Preliminary data: Health spending in 2020 declined for first time since 1960
The Bureau of Economic Analysis's initial estimates show a 2% decline over 2019, or about $75.8 billion.
For the first time in six decades, total health spending in the United States was lower in 2020 than in the previous year.
“While spending has recovered somewhat from its pandemic-related decline in the spring, our preliminary estimate is that national health spending in 2020 was 2% lower than in 2019, a decline of about $75.8 billion,” according to a report from the nonprofit organization Altarum.
Related: Health care utilization and spending finishing the year lower because of pandemic
Annual health spending growth, 2020 and 2019
The report was based on the initial estimate of December personal income and outlays from the Bureau of Economic Analysis. Among the factors affecting health expenditures last year:
- Hospital care, the largest component, was 7% lower in 2020 than in 2019.
- Dental services dropped 20% in 2020.
- Some services were temporarily curtailed, and patients avoided seeking care to avoid exposure to the COVID-19 virus.
- Spending on prescription drugs and home health care actually increased for the year, the latter likely related to individuals selecting home care rather than nursing homes to avoid exposure.
Researchers based their conclusions on preliminary numbers that may change slightly when final numbers are reported. The pandemic-induced recession may have suppressed spending on structures, equipment and services provided in non-traditional settings to values below projections. On the other hand, increased activity associated with COVID-19 testing, contact tracing and early vaccination efforts might cause public health spending to exceed projected values. Similarly, investment in COVID-related research could cause greater-than-projected spending within the research category.
Finally, lower-than-expected spending on personal health care could result in lower medical loss ratios and a resulting higher value for the net cost of insurance than previously projected. Estimates of the growth or decline of spending in various categories may be understated or overstated in comparison with the final National Health Expenditure Accounts values for 2020 from the Centers for Medicare and Medicaid Services, researchers said.
“Our estimates should, however, provide a reasonable characterization of the change in the level of care provided in 2020,” the report concluded. “We will get a clearer picture of last year’s national health expenditures when the next CMS projections are released this spring and the 2020 historical data are published in December. While uncertainties currently exist regarding the final NHEA values, it is clear that health-care goods and services delivered in 2020 declined from 2019.”
Read more: