Economic burden of health inequities: Who’s paying the price?

Paying out

What would happen if African Americans, Latinos, and Asian Americans had the same health outcomes as whites? Not only would we be spared the pain and suffering of the unequal burden of disease we bear, but we’d save billions of dollars each year.

In a recent study published by the Joint Center for Political and Economic Studies, Thomas LaVeist et al estimate that the combined costs of health inequalities and premature death in the United States between 2003 and 2006 were $1.24 trillion. Direct medical care expenditures during this 4-year period could have been reduced by $229.4 billion if racial and ethnic health inequities had been eliminated.

LaVeist and his colleagues used data from the Medical Expenditure Panel Survey (MEPS)[1] for the years 2002-2006 to develop a model to estimate health care costs for African Americans, Latinos, Asian Americans, and whites. They then re-estimated the model, assuming that each racial and ethnic category had the same health status — and, therefore, the same health care expenditures as that of the group with the best health status (usually the whites). The difference in two models represents the potential direct medical savings if all racial and ethnic groups had equal health status and outcomes. The savings in direct medical care costs totaled $229.4 billion.

To estimate the savings in indirect costs, these researchers used the MEPS data to estimate the days of work lost by adults owing to disability or illness. Then, they re-estimated the days of work lost with the racial and ethnic health inequities eliminated. The total savings came to $50.3 billion.

The researchers also estimated the costs secondary to premature death. Using data from the National Vital Statistics Reports,[2] they estimated the number of deaths by racial and ethnic category. Then, they estimated the number of deaths by racial and ethnic category if each category had the same health status as whites. This calculation gave them the number of excess deaths owing to racial health disparities. They used a very conservative estimate of $50,000 for each year of life lost to estimate the costs of premature death secondary to racial and ethnic health inequities, which was $957.5 billion.

You’d think that saving $1.24 trillion in health care costs would be important; however, no serious moves are being made to eliminate the health inequities responsible for these costs. Why don’t these excess costs motivate those who run the U.S. health care to do something to eliminate racial and ethnic health inequities?

Well, who bears these costs? Direct medical expenditures come out of the pockets of the patients, third-party payers, and some employers. LaVeist et al estimate that African Americans, Latinos, and Asian Americans paid nearly 31% of the excess direct medical costs out of our own pockets. While we consider that a loss, the barons of the health care industry consider that revenue. Excess costs for us equal profits for them.

What about the indirect costs of health inequities? Surely, they care about lost days of work? Employers tend to be very provincial in their thinking. They care about their employees’ missed days of work; however, if a worker at another shop misses work, that’s his or her employers’ problem.

Besides, 95% of the indirect costs of health inequities ($957.5 billion) were owing to the costs of premature deaths. From the perspective of employers as a class, African-American, Latino, and Asian-American workers are expendable. They can be easily replaced with others.

Those of us concerned with the premature loss of life, increased burden of disease, and increased health care costs endured by African Americans, Latinos, Asian Americans, and working people in general need to stand up and demand social justice. It’s the necessary precondition for eliminating racial and ethnic health inequity.

[1] Cohen JW, Monheit AC, Beauregard KM, et al. 1996/1997. “The Medical Expenditure Panel Survey: A National Health Information Resource.” Inquiry 33:373-389

[2] Heron MP, Hoyert DL, Murphy SL, et al. 2009. “Deaths: Final Data for 2006.” National Vital Statistics Reports 57(14). Hyattsville, MD: National Center for Health Statistics.

Monday, November 2nd, 2009 at 14:27