How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (2023)

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Early in the COVID-19 pandemic, it was not clear how healthcare utilization and spending would change. Although one might expect health costs to increase during a pandemic, there were other factors driving spending and utilization down.

In spring of 2020, healthcare use and spending dropped precipitously due to cancellations of elective care to increase hospital capacity and social distancing measures to mitigate community spread of the coronavirus. Although telemedicine use increased sharply, it was not enough to compensate for the drop in in-person care. As the year progressed, healthcare use and spending began to rebound as in-person care resumed for hospital and lab services and COVID-19 testing became more widely available. However, overall health spending appears to have dropped slightly in 2020, the first time in recorded history.

As of December 2020, health services spending was down about 2.7% (seasonally adjusted annual rates) and it remained suppressed in January 2021. When adding in spending on prescription drugs, total health spending was down by just about 1.5% as of December 2020 compared to the same time in 2019. The U.S. GDP fell by 3.5% by the end of 2020, meaning that, although health spending dropped, it likely represented a larger share of the economy than in past years.

The drop in health spending in 2020 reflects a decrease in utilization for non-COVID medical care. Particularly early in the pandemic, it appears many people delayed or went without medical care they otherwise would have received. Although healthcare use picked up toward the end of the year, it was not enough to compensate for the missed care earlier in the year. Additionally, the cost of COVID-19 vaccine administration will likely have an upward effect onclaimscosts in 2021, as severalinsurersnoted in their rate filings to state regulators.

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In 2020, health services revenue fell by 1% compared to 2019

One way to look at health spending is to use the Quarterly Services Survey (QSS) data. Across all health services, which excludes prescription drugs and social services, health services revenue was down by -8.9% in the second quarter of 2020 relative to the second quarter of 2019. In third quarter 2020, health services revenue was up by 0.9% from third quarter 2019. In fourth quarter 2020, health services revenue was up 3.4% relative to the fourth quarter of 2019.

Although spending rebounded at the end of 2020, health services spending was nevertheless down by about 1% in 2020 relative to 2019. The QSS data do not include spending on pharmaceuticals, which, as discussed more below, have been spared from pandemic-related spending drops.

Spending on health services dropped sharply in March and April 2020, but has mostly recovered since

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (4)

Another way to look at health spending trends is to use the personal consumption expenditure (PCE) data from the Bureau of Economic Analysis (BEA), which is published monthly on an annualized basis. Like the QSS, the BEA’s personal consumption expenditures (PCE) data show spending on health services was down sharply in spring 2020. (The monthly figures are estimates, and are later adjusted, in part based on results from the QSS.)

At the nadir in April 2020, personal consumption expenditures on health services (not including pharmaceuticals) were down by -31.9% on an annualized basis. This was unprecedented, as year-over-year personal consumption expenditures on health services have grown every month since the data became available in the 1960s. However, after plummeting in spring 2020, spending on health services has rebounded, and by January 2021, was down just -2.4% from the previous year (seasonally adjusted at annual rates).

The chart above does not include spending on pharmaceuticals and other medical products, which was up 5.0% year-over-year in December 2020, and up 1.0% year-over-year as of January 2021 over the same time the year before. Prescription drug revenue has not suffered from the pandemic the way health services revenue has, as the latter fell largely due to social distancing and the delay or cancellation of elective procedures. Combined spending on health services and prescription drugs was down by -1.53% as of December 2020, and by -2.2% as of January 2021 (seasonally adjusted annual rates, relative to the same month in the prior year).

As of fourth quarter 2020, U.S. GDP was down by -3.5% (seasonally adjusted at annual rates), relative to fourth quarter of 2019. This suggests health spending may represent a somewhat larger share of the economy in 2020 than in past years. The National Health Expenditure Accounts (NHEA) are the official source of health spending in the U.S. The NHEA counts a broader set of health-related spending compared to the BEA methodology. The NHEA data showed health spending as a percent of the U.S. economy was 17.7% in 2019. The NHEA estimates of health spending as a share of the economy in 2020 will be updated later in the year. Based on BEA data, we estimate health spending as a percent of the U.S. economy might have increased by 0.1 percentage points in 2020.

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By the end of 2020, physician’s office spending was still down from 2019

Through 2020, the Quarterly Services Survey shows that health services spending is down by 1.0% relative to 2019. Ambulatory care settings, like physician offices (-3.8%) and outpatient care centers (-2.7%), saw drops in annual health revenue, while revenue for labs and nursing homes increased and hospital revenue was about flat. Although not shown in this chart, dental providers have seen some of the largest drops in revenue among health services.

