Impact of Telemedicine on Health Expenditures During the COVID-19 Pandemic in Japan: Quasi-Experimental Study.

Background: The effects of telemedicine on health expenditures and health outcomes are an important policy question. Many countries loosened regulations on the use of telemedicine during the COVID-19 pandemic, thereby offering an opportunity to evaluate these effects via a natural experiment. Objective: This study aimed to assess the effect of greater telemedicine use on area-level health expenditures and health outcomes related to common chronic conditions in Japan during the COVID-19 pandemic. Methods: We compared prefectures (area levels of government) with higher prepandemic telemedicine rates (fiscal year [FY] 2019) versus those with lower rates and conducted a difference-in-differences analysis of the change in prefecture-level health expenditures from FY2017 to FY2022 and health outcomes from FY2017 to FY2021. The participants were the total population in Japan from FY2017 to FY2022 (n=126 million), and the exposure was the increase in telemedicine use following the government's relaxation of restrictions on telemedicine use as an exceptional measure during the COVID-19 pandemic. Our main outcomes were the share of outpatient claims that were for telehealth services; total, inpatient, and outpatient annual prefecture-level health expenditures; all-cause mortality, glycated hemoglobin, systolic blood pressure, and low-density lipoprotein cholesterol. Results: Treatment prefectures (n=15, population of 62 million) were defined as those with greater-than-median telemedicine use before the pandemic, while control prefectures (n=32, population of 64 million) were defined as those with less-than-median telemedicine use. Treatment and control prefectures shared similar demographic characteristics before the pandemic. The growth in telemedicine after 2020 as a share of outpatient claims increased among the treatment prefectures by 0.35 percentage points more than among control prefectures, which represented more than a threefold increase in telemedicine use compared to the prepandemic median. In difference-in-differences analyses, this difference was associated with a 1.0% relative decrease (95% CI 0.3%-1.8%) in total health expenditure (P=.006) and a 1.1% relative decrease (95% CI 0.2%-2.0%) in inpatient expenditure (P=.02). Outpatient expenditures showed no significant difference as a result of increased telemedicine adoption. Most health outcomes-all-cause mortality, glycated hemoglobin, systolic blood pressure, diastolic blood pressure, and low-density lipoprotein cholesterol-did not show any significant changes. Conclusions: Areas in Japan with greater expansion of telemedicine use during the pandemic experienced a significant decrease in both inpatient and total health care spending compared with areas with less telemedicine use, without harming health outcomes.