COVID-19 Is Changing How (and Whether) We Take Care of Ourselves — and Our Healthcare Dollars Tell the Story
The pandemic hasn’t only radically changed the way we spend as consumers, it has changed the way we spend as patients. A new report from Lively, Inc., shows that U.S. employees used their health savings account much differently in 2020 than they did the previous year. Doctors visits were down 3%; hospital visits dipped by 9%, as did spending on dentistry; and lab work fell 15%. The reason for the decline in these areas points to the pandemic and its accompanying lockdowns.
“We saw a change in consumer behavior due to COVID-19 and shelter-in-place orders that lead to a considerable decrease in nonessential procedures and visits,” said Shobin Uralil, chief operating officer and co-founder of Lively. “We expect this trend to continue into the first half of 2021.”
Though there were dips from the previous year, 2020 also saw significant HSA spending increases: Prescription drugs were up 32% and chiropractic care was up 20%. These changes, too, can be partly tied to the pandemic, albeit less obviously.
The 20% spike seen in chiropractic care can be attributed to shelter-in-place orders and increased sedentary lifestyles, Uralil said, adding: “We believe that poor work-from-home conditions and lack of movement likely caused pain and fatigue, leading many people to seek chiropractic services.”
The 32% increase seen in prescription spending in 2020 is primarily the result of reactive stockpiling due to COVID-19, noted Uralil, adding that price markups also factored in. “Initially, Americans were filling or refilling prescriptions per recommendation by the Centers for Disease Control and Prevention,” Uralil said. “The fear of medication shortages shortly followed, resulting in pharmaceutical stockpiling.”
The surge in prescription spending is “a big red flag,” according to Christine Simone, co-founder of Caribou, a healthcare planning platform for the financial advisory market.
“It shows the dependency on employers to cover the unpredictable rise in drug costs,” Simone said. “We also see big superstores (Walmart, etc.) gain traction, which, in my opinion, is more a result of convenience during widespread shutdowns rather than increased market share. I don’t see these superstores outpricing the up-and-coming tech platforms that will revolutionize drug access through lowered costs online.”
One thing that didn’t change from 2019 to 2020 was the rising cost of healthcare services.
“Between 2019 and 2020, the average annual premiums for single and family coverage increased by 4%,” said Uralil. “Specifically, in 2020, we found the average premium for single coverage was $7,470 per year, and the average premium for family coverage was $21,342 per year.”
This trend of rising healthcare costs is also expected to continue throughout 2021 — and well beyond it.
“Healthcare spending is projected to grow 5.4% annually,” said Simone. “But previous years have shown us that the rise is unpredictable. Consumers will need to start saving more throughout their working years to ensure they are set up for success throughout retirement when it comes to healthcare costs. Right now, costs above the age of 65 are averaging $295,000.”
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