An uneven year for HSA spending: Doctor visits down, prescription costs up
One ongoing element remained constant—the cost of health insurance continued to increase in 2020.
A new report on the use of health spending accounts (HSAs) noted the serious impact on the accounts caused by the COVID-19 pandemic in 2020. A decline in many kinds of medical visits and higher spending for prescription drugs were two of the major trends of the year, but the report noted—with caution—that health spending may revert to more normal patterns this year.
The HSA Spend Report, issued by Lively, tracked where and how consumers spent their health care dollars in 2020. The HSA company collected data from 50,000 account holders in the U.S. The researchers noted that one ongoing element remained constant—the cost of health insurance continued to increase in 2020.
Related: 4 charts tracking HDHP, HSA availability among employers
“Between 2019 and 2020, the average annual premiums for single and family coverage increased by 4%,” the report said. “As usual, premium costs continue to rise faster than the annual rate of inflation. Driven by rising health care costs, employers are increasingly moving to high-deductible healthcare plans (HDHPs), and employee adoption is increasing. In fact, between 2007 and 2018 the percentage of people with private health insurance, under 65, and enrolled in an HDHP grew from 17.4% to 46%.”
HSA spending during the pandemic
With nearly half the private market in HDHPs, the use of HSAs has become common. The report outlined how the pandemic affected HSA spending. One outcome was unpredictability—the study found some account holders increased their health spending in 2020, while others decreased spending.
Two areas that saw a decrease in spending were elective procedures and preventative visits, especially early in the year, as Americans stayed at home. “In March and April of 2020, COVID-19 halted health care spending for preventative and elective procedures,” the report said. “This was to prevent pandemic spread, but also to safeguard diminishing supplies of personal protective equipment for front-line workers. As stay-at-home orders lifted throughout the summer months, health care spending picked up, but slower than normal.”
Other areas saw an increase in spending, the report noted. Prescription drug spending saw a 32% increase, for a variety of reasons. The report noted the CDC recommended that Americans stockpile prescription drugs early in 2020, as the pandemic started. Many individuals also refilled prescriptions in anticipation of losing employer-sponsored health insurance.
Sudden spikes in the use of certain drugs also contributed to spending. “Interest in chloroquine and hydroxychloroquine spiked in March based on public attention, causing a 125% spike in these prescriptions,” the study reported. “Once the flurry of attention decreased, so did prescriptions.”
In addition, pharmaceutical companies raised drug prices in 2020. The study noted that drug makers raised prices for 245 prescription drugs between January and June of last year. More than 75% of the drugs were related to COVID-19 treatment. In addition, costs went up for anxiety and depression drugs such as Ativan, Lithobid, Paxil, and Spravato.
Another area that saw an increase in HSA spending was for chiropractic services. The report links this jump in services to the COVID-19 pandemic, due to more Americans working remotely from home. “These conditions have likely caused an increase in pain related to a sedentary lifestyle and poor work-from-home set-ups,” the report said. In addition, the researchers said some Americans turned to chiropractic care rather than drug treatments for conditions such as back pain, due to concerns with the ongoing opioid epidemic.
Other findings on HSA spending
Mental health care spending remained steady; this was somewhat surprising, given the stress caused by the pandemic, its economic consequences, and factors such as working and learning from home. The researchers speculated that stigma around seeking mental health may still inhibit some Americans. The report also noted the increase in use of remote mental health treatment. “We did see an increase in mental health spending through virtual experiences, a 10% increase [from 2019 to 2020],” the report said. “While the amount of mental health spend did not increase, the way in which consumers accessed help did.”
The consumer dollars spent on prescription drugs went mostly to large chain pharmacies such as Walgreens and CVS in 2020, but the report noted that superstores such as Walmart gained a larger market share of prescription drugs. The researchers speculated that consumers might have sought to limit their COVID-19 exposure by doing as much shopping as possible at one location.
Overall, the report shows costs continuing to rise, even at a time of economic uncertainty.
“It remains unknown whether new trends or changes in health spending due to COVID-19 will be permanent,” said Shobin Uralil, COO and Co-Founder of Lively. “But no matter what, HSAs will continue to be vital for American families to shelter themselves from rising out-of-pocket health care costs. Raising HSA contribution limits, expanding HSA eligible expenses, and letting more Americans take advantage of HSAs would help put more savings into the pockets of people across the country.”
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