Health care utilization and spending finishing the year lower because of pandemic
It's been a crazy year for health care, to say the least.
When the coronavirus pandemic hit last spring, everyone in the industry knew it would have a significant impact on health-care utilization and spending. However, no one was sure whether it would drive spending up or down.
As 2020 winds down, the Peterson-KFF Health System Tracker has summarized how utilization and spending have changed during the pandemic. Available data suggest that by the end of this year, health spending may be somewhat lower than it was in 2019. Any decrease in spending would be historic, because health costs tend to rise faster than inflation and have grown even during past periods of economic downturn.
Related: Costs for common health services far outpace inflation, vary from city to city
Analysts looked at how the pandemic has affected various aspects of the health-care system. So far in 2020, health services revenue has fallen by 2.4% compared to 2019. Year-to-date, health services spending is down by 2.4% as of the third quarter compared to the same period in 2019. By comparison, health services revenue increased by 5% in 2019 over 2018. Data do not include spending on pharmaceuticals, which have been spared from pandemic-related spending drops.
Spending dropped sharply in March and April but mostly has recovered since then. In April, personal consumption expenditures on health services (not including pharmaceuticals) were down by 32% on an annualized basis. However, after plummeting in in the spring, spending rebounded and by October was down just 1.7% from the previous year.
Year-to-date, the largest spending drop has been in ambulatory care settings. Ambulatory care settings, such as physician offices (minus 4%) and outpatient care centers (minus 4.7%), have seen some of the largest drops in revenue.
Hospital admissions fell in the spring but were back to about 95% utilization by July. Because these data go only through August, it is not yet clear how the latest spike in hospitalizations because of COVID-19, which has led some hospitals to reach capacity, will affect utilization by the end of the year.
Telemedicine use grew rapidly, but not enough to offset drops in in-person office visits. With social distancing, changes to provider payments for telehealth and recommendations to call ahead to providers, telemedicine use has increased during the pandemic, although not enough to fully offset the drop in in-person care.
Cancer screening dropped early in the pandemic. If cancer cases are missed or patients are diagnosed at later stages, it could have long-term impacts on both health outcomes and costs. Similar patterns can be seen for other serious and chronic diseases.
Many insurers held 2021 premiums flat. Of insurers that specified a rate impact because of the pandemic, most said it would have a net-zero effect on their costs in 2021, with some insurers saying they expect costs to drop and others expecting costs to increase.
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