Introduction The aim of our study was to assess the initial impact of COVID-19 on total publicly-funded direct healthcare costs and health services use in two Canadian provinces, Ontario and British Columbia (BC). Methods This retrospective repeated cross-sectional study used population-based administrative datasets, linked within each province, from January 1, 2018 to December 27, 2020. Interrupted time series analysis was used to estimate changes in the level and trends of weekly resource use and costs, with March 16–22, 2020 as the first pandemic week. Also, in each week of 2020, we identified cases with their first positive SARS-CoV-2 test and estimated their healthcare costs until death or December 27, 2020. Results The resources with the largest level declines (95% confidence interval) in use in the first pandemic week compared to the previous week were physician services [Ontario: -43% (-49%,-37%); BC: -24% (-30%,-19%) (both p<0.001)] and emergency department visits [Ontario: -41% (-47%,-35%); BC: -29% (-35%,-23%) (both p<0.001)]. Hospital admissions declined by 27% (-32%,-23%) in Ontario and 21% (-26%,-16%) in BC (both p<0.001). Resource use subsequently rose but did not return to pre-pandemic levels. Only home care and dialysis clinic visits did not significantly decrease compared to pre-pandemic. Costs for COVID-19 cases represented 1.3% and 0.7% of total direct healthcare costs in 2020 in Ontario and BC, respectively. Conclusions Reduced utilization of healthcare services in the overall population outweighed utilization by COVID-19 patients in 2020. Meeting the needs of all patients across all services is essential to maintain resilient healthcare systems.