America’s Healthcare System – Part 8
Why is the US Healthcare System Afflicted by So Many Disparities?
This is the eighth essay in Civic Way’s series on US healthcare. In this essay, we address another of healthcare’s major flaws—service disparities. The author, Bob Melville, is the founder of Civic Way, a nonprofit dedicated to good government, and a management consultant with over 45 years of experience improving public agencies.
Highlights:
The US suffers from acute healthcare disparities, in outcomes and quality
Economic disparities are more pronounced in the US than in comparable nations
Racial disparities are stark in outcomes and care access and quality
Other healthcare disparities stem from care gaps, medical errors, service lapses and billing variances
Such disparities in outcomes and care are products of many factors, including socio-economic factors unique to the US, but inadequate oversight should not be overlooked
The Big Picture
Every year, Americans pay twice as much for healthcare as citizens of other developed nations. Given how much we spend, we should have far better health outcomes than other nations. Sadly, our outcomes are measurably worse, and the gap between the US and our peers is growing.
There are many reasons for this phenomenon. Inadequate prevention (and public health capacity). Disparities in care access and quality. Fragmented healthcare resources. An ill-conceived healthcare financing (insurance) system. Profit-driven (instead of people-driven) innovation. Antiquated administrative systems.
In our last essay, we examined the prevention issue. In this essay, we focus on the second factor—disparities. In future essays, we will outline the other major issues, and some interesting ideas for fixing those flaws.
America’s Healthcare Disparities
What is meant by healthcare disparities? The Centers for Disease Control and Prevention (CDC) identifies them as “preventable differences in the burden of disease, injury, violence, or opportunities to achieve optimal health...” Examples include differences in health outcomes, insurance, and care access and quality.
The US suffers from acute healthcare disparities. Our offerings range from some of the best to some of the worst among developed nations. We are known for thrilling innovations as well as world class hospitals. Yet many poor urban and rural communities are woefully underserved.
The US lags behind its peer nations in outcomes. The US’ overall quality ratings—in treatment outcomes, patient safety and preventable deaths, for instance—compare poorly to those of most peer nations. Some of these healthcare disparities are in more detail below.
Economic Disparities
While the wealthy enjoy the best healthcare in every nation, the economic disparities are more pronounced in the US. Health outcomes are consistently worse for the poor in the US than for those with more means. For example, low-income individuals have lower average life expectancies, and poorer maternal and infant health outcomes, than more affluent individuals.
The deprived tend to receive worse healthcare than those with ample insurance or resources. Some are uninsured and some under-insured. The un- and under-insured, dominated by minorities, must often delay or forego healthcare. As a result, many low-income individuals don’t receive the healthcare or medications they need when needed. The poor also have less access to many of the determinants of good health, like safe neighborhoods, stable housing and healthy foods.
The ACA mitigated some of these economic disparities, primarily by making Medicaid and other insurance more available to those with less means. It was especially effective in expanding eligibility for Medicaid, However, some providers refuse to accept Medicaid patients, citing lower reimbursement rates and administrative red tape. In addition, ACA coverage gains were eroded by Trump-era actions (e.g., eligibility and outreach cuts).
Racial Disparities
US healthcare outcomes also differ significantly by race. According to the National Center for Health Statistics, certain racial groups—like Blacks, Hispanics and American Indians—have lower life expectancy than whites. Premature excess death rates are three times higher for minorities than whites.
The racial group with the worst health outcomes is African-Americans. Two examples. Blacks have the lowest life expectancy of any racial group. And Black women are three times more likely than white women to die during pregnancy or from pregnancy-related causes.
There is some overlap between racial and economic disparities. Minorities carry more medical debt than whites. Minorities have the lowest insurance rates, and less paid sick leave, than whites. In the US, inadequate insurance and unhealthy job conditions significantly contribute to subpar healthcare and health outcomes.
There is considerable evidence that white patients receive better healthcare than minorities. For instance, minorities tend to have less access to primary care doctors, which forces them to more costly—and stressful—emergency rooms. Some research also suggests physician bias which can yield less aggressive treatment.
Other Healthcare Disparities
Even if we don’t suffer economic or racial disparities, we often encounter other healthcare disparities like:
Care gaps – Whether due to insurance, access or resource limits, healthcare can be intermittent. In some areas, like postpartum care for new mothers, care continuity can suffer.
Medical errors – The US’ medical error rate is too high compared to peer nations. Such errors contribute to thousands of deaths every year. Even proven procedures can be unduly risky for the wrong cases.
Surgical errors – While the US has a lower post-operative sepsis rate than some peer countries, it has more post-operative complications[i]. US hospital infections are far more deadly than car crashes or homicides.
