One area that did see an increase in spending was on prescription drugs, consistent with trends in prior years. This may also have been affected by COVID-related policies, which let people get a 90-day supply of drugs at once rather than the typical 30-day supply, and let patients renew prescriptions via telehealth.
The report also documented a significant shift in who paid for care. Between 2019 and 2020, the portion of health care spending paid by individuals with commercial insurance plans – through deductibles, co-pays, and the like – dropped by an unprecedented 17.2 percent. This is a break from past years, during which the amount individuals had been paying out of pocket for medical care had been steadily increasing. According to the report, the decline was driven by people using less health care and by mandates that required insurers to cover services like COVID tests and COVID treatment without copays.
There was also some migration of people off commercial plans and onto public plans like MassHealth, probably as people lost jobs and income. The number of people with private insurance coverage dropped by 2.6 percent between March 2019 and December 2020, to around 6.5 million, while the number of people with public insurance grew by 8 percent during that time, to 2.5 million.
Obviously, these shifts have financial implications not only for individuals but also for hospitals and insurers. The CHIA report found that hospitals finished the year earning a median profit of 2.6 percent, but only because of federal relief funding. Without that extra money, hospitals would have lost money in 2020.
Insurers benefited from the lower use of medical care. The portion of premiums that was surplus or used for administrative expenses increased by 35.4 percent to $85 per member per month. Under federal and state law, some of the extra money must be returned to members over a three-year period. Health care premiums grew by 2.6 percent in 2020, but those premiums were set before COVID hit.
Amy Rosenthal, executive director of Health Care for All, a health care consumer advocacy group, said despite the unusual nature of 2020, there are several points in the report “that remain troubling for consumers.” These include the rise in prescription drug spending; the amount of money retained by insurers; and a continuing trend in enrollment in high-deductible health plans.
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