The Effect of Telehealth Insurance Coverage on Healthcare Utilization and Outcomes

Many individuals do not have access to healthcare due to geographical location, namely rural residence, or mobility issues. Telehealth, the use of medical information exchanged from one site to another via electronic communications, has the potential to reach these individuals, reduce disparities in access to care and improve health.  The concern is that care delivered through electronic means may be of lower quality. Information about the outcomes of such comparisons is readily available in reviews of medical literature (Currell et al., 2000; Miller, 2001; Hersh et al., 2002; Hersh et al., 2006; Reynolds et al., 2009), which indicate that telemedicine offers services of very close albeit somewhat lower quality than face-to-face consultations.

Since 1996 twenty states and the District of Columbia have enacted laws mandating private health insurance companies to cover telehealth-provided services. These laws could increase utilization and, thus, healthcare costs because people that otherwise could not access healthcare have the opportunity to do so with the help of electronic devices. On the other hand, early access to professional advice could prevent the aggravation of some conditions and, thus, reduce the utilization of more expensive forms of healthcare such as surgeries or hospital admissions and, thus, reduce health care costs.

This paper uses panel data techniques and several datasets (Area Resource File, Vital Statistics, and Behavioral Risk Factor Surveillance System) to investigate the impact of state mandates to cover telehealth services on several measures of healthcare utilization, such as hospital admissions, outpatient visits and surgical interventions, and on health care outcomes. The results provide information regarding the potential of telehealth to reduce healthcare costs. They also provide information regarding the potential of telehealth to reduce disparities in access to health care and in health outcomes.