As can be seen by clicking on the quarterly revenue tabs in the chart above, revenue for some health service providers has been volatile. For example, spending on medical and diagnostic laboratories was down by -14.5% in the second quarter of 2020, but as COVID-19 testing became more widely available through the year, spending on labs was up by 32.7% in the fourth quarter year-over-year.

Similarly, hospital revenue was down by -5.6% in the second quarter of 2020, with the cancellation of many elective procedures, but revenue bounced back in the third and fourth quarters, rising 5.7% over the previous year by fourth quarter 2020. On net, hospital revenue was therefore mostly unchanged in 2020 compared to 2019.

The COVID-19 recession is the first recession during which health spending has decreased

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (8)

Although social distancing and hospital capacity concerns were key drivers of the drop in health spending in 2020, use of health services may have also been suppressed due to affordability concerns amid the struggling economy.

In the chart above, we compare health spending in the quarter before, the quarter of, and the four quarters following the beginning of a recession based on BEA quarterly data. In previous recessions, except for the 2000s recession, health spending growth slowed down in the quarter following the first quarter of the recession, as compared to the same quarter of the previous year. Following the 2000 recession, year-over-year health spending growth increased from 7% in the quarter before to 9% in the fourth quarter relative to the same quarter in the year before.

Health spending growth has slowed down in the quarters following the beginning of some recessions. However, the COVID-19 recession marks the first of the past 5 recessions to result in a decrease in health spending growth year-over-year. Health spending was down -18% in the second quarter of 2020 and stayed down at -2.1% in the fourth quarter of 2020 over the prior year.

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How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (11)

An analysis of hospital utilization data by Epic andKFF found that while hospitalizations had fallen in the spring of 2020, admissions had picked back up to about 95% of expected utilization (based on historical patterns) by July 2020. After dropping again to 90% of expected admissions by August, overall admissions for the year rebounded to 94% of expected admissions as of December 5, 2020. As these data are only available through early December 2020, it is not yet clear how the latest spike in hospitalizations due to COVID-19 — which resulted in some hospitals again reaching capacity — affected utilization into early 2021.

Telemedicine use grew rapidly during the pandemic, but not enough to offset drops in in-person office visits

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (12)

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Although most employer health plans cover telemedicine services, ouranalysisfound thattelemedicine uptake before the coronavirus pandemic remained low. In 2018, 2.4% of large group enrollees who had an outpatient office visit had at least one telemedicine visit.

However, with social distancing, changes to provider payment for telehealth, and recommendations to call ahead to providers, telemedicine use has increased with the pandemic, according to analysis by IQVIA. Even so, as the chart above demonstrates, telehealth use was not large enough to fully offset the drop in in-person care. (Earlier analyses fromEpic Health Research Network,FAIR Health, andCVS Healthall show sharp increases in telemedicine use relative to the period before the pandemic.)

There was a drop in preventive services utilization through the third quarter of 2020

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (13)

The CDC’s data on the utilization of age-appropriate women’s cervical cancer screening among women insured through Kaiser Permanente Southern California shows preventive services utilization rebounded but was considerably below the pre-pandemic levels. During March 19-June 11 of 2020, there was a 78% and 82% drop in cervical cancer screenings for women aged 21-29 years and women aged 30-65 years, respectively, relative to the same time period in 2019. During June 12-Septembre 30 of 2020, preventive services utilization remained 29% and 24% below 2019 levels for aged 21-29 years and women aged 30-65 years, respectively.

According to an analysis of electronic health records byEpic Health Research Network, the average weekly screenings for breast, colon, and cervical cancers dropped 94%, 86%, and 94% during January 20 – April 21, 2020 relative to the averages before January 20, 2020. An analysisby IQVIA found that oncology visits for newly diagnosed cancer patients began to increase in summer, but and had still not reached baseline in October. If cancer cases are missed or patients are diagnosed at later stages, this could have long-term impacts on both health outcomes and costs. Similarpatternscan be seen for other serious and chronic diseases. The sustained decrease in health services utilization, including preventive services, may lead to more serious diagnoses and increased disease burden in the future.

