Health Care Inequality in America

How It Increases Costs for Everyone

Man paying for health care
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 Illustration by Sorbetto/Getty Images

Health care inequality is when one group of people in an economy have much worse health than another group. In the United States, health inequality is correlated with income inequality. Research has found that the higher your income, the better your health.

One reason is that only America has a health care system that relies on private health insurance. As a result, those with corporate-sponsored plans have better access to health care than those who didn't. Before the Affordable Care Act, almost 25 percent of Americans had little or no health insurance. As a result, over 101,000 of them died each year because they couldn't afford the high cost of health care.

Others found their savings were wiped out, they lost their homes, and incurred credit card debt. The economy suffered, since half of all bankruptcies were caused by high medical costs.

Facts

Between 2011 and 2013, 38 percent of those in households making less than $22,500 a year reported being in poor or fair health. Only 12 percent in households making more than $47,700 a year reported being in poor to fair health. This was true even when both groups were covered by insurance.

The most affluent 1 percent of mean lived 15 years longer than the poorest 1 percent. The gap for women was 10 years. That's the same number of years that smoking shortens life expectancy.

Low-income adults are more than three times as likely as affluent adults to have trouble with the activities of daily living. Chronic illness makes them too sick to eat, bathe, or dress themselves without help. Their children are more likely to be obese and have elevated blood lead levels than those in high-income families.

In 2012, the wealthy received 43 percent more doctor visits than the poor.

U.S. health care inequality was the third worst among 32 rich and middle-income countries. Only Chile and Portugal had a wider gulf.

Structural inequality seems to be worsening. Between 1979 and 2007, after-tax income increased 275 percent for the wealthiest 1 percent of households. It rose 65 percent for the top fifth. The bottom fifth only increased 18 percent. That's true even adding all income from Social Security, welfare, and other government payments.

During this time, the wealthiest 1 percent increased their share of total income by 10 percent. Everyone else saw their share shrink by 1-2 percent. As a result, economic mobility worsened.

The 2008 financial crisis saw the rich get richer. In 2012, the top 10 percent of earners took home 50 percent of all income. That's the highest percentage in the last 100 years, according to a study by economists Emmanuel Saez and Thomas Piketty. 

Causes

There are five reasons that low-income families have poor health. The first is that they are more likely to be sick. A 2012 study found that 25 percent of low-income families have poor health compared to 14 percent of the most affluent families. High blood pressure affected 38.6 percent of the poorest fifth in the study compared to 29.9 percent of the most richest fifth.

The second reason is disparities in care. Low-income neighborhoods may not have nearby access to the best hospitals, doctors’ offices, and medical technology. This is especially true in rural areas. Southern states also have poorer care than northern ones. 

The third problem is the rising cost of health care. One in five low-income Americans said they went without care because they couldn't afford it. Only one out of 25 high-income families said the same thing. Without treatment, the poor sick get sicker until they wind up in the emergency room

High health care costs can throw people into poverty. A 2018 study found that medical expenses pushed 4 million people below the federal poverty line. Medical bills have become collection agencies’ biggest business. In 2015, 1 million people declared medical bankruptcy.

The fourth cause is inequality in health insurance. Many of the working poor don't qualify for Medicaid. They can receive a subsidy under Obamacare, but often those policies only cover certain hospitals and doctors' practices. Again, in rural areas, the covered medical services may be insufficient.

Health insurance companies have been increasing patients' medical costs by raising deductibles and copayments. At the same time, employers have reduced their share. Between 2008 and 2018, the average deductible in employer-sponsored health plans has risen 255 percent.

The fifth cause is that poor health can create poverty. It is difficult to find and maintain a high-paying job if you are chronically ill. Diseases such as alcoholism and drug addiction can make any continuous job impossible.

The sixth cause is that the elderly are more likely to be unwell. They are also more likely to be poor. In 2016, half of all people on Medicare had incomes less than $26,200. Almost 10 percent lived below the poverty level.

How It Affects You

Health care inequality increases the cost of medical care for everyone. People who can't afford preventive care wind up in the hospital emergency room. For example, it's less expensive to treat diabetes with medication than to treat a diabetic coma in the hospital. The Emergency Medical Treatment and Active Labor Act requires hospitals to treat anyone who shows up in the emergency room. These uninsured patients cost hospitals a staggering $10 billion a year. The hospitals passed this cost along to Medicaid.

 That cost is added to your tax bill.

In 2009, half of the people (46.3 percent) who used a hospital said they went because they had no other place to go for health care. They use the emergency room as their primary care physician. It's one reason the number of emergency room visits increased from 115 million in 2005 to 136 million in 2011.

Even those in the middle class who have insurance face devastation from health care inequality. In 2015, medical bankruptcies affected 1 million people. The insured were 3 percent more likely to declare bankruptcy than the uninsured. They were not prepared for unexpected deductible and coinsurance costs. Almost a third didn't know their hospital wasn't part of their plan. Around 25 percent found that the insurance denied their claims. 

Even those with Medicare aren't safe. The average 65-year-old couple faces $275,000 in medical bills during retirement. Most of them haven't saved enough to pay these bills without destroying their retirement dreams.

Solutions

Universal health care is a system that provides quality medical services to all citizens. The federal government offers it to everyone regardless of their ability to pay. It has several advantages. First, it lowers health care costs for an economy. The government controls the price of medication and medical services through negotiation and regulation. It also eliminates the administrative costs of dealing with different private health insurers. Health care providers don't have to hire staff to deal with different health insurance company rules.

 

Second, it forces hospitals and doctors to provide the same standard of service at a low cost. In a competitive environment like the United States, health care providers focus on new technology. They offer expensive services and pay doctors more. They try to compete by targeting the wealthy. That allows them to charge more to get a higher profit.

The Earned Income Tax Credit has reduced health care inequality for children. Those who have claimed the credit find their children have a healthier birth weight.

Full-day child care for children five and under leads to measurably healthier adults. Their blood pressure is lower and they are less likely to be obese.

Community-based health clinics help reduce health-care inequality in low-income areas. It's critical that they teach patients how to care for their chronic diseases. Studies show they can improve the health statistics in the neighborhood.