What the Pandemic Revealed About U.S. Healthcare

What the Pandemic Revealed About U.S. Healthcare

I’ll cut to the chase. The pandemic revealed more systemic problems in our U.S. Healthcare system, shining a spotlight on deficiencies and inequities that were here before the pandemic, continued throughout it, and will likely stay a while after it’s over. COVID-19 has altered the patterns and distributions of healthcare services and expenditures in 2020, and it continues into 2021.

First, it revealed substantial weaknesses in crisis preparedness, and inadequacy in the way of medical supplies, facilities, and professional resources. Adding insult to injury there was also insufficient coordination and a lack of communication. And, as healthcare policy makers continue to address the rising cost of healthcare, the pandemic is requiring them to face long-standing and deep-rooted inadequacies, on top of increasing healthcare spending due to internal and external causes.

However, it wasn’t all bad. The pandemic and the development of vaccines have confirmed the importance of investment in basic scientific research. And, in some ways, it advanced innovation, particularly in the provision and distribution of services through telehealth expansion, retail clinics, and urgent care utilization. Our nation worked together to create outreach to rural and underserved communities with mobile health units. The world’s largest retailer even purchased a telehealth provider and continues to expand that service nationwide, creating more access for patients who have a need for telehealth options.

It was widely recognized that there was a need for federal financial aid and technical assistance, especially related to free vaccines, with various pricing directives for testing, and aid for supplies and equipment that helped improve access and affordability around COVID-19.

Continued Federal Support Not Likely

It seems mainstream acceptance of these federally led interventions seems unlikely to carry forward beyond the pandemic. In an ideal scenario, everyone’s healthcare dollars could go further through the expansion of fair pricing regulations and equitable access policies, yet it’s likely we’ll continue to see healthcare costs increase across the healthcare sector and the general U.S. economy in 2021.

The increase isn’t new… the national healthcare expense has increased annually for almost 60 years.(1) CMS projects that U.S. healthcare spending will grow at a rate 1.1% faster than that of the annual GDP. In fact, it’s expected to increase from 17.7% of the GDP in 2019 to 19.7% by 2028. Here’s a few reasons why:

  • The prices for medical goods and services are projected to an average of 2.4% annually by 2028
  • Health-sector wages are anticipated to increase faster than the GDP will
  • Due to an aging baby boom generation with increasing Medicare enrollment, Medicare spending is expected to grow 7.6% annually over the decade.
  • Spending for all categories of healthcare expenditures is expected to grow faster between 2019 and 2028 than in earlier years.

With this overall growth, some trends with cost-reduction potential were underway before the COVID-19 pandemic. For one, Americans were starting to seek care in non-traditional settings such as emergency rooms and hospitals. So, as health systems diversified their service locations beyond hospital facilities—and insurers directed plan members to lower-cost service—the number and utilization of ambulatory surgery centers, urgent care facilities, and retail clinics grew.(2)

The use of telehealth services also started to boom before the pandemic, but obviously became many times greater after social distancing became an imperative. (3) The downside for patient consumers like us is that the professional fee schedules for telehealth still likely won’t vary from in-office fees.

2022 Spending Projections Around COVID-19

The costs of testing for COVID-19, treating patients and administering vaccinations for the disease likely will continue into 2022. Increases in utilization and healthcare spending will also likely stick around thanks to the return of some care deferred during the pandemic, the ongoing costs of COVID-19, increased mental health and substance use issues, and worsening population health.

All in all, the pandemic has shifted how and where Americans gain access to care, a shift large enough to influence multiple aspects of price and utilization, and therefore, medical cost trends. The aftermath of the pandemic and the health system’s response to changes and failures observed during the pandemic are expected to drive up spending in 2022. At the same time though, some positive changes in consumer behavior and provider operating models that occurred during the pandemic are expected to drive down spending in 2022.

According to a recent HRI report, more people are shopping around for care, and millions of consumers became familiar with receiving care in lower-cost, more convenient ways during the COVID-19 pandemic. These shifts in consumer behavior could potentially reduce healthcare spending in 2022. (4)

We at AMPS know that educating patients on the costs of healthcare and providing them information so they can become informed medical consumers leads to more efficient and lower cost healthcare utilization. The most effective cost containment programs are those which are evidence-based and custom designed according to claims data analysis.

AMPS has a mission to help each member’s healthcare dollars go further by ensuring a fair exchange of goods and services for each healthcare dollar spent. By working together, we believe we can all improve our healthcare system one treatment at a time.

  1. CMS.gov. “NHE Projections 2019-2028 - Forecast Summary (PDF).“  Accessed May 13, 2021.
  2. FAIR Health. “FH® Healthcare Indictors and FH® Medical Price Index 2021.” Accessed May 13, 2021.
  3. Investopedia. “Telehealth” - https://www.investopedia.com/telehealth-5115239
  4. PWC. Medical Cost Trend: Behind the Numbers in 2022: https://www.pwc.com/us/en/industries/health-industries/library/behind-the-numbers.html
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