they were asking all sorts of questions about what does a pandemic mean, how is it affecting our employees, how is it affecting our costs and budgets, and what should we be doing about it?” said Greg Durant (pictured), Canadian chief actuary of health solutions for Aon. Employers are also trying to plan for a potential second wave of the virus that experts are noting could arrive in the fall and/or as restrictions ease.
The Aon model started out in the US since employers in the country are particularly concerned about the impact of COVID-19 on costs. They would be on the hook for medical costs should an employee need to seek treatment, as well as workers’ compensation costs that could arise if an employee gets infected at work. In Canada, however, the model has been adapted to fit the healthcare system in this market.
“What we have modelled in Canada is an estimate of the number of days off that are attributable to the pandemic and then we can determine the cost of absence,” said Durant. “We’ve also modelled what we think claiming patterns are going to be for health and dental. We know what’s happened from March and April, and we have a model now that will predict what we think will happen from May through the end of the year, and that varies by geography and when the restrictions are being eased.”
The model is continuously updated based on data that’s collected daily from individual countries as well as research institutes like the CDC, the Kaiser Institute and other international bodies that are building models to figure out the expected spread of the infection. So far, the model has been a close fit to what has actually happened, explained Durant.
Besides the spread of infection that’s accounted for in the model, there are two other important factors that it considers. One is the exposure for the employee population.
“We asked our clients what percentage of their employees are essential and what we mean by that is what percentage of employees need to interact with the public in order for that business to operate,” said Durant, pointing to a retail store, whose essential employee population might be between 10% and 15%, or a healthcare organization where that number could be higher, around 75%.
“You can adjust the exposure factor among your population, so that can drive up the number of people infected,” added Durant.
The second factor involves mitigation controls. This includes what is happening in the business’s geography, and what restrictions are imposed by the government. Nonetheless, predicting how a pandemic like this will evolve comes with its own challenges.
“The issue is we don’t have the answer about what’s going to happen – we know what’s happening today, but we don’t know what future restrictions will be imposed or eased,” said Durant. “In Canada, all of the provinces are saying ‘this is our plan, but as soon as we see a spike, we’re going to clamp back down,’ so the model allows you to put in that level of detail, which allows an employer then to figure out what is the expected exposure rate and what is the expected impact on costs.”