With uncertain short and long-term effects of COVID-19, many insurers held 2021 premiums flat

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (14)

Individual market insurers are required to file detailed premium justifications to state regulators for the coming year. Weanalyzedthese filings to assess the effect COVID-19 will have on 2021 premiums. In their rate filings, most insurers pointed to remaining uncertainty surrounding pent-up demand for delayed or forgone health services in 2020, the costs associated with distributing coronavirus vaccinations, and the direct costs of treating people with COVID-19. Of those insurers that specified a rate impact due to the pandemic, most said the pandemic 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. This variation in expectations across insurers illustrates the remaining uncertainty of how the pandemic will continue to affect the U.S. health system in the coming year and beyond.

As the year 2020 progressed, it became clear private health insurers were likely profitable from the pandemic’s suppressed healthcare spending, and that many insurers would likely owe significant Medical Loss Ratio rebates under the Affordable Care Act. In response, a number of insurers preemptively offered premium relief and voluntarily waived cost-sharing for COVID-19 treatment and certain other services.

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The Peterson Center on Healthcare and KFFare partnering to monitor how well the U.S. healthcare system is performing in terms of quality and cost.

How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (15) How have health spending and utilization changed during the coronavirus pandemic? - Peterson-KFF Health System Tracker (16)

FAQs

How was the healthcare affected during Covid? ›

The arrival of COVID-19 disrupted healthcare in various ways. Less urgent services were cancelled or postponed, while barriers imposed by curfews, transport closures and stay-at-home orders prevented some patients from attending appointments.

Why does health care spending continue to grow in the US? ›

Premium increases, higher deductibles and copays, and soaring prescription drug prices result in spikes in healthcare costs. According to the Centers for Medicare & Medicaid Services1, in 2021, healthcare costs skyrocketed to $4.3 trillion.

What are the effects on US economy if the cost of health care keeps rising? ›

Effect on the Economy

higher health care spending, they have less income to spend on other goods and services. High health care costs could reduce access to health care, bankrupt consumers and deplete retirement savings.

Which country spends the most in administrative health care costs? ›

There are several reasons things that may factor into higher health care costs in the U.S., from high drug costs to extensive administrative fees. The fact remains that The United States spends at least 40% more on health care per person than any other country in the world.

How did the COVID-19 pandemic affect the economy? ›

The pandemic was accompanied by historic drops in output in almost all major economies. U.S. GDP fell by 8.9 percent in the second quarter of 2020 (figure 3-3), the largest single-quarter contraction in more than 70 years (BEA 2021c). Most other major economies fared even worse.

How has US spending on healthcare changed over time? ›

Public and private health spending have both grown substantially in the past few decades. In 1987, public sector spending accounted for just under one third (32%) of total health spending. Public spending in 2020 represented half (51%) of overall spending.

What factors contribute to growth in healthcare spending? ›

Why Are Healthcare Costs Rising?
  • Service price and intensity.
  • Population growth.
  • Population aging.
  • Disease prevalence or incidence.
  • Medical service utilization.

What is the main reason that the United States spends so much more on health care per capita as compared to Canada? ›

The United States healthcare system is complex and most costs are market driven. High, unregulated prescription drug costs and healthcare providers' salaries rank higher than in other western nations, and hospital care accounts for 31% of the nation's healthcare costs.

What are the 5 main reasons for rising health care costs? ›

5 reasons why healthcare costs are rising
  • Aging population. The Baby Boomers, one of America's largest adult generations, is approaching retirement age. ...
  • Chronic disease prevalence. ...
  • Rising drug prices. ...
  • Healthcare service costs. ...
  • Administrative costs.

How can the government reduce healthcare costs? ›

Three common-sense reforms – lowering the cost of prescription drugs, accelerating the adoption of value-based care models, and increasing price transparency for consumers and employers.

What is the biggest problem with America's healthcare system? ›

Rising Expenditures. The U.S. ranks highest in healthcare costs among comparable countries.

What is government spending on healthcare? ›

NHE grew 9.7% to $4.1 trillion in 2020, or $12,530 per person, and accounted for 19.7% of Gross Domestic Product (GDP). Medicare spending grew 3.5% to $829.5 billion in 2020, or 20 percent of total NHE. Medicaid spending grew 9.2% to $671.2 billion in 2020, or 16 percent of total NHE.

What government spends the most on healthcare? ›

The U.S. continues to spend the most on healthcare per person, even though outcomes and quality of care is not often ranked highest.

Which country currently is spending the most on healthcare? ›

Health consumption expenditures per capita, U.S. dollars, PPP adjusted, 2020 or nearest year
  • United States. $11,945.
  • Switzerland. $7,138.
  • Germany. $6,731.
  • Netherlands. $6,299.
  • Austria. $5,899.
  • Sweden. $5,754.
  • Comparable Country Average. $5,736.
  • France. $5,564.

