Health Insurance Consumer Spending 2014–2018
By: Justin Anderson
As you all may be aware, we are currently in the midst of a pandemic due to COVID-19. Many businesses have been crumbling since the first round of quarantine began in the United States back in March of 2020.
Depending on which aspect on the insurance industry you look at, some companies have been reporting less earnings throughout the pandemic. For this segment, I am going to examine the health insurance industry specifically. I will explain why shortly.
There is one big question that insurance companies have been asking themselves throughout the entire pandemic, a million dollar question, if you will. This question, “What will claims look like after the pandemic?” is a question becoming more and more present with advances in the health industry, such as multiple COVID-19 vaccines being released between February and May 2021.
Whichever insurance agencies can price their premiums correctly after the pandemic, they will be able to see massive gains. The reason why I make this claim is because many people have been shying away from going to healthcare services out of fear of being infected with the virus. This may have helped many insurance companies because people have not been filing claims, but these customers’ premiums will most likely see a boost if they decide to get the treatments they need/want after the pandemic.
For now, I will examine the trends within the healthcare industry from 2014–2018.
To begin, it would be best to examine how much consumers were spending each year (see below).
From the chart above, we can see that spending per customer on health insurance has been consistently increasing every year, almost linearly.
The next step is going to be to analyze the number of claims and the values of these claims in the quarters that have encompassed the pandemic.
From the chart above, we can see that the most money spent by consumers was in the “outpatient” category.
Looking at how spending varied within the subcategories of the main categories outlined above, it is clear that, other than the bottom part of the chart, which is a repeat of the category chart, and the “NA” category, money is most spent in the surgical and surgery categories, which makes sense.
How will things look throughout the pandemic and how does this data apply to it?
Well, insurance companies have been doing extensive research already trying to predict what will happen when the pandemic is over, or how to price premiums after the pandemic. From the insurer perspective, it could be useful so see how the claims trend has been since the pandemic and the years leading to the pandemic. From the client’s perspective, the data can be used as an expectation as to what to pay once the pandemic ends.
The trends within this data, in my opinion, are going to have to be used to evaluate how consumers will be spending their money after the pandemic, because as I said earlier, there are many people avoiding healthcare out of fear of getting COVID-19. Once the pandemic is over, I think the spending trends will be slightly over what they would have been predicted at, because of the many people getting treatments done without any fear. Once all of those procedures are out of the way, consumer spending will fall slightly back to its normal state, and grow at the rate it was before the pandemic.
