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What Is the Healthcare Cost of Racial Health Disparities, Inequity?

A new assessment in Texas found that racial health disparities are running up a bill of $7.7 billion in excess healthcare spending and lost productivity.

There is a considerable human and healthcare cost that could have been avoided at the onset of COVID-19 had more been done to ameliorate eventual racial health disparities, amounting to thousands of lives lost and billions of dollars spent, according to analysis from Altarum on behalf of Episcopal Health Foundation.

Using figures up until the end of September 2020, the researchers found that had Black and Hispanic people in Texas been hospitalized at the same rate as their White counterparts, the state would have seen 24,000 fewer hospitalizations. That would have amounted to $550 million in healthcare cost savings, the analysis showed.

That is not to mention the human costs associated with racial health disparities during the pandemic. Had Black and Hispanic patients had the same COVID-19 mortality rates as White people, the state of Texas would have seen about 5,000 fewer deaths, cutting the total number of COVID-19 deaths in the state by 30 percent.

“These numbers are a glaring reminder of how non-medical factors like economic status and living conditions impact health and how COVID-19 is highlighting that in the worst way,” Elena Marks, president and CEO of the Episcopal Health Foundation, said in a statement. “The human and economic costs of health disparities continue to grow during the pandemic and we’re learning why we can’t address them through medicine alone. Something has to change in Texas.”

Racial health disparities during and even before the COVID-19 outbreak are largely due to institutional inequality, the researchers noted. Black and Hispanic individuals are more likely to work frontline or essential jobs that could not transition to remote work, live in multigenerational households, utilize public transportation, and lack health insurance.

Populations of color are also more likely to have a pre-existing chronic illness that increases their odds of severe illness should they contract the novel coronavirus. Most experts agree this trend is also the result of disproportionate experience with social determinants of health.

All said, these inequities have yielded a staggering bill for the healthcare industry. Racial health disparities have resulted in $2.7 billion in excess medical spending, and another $5 billion in lost productivity. That represents a 60 percent increase in excess medical spend and 72 percent in lost productivity spending due to health disparities since 2016.

Those figures refer to the costs associated with racial health disparities in general, not just those tied to the COVID-19 outbreak at hand, although the pandemic certainly compounds the issue.

“The current COVID-19 pandemic is raising the stakes and the visibility of health disparities in Texas and throughout the country,” said Ani Turner, co-author of the report and director of Sustainable Health Spending Strategies at Altarum.

Should it stay as it is currently designed, the US healthcare industry is slated to see further racial health disparities and higher associated costs in the future. By 2030, Texas may see up to $3.4 billion in excess medical spend because of racial health disparities, Turner and team estimated. Racial health disparities could spark up to $6.1 billion in lost productivity, the team added, and 551,000 lost live years. Those lost life years amount to up to $28 billion, the team said.

Moves like Medicaid expansion will be helpful for closing some racial health disparities by increasing patient access to care. However, better focus on the social determinants of health will be essential. Policymakers should eye factors like housing access and quality, food security, educational attainment, and institutional racism as part of their efforts to close racial health disparities.

These are all factors that came into the spotlight during the COVID-19 pandemic, as experts appreciated them as predictors of virus contraction and severe illness. But they have been at play in health disparities and outcomes for years, Marks asserted, and need long-term policymaking and solutions for sustained outcomes.

“These health disparities are preventable, and we can change millions of lives if we invest our health dollars in new ways,” Marks concluded.

“COVID-19 has shown us to really improve health we have to address non-medical factors like unhealthy housing conditions, air quality, education, employment, affordable healthy foods, and safe places to exercise. If elected officials, policymakers, and communities don’t change their priorities, the vicious cycle of health disparities only will get worse.”

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