How did COVID-19 affect government expenditure? ›

Goods and services decreased by 9% in almost all national government departments mainly because of lower costs of travelling and subsistence, training and development, and venues and facilities – mostly related to COVID-19 restrictions.

How the pandemic had a financial impact on your household? ›

Spending on non-essential services – for example, food and drink, health and beauty, travel and accommodation, and entertainment – fell significantly during the first lockdown to 35 per cent of pre-pandemic levels. Vehicle spending saw an even sharper drop to 29 per cent of the total before Covid-19.

Are healthcare costs increasing or decreasing? ›

U.S. employers expect healthcare costs to rise by 6% next year, after the 5% increase they've seen in 2022, according to a Willis Towers Watson (WTW) survey. Over half (54%) of the approximately 455 respondents who employ 8.2 million people say that their healthcare costs will be over budget this year.

What has changed in healthcare in the last 10 years? ›

Among the biggest changes to the patient experience are: electronic records, telemedicine, remote monitoring, wearable technology, wireless communication, etc. This infographic shows how digital healthcare is changing the way we get well.

How much money is spent on healthcare in the US 2022? ›

PROJECTIONS FOR MAJOR HEALTH CARE PROGRAMS FOR FY 2022

In CBO and JCT's projections, net federal subsidies in 2022 for insured people under age 65 are $997 billion.

What factors affect healthcare utilization? ›

Studies shows that several factors including age, sex, marital status, types of illness, household size, occupation, income or socioeconomic status, and understanding of insurance determine the utilization of healthcare from such health protection scheme [26,27,28].

How can health care spending be improved? ›

Eight ways to cut your health care costs
  1. Save Money on Medicines. ...
  2. Use Your Benefits. ...
  3. Plan Ahead for Urgent and Emergency Care. ...
  4. Ask About Outpatient Facilities. ...
  5. Choose In-Network Health Care Providers. ...
  6. Take Care of Your Health. ...
  7. Choose a Health Plan That is Right for You.
13 Aug 2020

What are the health care spending trends? ›

Hospitals (24.34%), Physicians (13.60%) and Drugs (13.58%) continue to account for the largest shares of health dollars (more than half of total health spending) in 2022. Spending related to the COVID-19 pandemic has continued in 2022.

Why healthcare costs are so much greater in the US than in other countries? ›

The United States, on a per capita basis, spends much more on health care than other developed countries; the chief reason is not greater health care utilization, but higher prices, according to a study from a team led by a Johns Hopkins Bloomberg School of Public Health researcher.

What are the three factor due to which health care costs keep rising? ›

Reasons for Rising Costs of Healthcare

Scarcity of experts who are qualified to use advanced medical equipment and robotics. Patients opting for higher category hospital rooms and extended hospital stay, depending on the health condition of the patient. Shortage of specialist doctors and surgeons in a particular field.

What is the US health spending problem? ›

About one-quarter of US medical spending is estimated to be spent on administrative costs—twice what is spent on cardiovascular disease, and three times what is spent on cancer. Finally, fraud and abuse may account for up to 10 percent of costs for some payers, though the exact amount is difficult to know.

What was the largest identified factor impacting health care spending? ›

Five factors contribute to the rise in health care costs in the US: (1) more people; (2) an aging population; (3) changes in disease prevalence or incidence; (4) increases in how often people use health care services; and (5) increases in the price and intensity of services.

Who is affected by the rising costs of healthcare? ›

The high cost of health care has disproportionately affected women and people of color. According to the survey, women are 17% more likely than men to be concerned about being unable to pay for care, and Black adults are 16% more likely than white adults to be concerned.

How does inflation affect healthcare costs? ›

September 26, 2022 - Inflation and rising labor costs will increase US national healthcare spending by $370 billion in the next five years, according to a McKinsey report. Consumer prices are rising faster than healthcare inflation, but general inflation has recently driven up healthcare supply input costs.

How can we reduce healthcare costs without affecting patient care? ›

Optimize Scheduling, Staffing, and Patient Flow

Optimization offers another way to reduce the cost of healthcare without compromising patients' health and safety. Hospitals can examine how patients move throughout their facilities to create a standardized flow.

