Healthcare costs saw historic drop in 2020

Healthcare costs decreased for the first time likely due to deferred care.

The cost of healthcare for an American family of four covered by an average employer-sponsored insurance plan dropped for the first time in 2020.

According to the 2021 Milliman Medical Index (MMI) report, this hypothetical family of four would have paid $26,078 for healthcare in 2020, down 4.2 percent from $27,233 the year before. This is the first time in the history of the MMI that healthcare costs have decreased and it is likely due to eliminated and deferred care offsetting the cost of COVID-19 testing and treatments.

The report also notes that lifestyle changes driven by the pandemic could have contributed to less demand for acute care while digital health and telehealth utilization rose enabling patients to access care in new ways. It is still unseen if these factors will persist or if behaviors will return to pre-COVID-19 norms.

For 2021, the report showed that the healthcare costs fort the same hypothetical American family of four in 2021 will be $28,256. This is an about 8.4 percent increase and is driven by a forecasted rebound in healthcare utilization. The expected increase is higher than historical healthcare cost increases and gross domestic product growth over the last five years.

The report notes that care management will likely be key to controlling healthcare costs in 2021 and beyond, possibly by leveraging new care access habits ingrained by the pandemic.

While the 2020 MMI report was filled with uncertainty, the 2021 report is even more precarious. As experts look to COVID-19 vaccine penetration rates, public health policy, and individual responses to new developments, this uncertainty may grow, according to the report.