Estimating the Economic Burden of Racial Health Inequalities in the United States

Abstract

The primary hypothesis of this study is that racial/ethnic disparities in health and health care impose costs on numerous aspects of society, both direct health care costs and indirect costs such as loss of productivity. The authors conducted three sets of analysis, assessing: (1) direct medical costs and (2) indirect costs, using data from the Medical Expenditure Panel Survey (2002-2006) to estimate the potential cost savings of eliminating health disparities for racial/ethnic minorities and the productivity loss associated with health inequalities for racial/ethnic minorities, respectively; and (3) costs of premature death, using data from the National Vital Statistics Reports (2003-2006). They estimate that eliminating health disparities for minorities would have reduced direct medical care expenditures by about $230 billion and indirect costs associated with illness and premature death by more than $1 trillion for the years 2003-2006 (in 2008 inflation-adjusted dollars). We should address health disparities because such inequities are inconsistent with the values of our society and addressing them is the right thing to do, but this analysis shows that social justice can also be cost effective.