Poor customer service – While some innovations—like telemedicine—will help, the US healthcare industry continues to be plagued by scheduling delays, long ques, crowded waiting rooms and resource constraints.
Confusing billing practices – Incomprehensible bills. Different charges for the same service. Hidden pricing rationales. Shifting costs. Misleading discounts. And surprise bills, especially from out-of-network providers.
Unfortunately, this list is by no means complete.
Why So Many Disparities?
Healthcare disparities have many causes. Socio-economic factors. Employment status. Insurance. Regulatory incongruities. Profit pressures. Even for similar healthcare facilities and services, patient access can vary dramatically. It is hard to quantify the relative correlation between healthcare disparities and their causal factors, but some factors loom larger than others.
Economic and racial disparities are both cause and symptom, and rampant. As the pandemic showed, minorities and the poor are more susceptible to chronic conditions[ii] that burden the healthcare system and undermine health outcomes. The US has relatively high rates of such conditions due to their prevalence among disadvantaged groups.
Minority and low-income Americans, whether urban or rural residents, are more vulnerable than other citizens to the factors that imperil physical and mental health. More likely to postpone or forego medical care due to cost. Higher teen birth rates. More housing instability (eviction, foreclosure and homelessness). Greater exposure to other health threats like crime and pollution.
The Need for Oversight
The healthcare industry employs many different business models—government, nonprofit and for-profit models. While the for-profit model can work well, if not accompanied by strong oversight, it can fail.
The hospice sector exemplifies how for-profit hustlers can exploit a weak regulatory scheme and exacerbate care disparities. In 1974, the hospice movement was launched to help patients die with dignity. Today, about half of all Americans die in hospice care. However, the hospice movement has devolved from a noble, charitable calling into a $22 billion profit-driven—and mostly tax-funded—enterprise.
Since the early 1980s[iii], Medicare has paid providers a set daily rate for each patient, without regard to the quantify or quality of care delivered. It thereby incentivizes for-profit providers to keep its beds full and costs low. Increasingly, hospice firms seek patients who are not terminally ill, and Medicare hospice care costs are rising for patients whose stays exceed six months[iv].
For-profit enterprises now dominate the hospice sector. From 2000 to 2022, hospices controlled by for-profit providers rose from 30 to 70 percent. From 2011 to 2020, hospices owned by private-equity firms tripled. The average Medicare margin for for-profit hospices is about three times that for nonprofit hospices.
In some states, this has led to the proliferation of small “churn and burn” firms—often run by medical novices. They open a hospice, submit bills until audited, close their doors, keep the money, buy a new license (and Medicare billing number), and transfer the patients to the new hospice. The number of new hospices has skyrocketed in such counties as Clark, Harris, Los Angeles and Maricopa.
The primary problem? Weak oversight. Despite widespread quality concerns, hospices are only inspected once every three years. Even when fraud or treatment problems are discovered, the errant hospices rarely lose funding[v]. CMS can demand repayment when hospice patients stay over six months, but hospices often discharge old patients or recruit new patients to evade accountability.
The result? Excessive fraud and dubious care. In 2018, the DHHS Office of Inspector General estimated that inappropriate billing cost taxpayers “hundreds of millions of dollars.” In 2021, the federal government recovered over $1.6 billion through qui tam lawsuits. Some terminal patients are neglected in their last days. Some patients not terminally ill are denied essential treatment (e.g., chemotherapy).
Closing Thoughts
Americans have become increasingly accustomed to—and insistent on—uniformity of service. We expect responsive customer service for virtually everything. Retail. Car repairs. Public services. Telephone. Internet. Tech support. When we don’t receive the kind of service we expect, we demand better.
Why then are we so tolerant of healthcare disparities? Perhaps the healthcare industry, with its exasperating patchwork of providers, insurers, regulators and rules, has desensitized us to its flaws. Perhaps some of us are too ill or weary to fight that fight. Perhaps we feel too powerless to change it. Perhaps we just find it easier to focus our indignation elsewhere.
The US is more economically and socially diverse than most nations, but it also has more resources. There is simply no excuse for our healthcare disparities. Leaving so many of our fellow Americans without the care they need is shameful. It is time to demand better.
[i] Common examples of post-operative complications include pulmonary embolism or deep vein thrombosis
[ii] These conditions include hypertension, heart disease and type 2 diabetes.
[iii] Hospices became Medicare-eligible under the Reagan administration.
[iv] Six months is the maximum period for which Medicare will reimburse hospices for one patient.
[v] According to the General Accounting Office, for the 2014-17 period, only 19 of 400,000 US hospices lost Medicare funding. However, CMS was recently given the latitude to fine noncompliant hospices.