Inequities in the US health system cost approximately $320 billion today and could eclipse $1 trillion in annual spending by 2040 if left unaddressed.
Inequities across the US health system limit underserved people’s access to affordable, high-quality care, create avoidable costs and financial waste that span society, and impact every individual’s potential to achieve health and well-being. To understand how far-reaching this issue is, Deloitte’s actuarial team developed a model to quantify the link between health care spending and health care disparities related to race, socioeconomic status, and sex/gender. The team analyzed several high-cost diseases (e.g., diabetes, asthma, and cardiovascular disease), determined the proportion of spending that could be attributed to health inequities today, and trended the spending to 2040—while accounting for changes in population and per capita spending.
Our actuaries concluded that health inequities account for approximately $320 billion in annual health care spending signaling an unsustainable crisis for the industry. If unaddressed, this figure could grow to US$1 trillion or more by 2040. If the United States reaches this threshold, we could see a direct impact on affordability, quality, and access to care beyond the challenges that already exist. The projected rise in health care spending could cost the average American at least $3,000 annually, up from today’s cost of $1,000 per year. And the increase in spending likely would have a greater impact on historically underserved populations. This avoidable expense (in dollars and lives) is the result of an inequitable health system and could have major consequences for the health and well-being of all individuals. No individual, family, or health system is equipped to sustain that kind of inefficiency and its implications. We can begin to address this by designing today for an equitable future.
Deloitte’s 2021 report, Breaking the Cost Curve, described how new business models, technological breakthroughs, consumers armed with highly personalized data, and regulations that encourage change could lead to a dramatic deceleration of health care spending by the year 2040. However, health inequities are a major barrier to this vision. In fact, the current trajectory of health care spending is compounded by health inequities. As our vision for the Future of Health™ continues to unfold, we’re watching health care spending accelerate and inequities in health and outcomes become more prevalent across race, sex/gender, age, location, and disability status.
Every organization should plan to address health inequities by designing and enabling the future of health care around people and equity. Health care incumbents, industry disruptors, community organizations, and government agencies each have a role to play in removing the barriers that lead to health inequities and turning unaffordable costs into opportunities. This should include: intentionality in design, rebuilding trust, partnerships, measurement, and addressing individual and community level inequities.
Addressing health inequities can help business leaders, boards of directors, and companies improve health outcomes and reduce health care spending by addressing the drivers of health (DOH), removing biases and inefficiencies in care, and enabling data and technology to help monitor, diagnose, and deliver care. In turn, this approach can have a positive impact on health outcomes, patient experience, quality of life, and the greater health and well-being of all individuals.
Health inequities stand in the way of affordability, health, and well-being
The health care sector is under pressure to reduce health care spending while increasing quality of care. Persistent health inequities have a substantial impact on health outcomes and spending. However, the industry hasn’t found a way to address them within this context. Quantifiable differences in health-related outcomes have been documented across many dimensions, including race, gender, age, location, disability status, and sexual orientation. Health inequities can be seen across a wide range of conditions including, hypertension, asthma, diabetes, cancer, mental health, and heart disease. Some communities have lower life expectancies and higher instances of certain diseases simply due to their zip codes. For instance, public health researchers recently drew attention to two neighborhoods in Kansas City—Blue Hills and Armour Hills. In Blue Hills, people die an average of 14 years earlier due to social, economic, and environmental disparities compared to people living in Armour Hills.
In addition to the negative impact on outcomes and spending within the health system, health disparities can have broader consequences for the economy and quality of life. Health disparities account for roughly $42 billion in lost productivity per year, not including additional economic losses due to premature deaths. Health disparities also can have devastating consequences on the quality and value of life for the people, families, and communities most impacted.
By Jay Bhatt, Andy Davis, Neal Batra & Brian Rush
Read the full report at https://www2.deloitte.com/us/en/insights/industry/health-care/economic-cost-of-health-disparities.html.