‘Bias is profitable’: Health disparities may cost $1T by 2040

Disparate health outcomes could cost the American healthcare system $1 trillion annually by 2040, nearly tripling in size over the next 20 years and accounting for nearly 12.5% of healthcare spending, a new report warns.

The analysis, published by Deloitte Wednesday, found the cost of excess health services delivered due to disparities is $320 billion annually, and the rate of increase outpaces overall cost trends. Total healthcare spending is expected to rise by 5.3% annually to 2040 while spending tied to disparities is expected to increase by 6.2% per year.

For consumers, the trend could mean healthcare costs increasing to $3,000 per person annually by 2040. Today, the average person spends approximately $1,000 per year on healthcare.

“What you continue to see is a lack of concerted effort to go after that number collectively. Through cynical eyes, the message you can take away is that inequity and bias is profitable in certain instances,” said Neal Batra, principal of life science and healthcare at Deloitte Consulting and co-author of the report. “That’s a real frustration, because what that suggests is that you have a fundamental disconnect in incentives that perpetuates this and creates drag on the ability to address it.”

The analysis determined the cost of socioeconomic, racial and gender disparities among several high-cost diseases, including breast cancer, diabetes, colorectal cancer, asthma and cardiovascular disease.

For example, racial disparities in diabetes management now add $15.6 billion in spending per year, approximately 4.8% of the total annual cost of diabetes care. Socioeconomic disparities in asthma care cost about $56 billion per year, or nearly 4.3% of annual spending on the disease.

“This avoidable expense is the result of an inequitable healthcare system and could have major consequences for the health and well-being of all individuals,” the authors wrote. “No individual, family, or health system is equipped to sustain that kind of inefficiency and its implications. We can begin to address this by designing today for an equitable future.”

The report calls on legacy organizations, industry disruptors, community groups and government agencies to come together to end health disparities and curb the rising cost of healthcare. “Trying to do this in isolation is not how this is going to be solved,” said Andy Davis, co-author of the report and principal of health care practice at Deloitte Consulting.

The report offers several recommendations, such as adopting value-based care models, creating cross-sector partnerships, unifying healthcare data infrastructure and ensuring diversity in data collection efforts.

At the local level, Davis and Batra called for addressing social determinants of health and building trust among underserved communities. Healthcare organizations should look to find ways to engage with the community that tackle environmental issues that exacerbated health disparities, such as nutrition, infrastructure, wealth, employment, education and public safety, the report recommends. They should also extend their community networks to facilitate data-sharing and early diagnosing and intervention, eventually transitioning to a more preventative model.

The report comes as health equity experts look to create sustainable funding for equity initiatives. But stepping away from grants and philanthropic funding to tackle health disparities and making the transition to disease prevention will require more robust data collection and collaboration, industry experts agreed.

It’s also going to require organizations to allocate money toward long-term solutions, said Dr. Vindell Washington, chief clinical officer of Verily Health Platforms, an Alphabet subsidiary.

“You make your community priorities based on how you spend your budgets,” Washington said. “So if you say you’re going to do something with one-time funding, the chances that you are going to build something that’s sustainable is about zero.”

Dr. Kelli Tice, the first-ever chief health equity officer at GuideWell, the mutual holding company of insurer Florida Blue, said the industry is attempting to shift resources spent on health disparities to preventative care. Florida Blue is looking to reward members and providers for overall wellness to help make the transition.

“Our system is built on a sick model as opposed to a healthy model. We are already paying the unfortunate price tag of long-standing health disparities,” she said. “Across the payer industry, we really need to recognize where those costs are showing up and if some of the money could be directed towards health equity solutions if it’s already being spent in downstream care.”

Addressing those disparities requires identifying them. Data collection efforts surrounding race, ethnicity, gender and social determinants of health need to be enhanced, industry watchers say. Healthcare organizations also need to push for policy change and major investments in public health infrastructure that investors and consumers have started pushing in recent years, experts said.

“If you are on the wrong side of this narrative, either in actuality or perceived, you can have an enormous whiplash effect from your consumer cohort,” Batra said. “That’s the reason why investors care. And that’s the reason why I think this now becomes a core business investment as opposed to a ‘let me do the right thing’ investment.”