What are some solutions to affordable healthcare? ›

Ideas to Make Healthcare More Affordable in USA
  • Reduce administrative costs on healthcare facilities. ...
  • Promote virtual healthcare. ...
  • Get rid of unnecessary lab tests for patients. ...
  • Regulate the prices of drugs and allow Medicare to negotiate prices. ...
  • People should be allowed to buy health insurance from any company.
23 Oct 2020

How does the government influence healthcare? ›

The federal government provides funding for the national Medicare program for adults age 65 and older and some people with disabilities as well as for various programs for veterans and low-income people, including Medicaid and the Children's Health Insurance Program.

What are the two major problems facing the healthcare system? ›

Major Problems in the U.S. Health Care System
  • Government Changes to Health Care Policies. ...
  • The Nursing and Physician Shortage. ...
  • The Opioid Crisis. ...
  • Poor Patient Outcomes. ...
  • Poor Public Perceptions. ...
  • Recommended Readings.

What are the 3 largest threats to public health in the US today? ›

These threats to public health are some of the most costly and impactful in the modern age:
  • Climate Change. ...
  • Obesity. ...
  • Antibiotic and Antimicrobial Resistance.
26 Feb 2020

What are three major problems facing the healthcare system in the United States? ›

Deprived communities continue to lack access to primary healthcare services and rely on emergency departments to treat chronic diseases and preventive care.
  • The Biggest Problems with the U.S. Health Care System.
  • High Costs of Care. U.S. healthcare underperforms in most verticals. ...
  • Lack of Insurance Coverage.
27 Jul 2021

How does healthcare spending affect the economy? ›

Effect on the Economy

higher health care spending, they have less income to spend on other goods and services. High health care costs could reduce access to health care, bankrupt consumers and deplete retirement savings.

What percentage of healthcare spending is spent on prevention? ›

With government budgets and corporate survival imperiled by healthcare costs, the search for “savings” in prevention, which accounts for an estimated 3 percent of spending, not only misses the point but risks overlooking the major cost drivers responsible for spending.

What is role of government and public spending on health? ›

Governments are also involved in the provision of clinical services at primary, secondary and tertiary levels of health systems. These services are provided in communities, work settings and public institutions including health centres, investigation networks and hospitals.

Which country has the best healthcare system 2022? ›

The Top 10 Healthcare Systems in the World 2022
  • South Korea. South Korea tops the list of best healthcare systems in the world. ...
  • Taiwan. Taiwan is second in the best healthcare systems in the world. ...
  • Denmark. ...
  • Austria. ...
  • Japan. ...
  • Australia. ...
  • France. ...
  • Spain.
21 Jul 2022

Which country spends the least on healthcare? ›

Somalia spends the least, only $33 per person per year for health. That's a really, really small number.

What population spends the most on healthcare? ›

While there are people with high spending at all ages, overall, people 55 and over accounted for 56% of total health spending in 2019, despite making up only 30% of the population. In contrast, people under age 35 made up 45% of the population but were responsible for only 21% of spending.

Who has the number 1 healthcare in the world? ›

Health ranking of countries worldwide in 2021, by health index score. In 2021, Japan ranked first with a health index score of 86.6, followed by Singapore and South Korea.

What are 3 reasons health care costs are rising? ›

5 reasons why healthcare costs are rising
  • Aging population. The Baby Boomers, one of America's largest adult generations, is approaching retirement age. ...
  • Chronic disease prevalence. ...
  • Rising drug prices. ...
  • Healthcare service costs. ...
  • Administrative costs.

What is one reason that healthcare costs are rising quizlet? ›

Pharmaceutical companies are an important factor in rising health care costs because they largely control which drugs come to market, how they are advertised, and at what prices. Pharmaceutical companies market new disease (symptoms --> diseases) as well as new drugs.

What are three ways to reduce health care costs? ›

Eight ways to cut your health care costs
  1. Save Money on Medicines. ...
  2. Use Your Benefits. ...
  3. Plan Ahead for Urgent and Emergency Care. ...
  4. Ask About Outpatient Facilities. ...
  5. Choose In-Network Health Care Providers. ...
  6. Take Care of Your Health. ...
  7. Choose a Health Plan That is Right for You.
13 Aug 2020

Who is to blame for rising healthcare costs? ›

The cost of healthcare is continually rising. In fact, U.S. healthcare spending is estimated to hit $6.2 trillion by 2028. Consumers are frightened and quick to place blame. Much of this blame is landing on physicians and insurance companies.

What has been the trend in health care costs over the past two decades? ›

However, healthcare spending had been increasing long before COVID-19 began. Relative to the size of the economy, healthcare costs have increased over the past few decades, from 5 percent of GDP in 1960 to 18 percent in 2019 (before COVID-19) and 20 percent in 2020.

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