Ledbetter Parisi LLC
Healthcare Consumption Drops During COVID-19 Pandemic
As Americans, both voluntarily and due to state orders, delay elective surgeries and avoid doctor’s offices, healthcare spending has hugely declined nationwide. The largest U.S. for-profit hospital operator, HCA Healthcare, has reported a 70% drop in outpatient surgeries and a 30% drop in inpatient admissions in April compared to a year ago.
While COVID-19 testing and treatment is a new expenditure for health plans and insurers, the amount spent is relatively low and is more than offset by the cost savings due to lower overall usage. UnitedHealth Group, the largest U.S. health insurer, reported first-quarter earnings well above expectation, in contrast to other businesses struggling due to economic shutdown and layoffs.
The continued stability of health plans and insures, however, is uncertain. The economic downturn may negatively affect investment income for health plans and contributions from employers. Additionally, any surge in serious COVID-19 cases that require expensive hospitalization may chip away at any savings.