Female doctor examining patient
Differences in rates of disease and uneven access to quality healthcare among certain populations have garnered increasing attention, from the White House to the corporate world.
But health disparities aren’t just a matter of justice and fairness. They’re also expensive.
According to a report released this week from Deloitte, inequities currently cost the U.S. healthcare system approximately $320 billion. If left unchecked, the cost of health disparities could reach $1 trillion or more by 2040.
“Health inequity is not trending towards a crisis, we are in crisis mode now,” said Andy Davis, principal in the Health Care Practice at Deloitte Consulting LLP and one of the report’s authors. “By being able to quantify the impact that these inequities [have] on healthcare costs, understand the magnitude of it, and the implications of those costs for everyone in society, we can spotlight how prevalent this crisis is today, and how important it is to solve.”
Deloitte’s analysis is based on the quantification of unnecessary healthcare spending that stems from structural inequities and biases, specifically related to race, gender, and socioeconomic status, factors that tend to be interconnected and well documented.
A body of evidence suggests that women and people of color face biases that can lead to delayed care, missed diagnoses, medical errors, and limited access to the best treatments. Repeated visits in search of a diagnosis, later diagnoses when treatments may be more extensive, and lost productivity when people are sick and can’t work cost more. The resulting costs could be prevented by eliminating or reducing bias.
To quantify preventable costs resulting from inequities, Deloitte first identified overall health spending on several high-cost diseases—including breast cancer, diabetes, colorectal cancer, asthma, and heart disease—and then calculated the percentage of spending attributable to health inequities.
The results show that documented disparities in diagnosis, treatment, and outcomes carry hefty price tags.
For example, according to the U.S. Department of Health and Human Services Office of Minority Health, Black adults are 60% more likely than white adults to be diagnosed with diabetes and two to three times more likely to have complications. The greater the burden of disease and the worse the outcomes, the more that disease will cost overall.
Some amount of those added costs are due to bias and inequity. Deloitte estimates that portion to be 4.8% of U.S. annual spending on diabetes—or nearly $16 billion annually.
On another dimension of inequity, people living below the federal poverty level are more than 50% more likely to have asthma than people earning higher incomes, Deloitte analysis shows. According to Deloitte, those disparity-driven costs equate to 4.3% of total spending on asthma, equivalent to $2.4 billion per year.
“Understanding the causes and consequences of differences in healthcare use and health outcomes by socioeconomic status, race, and gender is important to ensuring that with advances in healthcare technology and medical knowledge, no groups are left behind,” said Anupam B. Jena, MD, PhD, Ruth L. Newhouse professor of health care policy in the department of health care policy at Harvard Medical School and a contributor to Deloitte’s effort.
Current healthcare spending is reportedly rising at a compound annual growth rate of 5.3% while spending due to health inequities is rising at 6.2%.
Deloitte projects the impact of health inequities to cost Americans at least $3,000 per year by 2040—a threefold increase over the current level—whether they’re directly impacted by systemic inequalities or not.
“Not everyone is directly impacted by systemic inequities in the care that they receive, but everyone is impacted financially…it makes it personal,” Davis said. “We know this is the tip of the iceberg for the economic burden of those subject to inequities today. All of this is a barrier to a vision of the future where every person has the opportunity to thrive and be healthy.”
Davis said the authors hope the report will inspire healthcare leaders across the industry to take action, recognizing not only the moral imperative but also the business case for reducing health inequities.
“We deeply believe that to play a meaningful role in serving patients today, taking action to eliminate health inequities is both the right thing and most financially responsible thing to do,” he said.
This analysis also puts a spotlight on the need for collective action, because according to Davis, no one entity can do enough to improve equity on their own.
“Oftentimes, we have seen actions that can go only as far as your organization can reach, but that impact is minimized in scale,” Davis said. “Working together is the only way to solve this issue.”
The report urges healthcare organizations across sectors to work to improve equity through intentional design of products and services, cross-sector partnerships, and measurement to identify progress.
For Davis, this effort is personal.
“With two young daughters, I feel a sense of urgency to bring organizations together to drive change and be intentional about the actions we take now,” he said. “This isn’t someone else’s problem to solve, but it’s all of ours, and one that none of us can ignore.”