Health care spending hit record lows in April

BY BENEFITS PRO

In the initial stages of the COVID-19 pandemic, as businesses closed and states put stay-at-home orders in place for all but essential outings, the health care industry took a hit. More specifically, during the month of April, Americans spent 24.3% less on health care compared to April 2019–the least the country has seen since July 2013.

According to the latest report from Altarum, health care spending declined in all major categories except for prescription drugs and nursing home care during the month of April. Meanwhile, dental services spending plunged a whopping 60.8%.

“While March 2020 exhibited the only previous occurrence in our historical time series (which goes back to 1989) of a monthly decline from the previous year, the April reading dwarfs the March value,” analysts wrote.

After dental services, hospital and physician spending saw the biggest declines, at 40.7% and 40.9%, respectively, compared to the same period last year. Prescription drug spending made up 13% of all health care spending in April, an increase year over year but down slightly since March, when many insurers loosened restrictions and allowed consumers to stock up on their prescriptions.

The decline in spending also reverses a steady trend of health care making up an increasing percentage of GDP. After holding steady around 18% over the past four years, health care spending as a percentage of GDP dropped to 17.1% in March and 15.7% in April.

The report is the most recent from Altarum, with the May spending figures expected to come out in July. According to analysts, “with the start of reopening of the U.S. economy in May, we anticipate a modest reversal of these declines in spending.”


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