Health Inequity Leads to $320B in Unnecessary Healthcare Spending

June 29, 2022 - Health inequities account for around $320 billion in annual healthcare spending, a figure that could reach $1 trillion by 2040 if stakeholders do not act accordingly, according to data from Deloitte.

The analysis projected the trajectory of unnecessary healthcare spending among populations that experience socioeconomic, racial, and gender inequities.

Researchers analyzed five high-cost diseases, including diabetes, coronary heart disease, asthma, breast cancer, and colorectal cancer, and determined common health disparities among the patient populations. They then used this data to establish the proportion of spending that could be attributed to health inequities in the present and future.

The US spends $327 billion per year on diabetes, researchers found. Nearly 5 percent of this spending is associated with healthcare disparities. Black adults are 60 percent more likely to be diagnosed with diabetes than White adults and are two to three times more likely to experience complications. This amounts to $15 billion in unnecessary spending.

Similarly, healthcare spending on asthma is around $56 billion annually, 4.3 percent of which is associated with health inequities ($2.4 billion). The asthma rate for those living under the federal poverty level (FPL) is 11 percent compared to 7 percent for those whose income is two times the FPL. This can hinder care and medication access and result in late diagnoses.

The proportion of spending on coronary heart disease attributed to health inequities was slightly smaller at 1.2 percent but still amounted to nearly $1.3 billion per year. This is due to more women than men having a history of heart attack, the analysis stated.

Racial disparities were also prevalent among patients with breast and colorectal cancers. Nine percent of Black women are diagnosed with breast cancer at an advanced stage compared to 5 percent of White women. Meanwhile, Black adults are less likely to get screened for colorectal cancer than White adults.

However, these diseases ranked lower on the disparity level, with 0.4 percent of breast cancer spending and 0.1 percent of colorectal cancer spending associated with health inequities.

Overall, the researchers determined that $320 billion per year is attributed to health inequities. This number could grow to $1 trillion or more if left unaddressed by 2040. This increase could directly impact affordability, quality, and access to care, with healthcare spending costing the average American at least $3,000 per year.

“The increase in spending likely would have a greater impact on historically underserved populations,” the analysis stated. “This avoidable expense (in dollars and lives) is the result of an inequitable health system and could have major consequences for the health and wellbeing of all individuals.”

According to Deloitte, healthcare stakeholders must act soon in order to mitigate these potential consequences. The analysis offered a series of strategies stakeholders should consider when working toward achieving equitable health.

First, leaders should intentionally insert equity-centered thinking into business choices when developing new care delivery systems. Forming partnerships across the industry can also help advance health equity.

“It likely will require current actors, new actors, and the government to collectively make a change,” researchers wrote. “Healthcare organizations should collaborate with agencies, organizations, and coalitions that work on initiatives to address the root causes of health inequities.”

Stakeholders should leverage accessible, inclusive data, key performance indicators, and ongoing evaluation to track progress in tackling health equity. Addressing social determinants of health at the individual and community levels is also essential to advancing health equity.

Finally, healthcare stakeholders should focus on building trust across the industry, including with individuals and communities.