Care Redesign

The Costs of Racial Disparities in Health Care

Article · February 15, 2016

Racial disparities in life expectancy are a key indicator of inequity in health outcomes. Although the United States has made progress in narrowing the gap in life expectancy between blacks and whites, from 7.6 years in 1970 to 3.8 years in 2010, a disparity remains — largely from blacks’ higher death rates at younger ages from heart disease, diabetes, and cancer, as well as higher risks for HIV infection, homicide, and infant mortality.

Leaders in government, business, and health care must address these persistent disparities at the national, state, and local levels, as both an ethical and an economic imperative. In fact, eliminating racial disparities in health care is vital to pushing the entire health care system toward improving quality while containing costs — so-called value-based care. In its 2001 “Crossing the Quality Chasm” report, the Institute of Medicine identified equitable care as one of six core aims of high-value health care systems. And since 2003, Congress has mandated that the federal government produce the annual National Healthcare Disparities Report as part of the effort to monitor national progress in this domain.

In 2011, Richard Allen Williams and I outlined five principles for eliminating racial disparities as part of health care reform:

  1. Provide insurance coverage and access to high-quality care for all Americans.
  2. Promote a diverse health care workforce.
  3. Deliver patient-centered care.
  4. Maintain accurate, complete race and ethnicity data to monitor disparities in care.
  5. Set measurable goals for improving quality of care, and ensure that goals are achieved equitably for all racial and ethnic groups.

Racial health disparities are associated with substantial annual economic losses nationally, including an estimated $35 billion in excess health care expenditures, $10 billion in illness-related lost productivity, and nearly $200 billion in premature deaths. Concerted efforts to reduce health disparities could thus have immense economic and social value.

Employers and health plans have an important stake in these efforts. For example, reducing disparities in effective asthma treatment by 10% for African American workers could save more than $1,600 per person annually in medical expenses and costs of missed work. Similarly, eliminating racial and ethnic disparities in access to outpatient mental health treatment could reduce costs, particularly for people on Medicare or Medicaid, by limiting emergency room visits and hospitalizations for mental illness and other medical conditions such as diabetes and heart disease.

Much of what we know about reducing racial disparities has come from organized systems of care, such as health maintenance organizations (HMOs), as they have advanced information systems for collecting data on health care quality and are often subject to public reporting. For example, to guide quality-improvement efforts, the state of Massachusetts required hospitals beginning in 2007, and health plans in 2009, to collect information on the race, ethnicity, and language of their patients. In 2009, the Institute of Medicine called on all health systems to collect these data to help monitor and remedy disparities in care. Recent efforts to achieve racial equity in health care have focused on measuring and reporting disparities in health care quality and outcomes, followed by interventions aimed at reducing those disparities — interventions that are then themselves measured and evaluated.

Such interventions can have a major impact. As colleagues and I reported in 2005, Medicare HMOs had reduced racial disparities in basic processes of care, such as testing cholesterol and blood sugar levels in older adults with heart disease or diabetes. However, substantial racial disparities persisted in how well those parameters were controlled in this population, thereby contributing to greater risks of heart disease, kidney failure, and stroke among the black community. Nearly a decade later, we found that racial disparities have been eliminated in control of high blood pressure, blood sugar, and cholesterol within Medicare HMOs in the western United States, where quality of care is highest. In contrast, these clinical outcomes remain substantially worse for blacks than whites in the Northeast, Midwest, and South, despite evidence that treating high blood pressure is highly cost-effective.

Optimal control of high blood pressure, blood sugar, obesity, and smoking could further improve life expectancy by 5 to 7 years for African American adults by preventing or postponing deaths from cardiovascular disease, diabetes, and cancer, particularly for those with low incomes in the rural South. Unfortunately, most blacks in the South live in states that have opted not to expand Medicaid under the Affordable Care Act, so those with the lowest incomes will continue to experience disparities that could be prevented by better access to effective health care.

In addition, racial disparities in death rates from colorectal cancer have widened as screening rates for blacks nationally have not kept pace with those of whites. Encouraging evidence from New York City has shown the benefits of coordinated public and private efforts to promote colorectal cancer screening. As rates of screening colonoscopy rose from 42% of eligible adults in 2003 to 62% in 2007, large disparities in this service were eliminated for black and Hispanic adults. The costs of screening more middle-aged adults can be largely offset by long-term Medicare savings in preventing colorectal cancer, which is expensive to treat.

Efforts to eliminate racial disparities in health care are important, but they alone will not erase the racial disparity in life expectancy in the United States. The efforts must be coupled with broader policies and partnerships to promote community health through racial equity in education, employment, housing, and the judicial system. Better integration of these approaches to reduce racial disparities in health care and community health will sustain and accelerate progress in narrowing the racial gap in life expectancy, and it will enhance the economic value that comes with better health and longevity. Until then, efforts to combat racial inequality will remain as important in health care as they are in many other facets of American society.

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