Rising US health spending will hit government budgets

Significance

Healthcare spending fell following the onset of COVID-19 as savings from patients foregoing non-COVID care offset the additional costs of fighting the pandemic. While the financial implications of COVID becoming endemic are unclear, they will be less significant in driving healthcare expenditure than demographics and the pace at which medical costs rise.

Impacts

• The long-term economic costs of missed education, disability and premature death will outweigh COVID's long-term medical costs.
• Driven by cost concerns and technological advances, at-home treatment and monitoring will replace some hospital care.
• Mega-mergers of hospital systems and the assembly of specialist medical value chains will shape the next wave of consolidation.
• The financial reserves which got states through the first two years of the pandemic are, in most cases, largely exhausted.