“Money and Medicine” The Economics of Health



By Dr. Elke Harris



The United States allocates 17.9% of its gross domestic product (GDP) toward health care. This rate is higher than any other country in the world (the GDP refers to the total value of goods produced and services provided in a country during one year.) Countries with economies on par with the United States spend far less on health care and have better health outcomes. Among the 35 similar (high GDP, high income) countries of the Organization of Economic Cooperation and Development (OECD), the average percentage of GDP allocated toward health care costs is 9%. The irony is the United States spends twice as much on health care, yet Americans are far from the healthiest people in the world.


Life expectancy rate and infant mortality rate, among other determinants, are key indicators of a nation’s health status. The life expectancy in the United States is 78.8, 26th out of 35. The United States ranked 29th out of 35 in infant mortality with a rate of 5.8 per 1,000. World Cancer Research Fund International ranks the United States as the 6th highest in cancer rates. It should also be noted that life expectancy and infant mortality rates are worse among poor, uneducated, non-White Americans.


A country is only as healthy as its sickest citizens and in any country, the sickest citizens are usually the poorest. This is also true for the United States. In addition to poverty, racial disparities abound in the American health care system. The Department of Health and Human Services (DHS) defines health disparities as “differences in health outcomes that are closely linked with social, economic, and environmental disadvantage.” The National Institutes of Health (NIH) define a health disparity as the “difference in the incidence, prevalence, mortality, and burden of disease and other adverse health conditions that exist among specific population groups in the United States.” The Center for Disease Control (CDC) defines health disparities as“preventable differences in the burden of disease, injury, violence, or opportunities to achieve optimal health that are experienced by socially disadvantaged populations.”


There may be a disparity as to how to define health inequality, however, the facts are the same. Minority populations are more likely to suffer adverse health outcomes as compared to their White counterparts. African-Americans are nearly twice as likely to die from stomach and prostate cancer. The incidence of breast cancer is lower in African-American women, yet they are 42% more likely to die from the disease. According to the CDC, African-Americans are 40% more likely to die from stroke, 30% more likely to die from heart disease, and 8 times more likely to die from HIV. Moreover, obesity is 40% higher and diabetes is 60% higher in African-Americans. Health disparities are also apparent in statistics regarding children. The infant mortality rate among African-Americans is twice that of White Americans. Compared to White children, African-American children are three times as likely to die from asthma. These statistics are not due to a genetic predisposition.


Factors contributing to disparities include income, education, occupation, language barriers, and geography. Statistically, a higher income and education correlate with healthier choices, access, knowledge and understanding, and thus produce more favorable results. People in occupations which provide employee sponsored health care coverage are more apt to access health care as a matter of opportunity.


Communication is vital to the physician-patient relationship. Medical jargon is difficult for the uneducated, and even more so when there are language barriers between medical personnel and patients. In regards to geography, the distance to and from medical facilities can often be a hindrance. Transportation, or the lack thereof, is a huge factor in getting access to health care. Also, geographic areas that are exposed to environmental toxins are associated with an increase in illnesses and health care costs.




There is disparity in insurance coverage, access to health care, and the quality or standard of care. Historically, Medicaid and Medicare have decreased health care disparities in the decades since these programs have been in existence. However, there is also the stigma associated with not being able to afford private insurance. There is an implicit bias on the part of medical professionals entrusted to render the standard level of care in a professional manner. Typically, government insurance programs cover less with regards to medication and procedures. In addition, these programs pay less in terms of reimbursement rates for office visits and procedures. For this reason, providers opt not to participate in Medicaid/Medicare, thus leaving a void in quality health care and/or a provider shortage in neighborhoods where the majority of residents are of a lower socio-economic class.


Then there is the phenomenon of “price discrimination.” This is the means by which hospitals charge the uninsured 2-4 times as much as the insured for the same service. This practice, though it is a legal one, magnifies economic inequities and adds to the financial hardship of the already impoverished.


Optimal health care should not be a privilege. Health care is a right, and health care disparity is inherently wrong. Its elimination should be a priority to lawmakers, policy makers, physicians and allied health professionals, insurance companies, and the individual American citizen. Indeed, the disparity in health care should be important to all American citizens, as it adds to the total health care costs and thus the overall spending of the United States. If the greatest disease burden is among the poor and minority populations, then it is prudent to implement policies that impede, if not eradicate, the progression of disease in these same populations.


This is possible but of course, requires financing. It takes funding to hire and retain qualified medical personnel. Monies are needed to foster an environment where education occurs at every encounter with the patient. Funds should be allocated to develop community health centers that are easily accessible by public transportation. A multilingual staff is a must. Investment in health is an investment in people. The investment will not only save lives, it will reap a return in lower health care costs in general and promote quality of life for all Americans.

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