The “Business Case” for Eliminating Health Care Disparities

by | Apr 26, 2010 | Choosing Health Equity

No one would deny that health care in the United States is riddled with disparities – in access, in treatment, and in outcomes. There are disparities due to gender, race/ethnicity, place of residence, socio-economic status, age and insurance status. Until recently, few attempts have been made to examine how those disparities affect costs. A spate of recent research, however, builds a powerful case for paying much more attention to the connection.

As our nation grapples with how to complete and implement reforms, and gain control of health care costs, we should take this new evidence to heart. Here are some of the findings.

Finding #1: Using data from the federal Medical Expenditure Panel Survey (MEPS), Thomas LaViest of the Johns Hopkins School of Public Health and colleagues estimated the potential savings to the health care system of eliminating health disparities between adults of various racial/ethnic groups. After sorting everyone into subgroups based on race, ethnicity, age and gender they used seven health status measures to calculate what the savings would have been if race/ethnicity disparities been eliminated, i.e., if each racial/ethnic group had achieved a health status equal to the one with the best health status for its age/gender group. The result: eliminating disparities would have reduced direct medical costs by $229.4 billion over the four-year period 2003-2006. The indirect costs to society from lower productivity due to disability or illness totaled an additional $50.3 billion.

Finding #2: Timothy Waidmann of the Urban Institute, also using MEPS data for that time period, focused on the impact of disparities on the prevalence of certain chronic diseases – diabetes, hypertension, stroke and renal disease – between the non-Hispanic white population and the African American and Hispanic populations. Both high blood pressure and diabetes are more prevalent among African American and Hispanic populations than among whites, and both are major contributors to incidence of renal disease and stroke. If we could eliminate those gaps, Waidmann estimates health care costs in the Medicare program alone would have declined by an estimated $7.3 billion in 2009. He notes, further, that failure to reduce the incidence of these costly chronic diseases will result in higher excess costs to Medicare in the years to come.

Finding #3: A still more sobering set of research findings made front-page headlines in the New York Times last December. Stephen Crystal and colleagues from Rutgers and Columbia determined that poor children (defined as those with Medicaid coverage) are four times more likely to be prescribed powerful antipsychotic drugs than their middle-class counterparts. Furthermore, they’re more likely to receive anti-psychotics for less serious conditions, like A.D.H.D. and conduct disorders, than their privately insured peers. While there could be reasonable explanation behind some of this disparity, such as higher prevalence of mental health conditions in lower income families or limited access to alternative treatments such as psychotherapy, this is an alarming discrepancy. Anti-psychotics are powerful drugs with potentially harmful side effects capable of creating lifelong physical problems. They also are associated high medical costs, down the road.

The new health reform law, passed by Congress and signed into law by President Obama, will begin to address disparities in health care in various ways including expanding access to health coverage through Medicaid expansions and health exchanges, as well as expanding access to preventive care for everyone. It also calls upon all federally conducted or supported health programs to collect and analyze patient demographic data, which can then be used to identify what disparities exist where and to develop strategies to reduce those disparities.

But we’ll need to do even more if we are to eliminate health disparities all together. For example, we need to improve coverage and payments for language services for patients with limited English proficiency, and increase cultural competency training. Clear communication between patients and their providers is essential for patient safety and providing patient-centered care. It will also be important to ensure that quality improvement initiatives focus on not only raising the bar for all populations, but also closing the wide gap in quality of care among racial and ethnic groups and, for many conditions, men and women.

The data shows that unaddressed disparities in health care are a continuing source of unnecessary health spending in this country. We have a moral imperative to build an equitable health care system and these findings show us we can build a fiscally sustainable one at the same time. As the implementation of health care reform moves forward, reducing the disparities gap should be a major priority for all of us.