Does Telehealth Really Drive Up Costs?

Last week, at the January 2025 Telehealth T-Time, Chris Adamec, Executive Director of the Alliance for Connected Care, shared a list of common perceptions that policymakers are currently holding about telehealth. One of the most striking of these was the following:

“This model is great, but helping more people means more costs.”

This statement reflects a persistent myth that telehealth will drive up taxpayer costs by making healthcare too accessible, increasing unnecessary utilization. This perspective misrepresents both the realities of telehealth usage and how it fits into broader healthcare systems.

What’s more, this isn’t a new concern. Fears about runaway spending date back to 2001, when Medicare first introduced limited telehealth reimbursement pathways. Those pathways came with heavy restrictions, born out of the same worries about excessive utilization. Let’s unpack the history and evidence to debunk the idea that telehealth is a fiscal liability.

Why Helping More People Isn’t a Problem

The argument that "helping more people is bad because it costs money" misses the entire point of healthcare. A healthcare system’s goal isn’t to minimize spending by reducing access—it’s to maximize health outcomes.

If we applied this logic across the board, we’d cut back on surgeries, preventive screenings, and hiring new doctors, all because more care might cost more money upfront. But we don’t, because we recognize that the value of healthcare lies in improving quality of life and reducing long-term costs. Telehealth plays the same role—it addresses needs early, saving money by preventing avoidable complications.

In 2001, when Medicare introduced its first telehealth reimbursement pathways, this principle seemed lost on policymakers. A small $5 million allocation (to my recollection) was set aside for telehealth reimbursements. But worried that this budget would be depleted too quickly, policymakers created barriers to accessing telehealth:

Origination Site Restrictions: Patients couldn’t receive telehealth services from home; they had to be in a clinical site or skilled nursing facility.

Geographic Limitations: Only patients living in rural areas were eligible, with “rural” defined not by Medicare but by an agency concerned with population statistics and economic development. This limitation excluded many rural counties classified as part of a metropolitan statistical area due to their proximity to a city, somewhere along the county line.

Even with these barriers in place, it took reportedly seven years to spend the allocated funds. Millions of patients went without access to telehealth for? almost two decades, and the promise of more efficient care was stifled. It took a global pandemic for the US Congress to remove these outdated rules temporarily. Yet even today, these limitations linger, threatening to become law again every two years—or, now, even after just a three-month extension.

This history shows that fears about overspending have repeatedly outweighed patient needs, to the detriment of the healthcare system.

The Cost-Saving Potential of Telehealth

Policymakers concerned about taxpayer dollars should learn to understand telehealth as a cost-saving mechanism, not a cost-increasing "handout".

Patient care costs a lot of money when the care needed is critical (requiring a hospitalization and/or surgery) or urgent (requiring a visit to the emergency room or an urgent care center). Telehealth can avoid or divert more costly levels of care, because it's more convenient and easy for patients to act on their concerns sooner.

Here are some examples of how telehealth saves costs:

Preventing Emergencies: Early interventions via telehealth reduce the need for costly emergency room visits and hospitalizations. For example, a patient with worsening asthma symptoms can connect with a provider virtually and receive medication adjustments before they end up in the ER.

Reducing Indirect Costs: Telehealth eliminates travel expenses, minimizes time off work for appointments, and reduces childcare needs for families. These indirect savings contribute to a more productive economy while lessening the financial burden on individuals.?

Keeping Rural Hospitals Open: Telehealth also enables rural hospitals to take on sicker patients with help from remote virtual specialists or to stabilize the patient for transport. A local hospital that stays open is good for the community and good for the overall cost of care.

Streamlining Care Delivery: Virtual care allows providers to monitor patients more efficiently, identify trends early, and focus in-person resources on the most complex cases. This can lead to fewer redundant tests and follow-up visits.

For instance, remote patient monitoring programs for heart failure patients have demonstrated cost savings of up to $8,000 per patient per year by preventing hospital readmissions.

Addressing Misconceptions About Overuse

Nobody who is healthy (physically and mentally) would voluntarily schedule a telehealth visit, just because it's possible. And, especially the men among us, have been reprimanded by the many women in our lives to "see a doctor" sooner than later.

Yes, the underlying persistent myth behind the above quote is that telehealth? somehow encourages frivolous use, whether by “tele-hypochondriacs” or other groups imagined to be exploiting the system. Let’s address a few common stereotypes skeptics may be thinking of:

The “Convenience Seeker”: This is the patient perceived as using telehealth simply because it’s easier, not because they truly need care. However, convenience itself isn’t a bad thing—it breaks down barriers like transportation or time off work, particularly for working parents, hourly employees, or those without access to reliable transportation. The vast majority of these patients use telehealth for legitimate medical needs, not trivial concerns.

The “Frequent Flyer”: Another stereotype is the person who overuses healthcare services, booking multiple appointments for minor issues. But research shows telehealth is most often used for managing chronic conditions, mental health care, or acute illnesses—areas where regular contact with a provider improves outcomes and prevents more costly interventions.?

The “Tele-Hypochondriac”: One persistent myth is that telehealth enables frivolous use by individuals who overuse services for minor or imagined concerns. But hypochondria isn’t exclusive to telehealth. Patients with heightened health anxiety will seek care regardless of modality, and in-person visits are typically more expensive than virtual ones.

The data consistently debunks these stereotypes. Far from being frivolous, telehealth users are patients who genuinely need access to care. Denying or restricting telehealth services doesn’t stop them from seeking care—it simply may inadvertently prevent them from seeking care early on, which then pushes them into costlier in-person settings.

The Bigger Picture

Telehealth doesn’t exist in isolation—it’s part of a larger strategy to create a healthier population. By reducing barriers to access, telehealth helps close care gaps, particularly in rural and underserved communities. It’s a tool that aligns with the broader goal of population health management: keeping people healthier for longer.

Every avoided hospitalization, every case of chronic disease caught early, and every mental health crisis addressed through telehealth contributes to a more cost-effective healthcare system. Telehealth isn’t a cost driver—it’s a cost reducer when viewed through the lens of long-term health outcomes.

The idea that telehealth increases taxpayer costs is an outdated fear, not a reality. In truth, telehealth enables earlier interventions, prevents costly complications, and creates efficiencies that reduce overall spending. It’s not just a convenience for patients—it’s a cornerstone of a more efficient and equitable healthcare system.

The history of telehealth shows us what happens when fears about overspending outweigh evidence and patient needs: millions lose access to care, and the system stagnates. As policymakers weigh the future of telehealth, they must recognize it not as a fiscal liability but as an investment in better outcomes and smarter healthcare spending.

What is your favorite rebuttal to the argument that telehealth will increase taxpayer cost?

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Christian Milaster and his team launch, expand, and grow Telehealth Programs for rural health centers, behavioral health agencies, health systems, schools, and libraries. Christian is the Founder and CEO of Ingenium Digital Health Advisors where his team and consortium of experts partner with healthcare leaders to enable the delivery of extraordinary care by accelerating the adoption of digital health innovation.

To explore how we can help your organization solve your challenges, contact Christian by phone or text at 657-464-3648, via email, or video chat.