The Health Strategist
institute for continuous health transformation
in person and digital health
Joaquim Cardoso MSc
Chief Research and Strategy Officer (CRSO)
May 6, 2023
ONE PAGE SUMMARY
“The High Costs of Ignoring Health Inequities” explores the relationship between health equity and efficiency within the US health system.
- The author argues that achieving equitable health outcomes does not necessarily conflict with efficiency and that ignoring health inequities carries significant costs and missed opportunities.
- The paper emphasizes the need to prioritize equity as a central goal and highlights the potential economic benefits of reducing health disparities.
The existing US health system, designed with efficiency in mind, inadvertently produces inequitable outcomes.
- Despite separate domains for equitable and efficient care, the author asserts that efficiency can be pursued in ways that advance equity.
- By allocating resources according to need and minimizing costs for desired outcomes, policy makers can promote both technical and allocative efficiency.
The paper provides examples of how addressing health disparities can lead to cost savings and economic growth.
- Eliminating health inequities would reduce direct medical care expenditures and indirect costs associated with illness and premature death.
- Consider, for example, well-documented racial and ethnic screening disparities and their impact on early detection of colorectal cancer. One clinical trial comprising 90 percent Black participants found that text messages with mailed at-home Fecal Immunochemical Tests (FIT) screening kits led to a nearly 10-fold increase in colorectal cancer screening completion.
- State-level studies demonstrate the economic burden of disparities and the potential savings if inequities were eliminated.
- The author’s own research reveals substantial costs attributed to preventable heart failure admission disparities among Medicare beneficiaries, highlighting the need for targeted interventions.
- One study estimated that eliminating health disparities would have reduced direct medical care expenditures by about $230 billion and indirect costs associated with illness and premature death by more than $1 trillion for the years 2003–2006.
- A more recent analysis found inequities in the US health system cost approximately $320 billion annually and could reach $1 trillion in spending by 2040 if left unaddressed.
- The economic burden of mental health inequities alone was estimated to be $278 billion between 2016 and 2020.
In addition to cost savings, the author argues that equity promotes long-term economic prosperity and social cohesion.
- Empirical evidence shows that investing in equity can lead to economic growth and prosperity for all Americans.
- Removing discriminatory barriers and allocating talent where needed has accounted for a significant portion of aggregate market output per person in the US.
- Thus, reducing inequity is not a zero-sum game but a path to benefits for society as a whole.
The executive summary concludes by emphasizing the moral and economic imperatives of addressing health inequities.
- By centering equity as the goal of the US health system, efficiency in resource allocation can be improved.
- The opportunity cost of ignoring these inequities, both in terms of economic burden and societal well-being, necessitates intervention.
- Achieving long-term sustainable economic prosperity and social cohesion depends on addressing the crisis of health inequities.
DEEP DIVE
The High Costs of Ignoring Health Inequities
Health Affairs
Andrew C. Anderson
MAY 3, 2023
Most agree health disparities are a moral problem. Yet there are disagreements about how to reduce them. Some believe that in health systems, equity and efficiency are incompatible, requiring stark and painful tradeoffs. Others, myself included, believe that achieving equitable health outcomes can, in fact, be accomplished by improving efficiency.
The existing structure of the US health system — including how it’s organized and paid for — is designed to increase health gains irrespective of whether those gains are maintained and concentrated in a subset of the overall population — such as the wealthy, for example. Despite the inefficiencies in the system, it was, nevertheless, designed with efficiency in mind. In this case, efficiency serves the production, intentionally or not, of inequitable outcomes. Equity is treated as a complementary rather than central goal of the system.
Even among the 6 domains of health care quality established by the Institute of Medicine, equitable care and efficient care are listed as separate domains.
Some may argue that the goals of effectiveness, safety, timeliness, and patient centeredness — measured more often — are more important or more feasible to address.
Even so, this does not mean we should accept the status quo. To do so, would involve overlooking several factors: 1) equity and efficiency are not at odds, 2) ignoring health inequities entails a significant opportunity cost, and 3) increasing equity is necessary for long-term prosperity both socially and economically.
Equity And Efficiency Are Not At Odds
Efficiency describes a functional relationship between inputs (like money) and outputs (like health gains), but it is not an outcome in itself. It is within policy makers’ control to pursue efficiency in such a way that advances equity. One way is to think of efficiency as allocative — that is distributing resources according to their correct use or need. Another way is to think of efficiency in technical terms — that is, minimizing cost for the desired outcome.
