Deloitte: Health inequities cost industry $320B per year, signal unsustainable crisis

Health inequities that limit underserved people’s access to affordable, high-quality care account for approximately $320 billion in annual healthcare spending, according to an analysis by Deloitte.

If unaddressed, health inequities could account for over $1 trillion in annual spending by 2040, signaling an unsustainable crisis for the industry.

Inequities across the U.S. health system limit underserved people’s access to affordable, high-quality care, create avoidable costs and lead to financial waste that spans society and impacts every individual’s health and well-being.

People of color and other underserved groups experience higher rates of illness and death across a wide range of health conditions. As of 2018, life expectancy among Black people was four years lower than white people, and low-income people report worse health status than higher-income individuals, according to the Centers for Disease Control and Prevention.

To better understand the issue, Deloitte’s actuarial team developed a model to analyze the link between healthcare spending and healthcare disparities related to race, socioeconomic status and sex/gender. The team then analyzed several high-cost diseases including diabetes, asthma and cardiovascular disease, determined the proportion of spending that could be attributed to health inequities and trended the spending to 2040.

The projected rise in healthcare spending could cost the average American at least $3,000 annually, up from today’s cost of $1,000 per year, according to Deloitte’s analysis. That increase in spending would likely have a greater impact on historically underserved populations as well as a direct impact on affordability, quality and access to care.

New business models, technological breakthroughs, providing consumers with personalized data and regulations that encourage change could help decelerate healthcare spending by 2040, according to a 2021 report by Deloitte.

“Addressing health inequities can help business leaders, boards of directors, and companies improve health outcomes and reduce health care spending by addressing the drivers of health, removing biases and inefficiencies in care and enabling data and technology to help monitor, diagnose and deliver care,” Deloitte said in its analysis.

In addition to increased spending within the healthcare system and negative patient outcomes, health disparities can cost the economy roughly $42 billion in lost productivity per year, not including additional economic losses due to premature deaths, according to a report from the W.K. Kellogg Foundation.

Deloitte’s analysis recommends that stakeholders increase their focus on health equity and infuse equity-centered thinking into business choices, form cross-sector partnerships, define and track progress in tackling health equity, address individual and community-level barriers and social determinants of health and build trust across the system.