Healthcare Spending in 2020 May Dip to ‘Historic’ Low: Study

Healthcare Spending in 2020 May Dip to ‘Historic’ Low: Study

Healthcare spending in 2020 is on course to not only be lower than in 2019, but lower than ever recorded, according to an analysis of available data by Kaiser Family Foundation (KFF) experts.

Although the decrease in spending is expected to be modest, this would be the first outright drop in spending on patient care since records started being kept in the 1960s, KFF President Drew Altman noted in a column accompanying the new report.

The decreased spending may have come at the expense of health, Altman added. “We do not know what share of the spending and utilization skipped or delayed because of COVID-19 was necessary or unnecessary. There was a decline in cancer screenings and visits to manage chronic care, but we also do not know if health outcomes suffered.”

Through October, spending for health services decreased by about 2% on an annualized basis compared with the same period in 2019, KFF researchers Cynthia Cox, MPH, and Krutika Amin, PhD, found. Including drug costs, which actually rose during the pandemic, total health costs were down a mere 0.5% from the prior-year period, they said.

Nevertheless, they pointed out, “Any decrease in health spending would be historic, as health costs tend to rise faster than inflation and have even grown during past periods of economic downturn.”

One source of KFF’s data is the Quarterly Services Survey (QSS) of the US Census Bureau. According to that survey, health services costs grew 0.3% in Q1 2020 compared with the first quarter of 2019. In the second quarter of 2020 — when the coronavirus took hold in the US — health spending plunged 8.6% compared with Q2 2019. And in the third quarter of 2020, spending rose 1.3% from the prior-year period.

Overall, health services revenue fell 2.4% through September 30 compared with the same period in 2019. In contrast, health services revenue increased by 5% in 2019 over 2018. Again, this data does not include pharmaceutical sales.

Another Gauge of Spending

The researchers also looked at the personal consumption expenditure (PCE) data from the Bureau of Economic Analysis, a unit of the US Department of Commerce.

This data, which is published monthly on an annualized basis, shows that spending on health services was down sharply in spring 2020. At its nadir in April,

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