WHAT IS THE FUTURE OF VALUE-BASED CARE?

Commercial risk will be a critical catalyst of progress – it’s complicated, but is it possible? We think so.

X

June 27, 2022

Health disparities cost the US billions every year

Daily Briefing

    Health disparities cost the United States an estimated $320 billion in unnecessary spending every year—and this number could increase to $1 trillion by 2040 if changes are not made, according to a new report by Deloitte.

    Cheat sheet: Health disparities at the point of care

    Report details and key findings

    For the report, researchers developed a model to project the costs of unnecessary health care spending among populations that experience socioeconomic, racial, and sex/gender inequities.

    In particular, the model examined the impact of several high-cost conditions, including breast cancer, diabetes, colorectal cancer, asthma, and cardiovascular disease, and determined how much of their spending could be attributed to health inequities. The model also factored in the potential effect of intersectional inequities.

    Overall, the researchers estimated that health disparities cost the United States approximately $320 billion a year, and this figure could almost triple in size to $1 trillion by 2040, accounting for almost 12.5% of all health care spending. In total, spending associated with health disparities is expected to increase by 6.2% every year over the next 20 years.

    When it came to different health conditions, diabetes and asthma were the most significantly impacted by health inequities, followed by coronary heart disease, breast cancer, and colorectal cancer.

    For example, Black adults are 60% more likely to be diagnosed with diabetes and between two and three times more likely to develop complications from the disease. According to the model, 4.8% of annual diabetes spending in the United States was associated with racial disparities, resulting in $15.6 billion in unnecessary spending.

    In addition, the asthma rate for individuals living under the federal poverty limit (FPL) was higher (11%) than those who earned at least two times the FPL (roughly 7%). Overall, 4.3% of annual asthma spending was associated with income disparities, resulting in $2.4 billion in unnecessary spending.

    "This avoidable expense is the result of an inequitable healthcare system and could have major consequences for the health and well-being of all individuals," the researchers wrote. "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."

    Commentary

    According to several health experts, the report's estimates are significant, but they are likely much lower than the true cost of the unnecessary spending associated with health inequities.

    "It's likely the problem is much worse than what the model predicts," said Lesley Rennis, an associate professor at CUNY's Borough of Manhattan Community College and an expert in public health research and evaluation.

    Kellan Baker, executive director and chief learning officer at the Whitman-Walker Institute, agreed that the report's findings were conservative and said that the true costs of health disparities "are likely much higher than any estimate, due to the complex and interconnected factors that affect health, many of which lie outside the field of health itself."

    In the report, the authors called for legacy organizations, industry disruptions, community groups, and government agencies to work together to end health disparities and alleviate rising health care costs. "Trying to do this in isolation is not how this is going to be solved," said Andy Davis, principal of health care practice at Deloitte and a co-author of the report.

    The authors also made several recommendations to help reduce disparities and their associated health care spending, including:

    • Adopting value-based care models
    • Forming cross-sector partnerships
    • Creating an inclusive health care data infrastructure
    • Diversifying data collection efforts
    • Addressing social determinants of health and building trust among underserved communities

    "What you continue to see is a lack of concerted effort to go after that number [health care costs] collectively. Through cynical eyes, the message you can take away is that inequity and bias is profitable in certain instances," said Neal Batra, principal of life science and health care at Deloitte and a co-author of the report. "That's a real frustration, because what that suggests is that you have a fundamental disconnect in incentives that perpetuates this and creates drag on the ability to address it."

    "If you are on the wrong side of this narrative, either in actuality or perceived, you can have an enormous whiplash effect from your consumer cohort," Batra added. "That's the reason why investors care. And that's the reason why I think this now becomes a core business investment as opposed to a 'let me do the right thing' investment." (Putka, MedPage Today, 6/23; Hartnett, Modern Healthcare, 6/23; Bhatt et al., Deloitte, 6/22)

    How to advance equity for your workforce, patients, and community

    inclusion cover v2

    We've curated resources to help you make real headway against inequity in three key areas—your workforce, your patients, and your community—including:

    Get all the Resources

    Have a Question?

    x

    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.