Pension & Benefits News COVID-19 will likely decrease nationwide health expenditures in 2020
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Tuesday, May 5, 2020

COVID-19 will likely decrease nationwide health expenditures in 2020

By Pension and Benefits Editorial Staff

The COVID-19 pandemic could reduce U.S. nationwide health care expenditures by $75 billion up to $575 billion in 2020, according to a recent estimate from Milliman, Inc. The report, Estimating the financial impact of COVID-19 on health care costs, found that the cost of deferred and foregone care dwarfs the added cost of COVID-19 testing and treatment.

“While the testing and treatment of COVID-19 patients is increasing health care costs across the country, these expenses are dwarfed by the cost reductions resulting from the deferral of nearly all elective care and other care than can be delayed,” said Doug Norris, principal and consulting actuary at Milliman.

The report modeled 18 different scenarios, and found:

  • If COVID-19 results in deferred care through the end of June, the net reduction of 2020 health care costs through June would be $140 billion and $375 billion nationally. The net reduction at year-end would depend on the demand as care resumed in the second half of the year.
  • If COVID-19 results in deferred care through the end of the year, either because of a second wave of COVID-19 infections or an elongated curve of first wave of infections, the net reduction of 2020 costs will be between $75 billion and $575 billion nationwide.

“Ultimately, the magnitude of cost reductions will depend on how long care is deferred,” said Matt Kramer, consulting actuary at Milliman. “If there is a second wave of infections, or if the first wave is elongated and lasts into the fall, some amount will be offset, but regardless of the scenario, we expect COVID-19 will actually reduce health care expenditures in 2020.”

SOURCE: www.milliman.com

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