Deloitte Analysis: Health Care Costs for Average American Could Triple by 2040 if Health Inequities are Unaddressed While Annual Spending Could Exceed $1 Trillion

Why this matters

Inequities across the U.S. health care system not only affect underserved populations’ access to affordable, high-quality care, but they also create avoidable costs and financial waste that impact all of society. Inequities impact the ability for every individual to achieve health and well-being and the costs have greater impact on historically underserved populations. The health care sector is under pressure to reduce health care spending while increasing quality of care. Persistent health inequities have a substantial impact on health outcomes and spending; however, the industry hasn’t found a way to address them within this context.

To understand how far-reaching this issue is, Deloitte developed a model to quantify the link between health spending and health inequities related to race, socioeconomic status, and sex/gender as summarized in the report, “U.S. health care can’t afford health inequities.” Deloitte analyzed several high-cost diseases (e.g., diabetes, asthma, cardiovascular), to determine the proportion of spending that could be attributed to health inequities today, and forecast this spending to 2040, taking into account population and per capita spending changes.

The analysis — a multi-pronged research approach meant to quantify and vet the costs of health inequities — showed that health inequities cost approximately $320 billion in annual health care spending today and could add up to more than $1 trillion by 2040. The cost could exceed that if unaddressed, directly impacting affordability and access, costing the average American at least $3,000 annually, up from $1,000 annually. Historically underserved communities could be even more disproportionately impacted.

Key quotes

Costs are already at a crisis level for the industry, and if left unaddressed, the trajectory of costs could result in an even greater number of unaffordable bills and declining health and productivity for everyone. It’s critical that we act now to change this trajectory to achieve a better, more equitable future of health for all.

— Neal Batra, principal, life sciences and health care, Deloitte Consulting LLP

Need for change

Removing barriers to health equity can have a positive impact on outcomes, quality of life, and the greater health and well-being of individuals and communities. However, it will require action by industry leaders with intentionality in design, rebuilding trust, partnerships, measurement, and addressing individual and community level inequities.

The methodology behind the analysis

Deloitte’s health actuaries projected the trajectory of unnecessary health care spending among populations that typically experience socioeconomic, racial and sex/gender inequities. While there are many other types of inequities, such as age and ability, the actuaries focused on those that are often most frequently interconnected and most documented. The model also factored in populations that might face multiple biases.

Deloitte’s model looked at several high-cost diseases such as breast cancer, diabetes, colorectal cancer, asthma and cardiovascular. For these diseases, actuaries determined the proportion of spending that could be attributed to health inequities. For instance, according to the U.S. Department of Health and Human Services Offices of Minority Health, Black adults are 60% more likely than white adults to be diagnosed with diabetes and two to three times more likely to have complications, according to research. Racial inequity often contributes to a late diagnosis and comorbidities. Our analysis determined that 4.8% of spending on diabetes is associated with health disparities, which results in $15 billion in unnecessary spending. This approach was used to estimate the percentage of spending due to inequities for these disease states.

Key quote

There are two things of critical importance in this analysis. First, health inequity impacts everyone, directly or indirectly. Second, this problem is too great for one institution and organization to solve by itself. Solving this will require intentional collaboration.

— Andy Davis, principal, health care practice, Deloitte Consulting LLP

Actions for an equitable future of health

Health care stakeholders — business leaders, payers, and boards — should take action now to mitigate future consequences because they can’t afford to ignore health inequity. A truly equitable future of health with interoperable data, easy access, empowered people, trust, well-being, focus, and scientific breakthroughs may be possible if these actions are pursued:

1. Be intentional: Stakeholders across the health care ecosystem should approach the future of health with intentionality and engage in continuous thinking on equity.
2. Form partnerships: Current stakeholders can’t solve this on their own. The magnitude and complexity of the problem is too significant.
3. Measure progress: Accessible, platform-agnostic, and inclusive data and technology infrastructure paired with representative data collection, key performance indicators, and ongoing evaluation will be necessary to define progress in tackling health equity.
4. Address individual and community-level barriers: To advance health equity, non-medical drivers of health and barriers to quality care at both the individual and community level — such as health and digital literacy and care infrastructure — should be eliminated.
5. Engender trust: Trust across the system, from individual practitioners to institutions in data and technology, is crucial. It will be important to rebuild trust with people and communities intentionally by understanding needs, improving experiences, and building a more diverse and inclusive workforce.

About Deloitte
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90% of the Fortune 500^® and more than 7,000 private companies. Our people come together for the greater good and work across the industry sectors that drive and shape today’s marketplace — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthier society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them. Building on more than 175 years of service, our network of member firms spans more than 150 countries and territories. Learn how Deloitte’s more than 345,000 people worldwide connect for impact at www.deloitte.com.