Consider, for example, well-documented racial and ethnic screening disparities and their impact on early detection of colorectal cancer. One clinical trial comprising 90 percent Black participants found that text messages with mailed at-home Fecal Immunochemical Tests (FIT) screening kits led to a nearly 10-fold increase in colorectal cancer screening completion.
The effectiveness of this intervention has also been demonstrated among American Indian and Alaska Native populations. The intervention is efficient from a technical and allocative perspective. F
irst, it achieves technical efficiency as text-based interventions are relatively low cost, simple, and reach large groups of people at a low cost per person. It achieves a higher level of allocative efficiency because it is deployed within a population that has a greater need on average.
Selecting the right implementation strategies for interventions can serve the aim of both reducing disparities and optimizing health gains for all people.
Opportunity Cost
Significant costs are attributed to disparities in disease burden, medical care, lost productivity, and premature death.
One study estimated that eliminating health disparities would have reduced direct medical care expenditures by about $230 billion and indirect costs associated with illness and premature death by more than $1 trillion for the years 2003–2006.
A more recent analysis found inequities in the US health system cost approximately $320 billion annually and could reach $1 trillion in spending by 2040 if left unaddressed.
The economic burden of mental health inequities alone was estimated to be $278 billion between 2016 and 2020.
These costs have also been documented at the state level.
For example, the Connecticut Department of Health found hospital admission disparities between Black and Hispanic residents cost the state over $384 million and $121 million, respectively, compared with White residents.
In 2018, Blue Cross Blue Shield of Minnesota estimated eliminating inequities would save the state $2.26 billion annually due to increased employment and less time missed at work due to illness.
They also found savings could have been used to fund the construction of 54 hospitals, provide annual assisted living costs for more than 47,000 people, build 15 high schools, and cover annual nursing home care for more than 25,000 people.
My co-authors and I published a paper in the May 2023 issue of Health Affairs, describing the costs of preventable heart failure admission disparities among Medicare beneficiaries living in six states in the US South (Kentucky, Arkansas, Florida, Georgia, Mississippi, and North Carolina).
We found disparities explained 48 percent of costs for Black, 14 percent of costs for Hispanic, and 51 percent of costs of American Indian and Alaska Native beneficiaries (over $60 million annually) attributed to the Medicare program.
If the patterns observed in our study had been observed nationally, the costs due to racial and ethnic disparities in preventable heart failure admissions would have exceeded $1.1 billion nationally in 2017.
These estimates reveal opportunities to create long-term efficiencies by improving the quality of care for affected populations while containing costs.
This is likely of particular importance for state governments with strict budget constraints.
Advocates too, have the opportunity to frame the problem of health inequities partly as an economic burden (i.e., continued excess costs, spending, and lost lives) to further demonstrate the urgency to address them.
These estimates also complement other indicators of progress (e.g., summary measures of disparities) when implementing interventions to address disparities.
Equity Reduces Costs And Stimulates Economic Growth Over The Long Run
I believe that fixing the systems that produce health disparities will require some redistribution of power and resources; but it’s not a zero-sum game.
Some say such policies don’t work because they are a “leaky bucket” in which resources transferred from the advantaged to the less advantaged are lost to additional administrative costs and disincentives among those who receive benefits.
But this idea has been empirically refuted.
Rather, investments in equity can lead over time to economic growth and prosperity for all Americans.
For example, a recent study examined the economic impact of taking down discriminatory barriers to workforce entry for women and Black workers in the fifty years spanning 1960 to 2010.
It found that better allocation of these workers throughout the economy — putting talent where it was needed — accounted for between 20 and 40 percent of the total growth aggregate market output per person in the U.S.
Over the long-term, reduced inequity can bring significant benefits to everyone.
Economic Prosperity And Social Cohesion
There are both moral and economic reasons to address health inequities.
The belief in a tradeoff between equity and efficiency is misguided. Centering equity as the goal of the US health system can improve efficiency in the allocation of resources.
On its own, the opportunity cost of not addressing these inequities warrant intervention.
Ultimately, long-term sustainable economic prosperity and social cohesion in the United States depends on addressing this crisis.
Editor’s Note:
Dr. Anderson was a member of the 2022 cohort of Health Affairs’ Health Equity Fellowship For Trainees.
References
See the original publication https://www.healthaffairs.org
