Data show ‘massive’ decrease in medical spending as COVID-19 pandemic evolved

Weekly aggregate medical spending by most commercial insurance customers and Medicare Advantage recipients in the United States dropped by nearly half as the COVID-19 pandemic progressed, data show.

“Understanding how early spending changes varied by disease incidence and implementation of policies to limit transmission can inform expectations about health care spending as the pandemic evolves,” J. Michael McWilliams, MD, PhD, a professor of health care policy at Harvard Medical School and general internist at Brigham and Women’s Hospital, and colleagues wrote in JAMA Internal Medicine.

McWilliams and colleagues analyzed multi-payer deidentified claims from FAIR Health that spanned the first 14 weeks of 2020, with emphasis on spending from week 9 (ending March 3) to week 14 (ending April 7). The claims were from approximately 75% of commercial insurance carriers and 50% of Medicare Advantage recipients.

Some of the “massive” decreases the researchers identified included:

• a $2.7 billion, or 46%, drop in weekly aggregate medical spending;
• decreased spending across all services categories except telehealth, with decreases ranging from 26.9% for inpatient care to 86.2% for ambulatory surgical center care;
• 48.8% decreased spending in New York and 49.9% decreased spending in other high COVID-19 activity states; and
• 44.2% decreased spending in states that implemented social distancing policies early in the pandemic and 39.7% decreased spending in those that implemented these policies later.

The researchers also reported that identifiable inpatient spending for COVID-19 increased more in high-activity states (up to 25.2%) than low-activity states (up to 3.5%) by week 14, but declines in total inpatient spending were similar in high-activity states (–25.1%) and low-activity (–26.9%) states. Conversely, spending on elective procedures dropped more in high-activity states (–85.5%) than low-activity states (–76.1%) states. Within each state category, spending reductions were largely similar among elderly vs. nonelderly patients, according to the researchers.

McWilliams and colleagues said their findings suggest that health care spending will rise and fall in alignment with the pandemic’s severity, adding “resurgent or persistent concerns may limit spending via demand-side or supply-side mechanisms, including patient fear of exposure and effects of infection control measures on facility capacity and nonessential care.”