Deloitte Analysis: Health Care Costs for Average American Could Triple by 2040 if Health Inequities are Unaddressed While Annual Spending Could Exceed $1 Trillion has been saved
Deloitte Analysis: Health Care Costs for Average American Could Triple by 2040 if Health Inequities are Unaddressed While Annual Spending Could Exceed $1 Trillion
Findings signal a looming crisis for the health care industry and an impact on patients’ health and wallet that no one can affordt.
New York, July 6, 2022
- Health inequities account for approximately $320 billion in annual health care spending today, and if unaddressed, this figure could grow to $1 trillion or more by 2040.
- The projected rise in health care spending could cost the average American at least $3,000 annually, up from today’s cost of $1,000 per year.
- Every organization today should address health inequities by intentionally designing for an equitable future of health.
- Trust, partnerships, measurement, and addressing individual and community level disparities are critical underlying mechanisms for the industry to eliminate health inequities.
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.
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.
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:
- Be intentional: Stakeholders across the health care ecosystem should approach the future of health with intentionality and engage in continuous thinking on equity.
- Form partnerships: Current stakeholders can’t solve this on their own. The magnitude and complexity of the problem is too significant.
- 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.
- 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.
- 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.
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Addressing health inequities—which are in line to cost $1 trillion in annual US health spending by 2040—could add tremendous economic and social value.
Learn how the Deloitte Health Equity Institute is translating purpose into action to advance health equity.