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The Keckley Report

Income Equality and Healthcare in the U.S.

By January 27, 2014March 1st, 2023One Comment

At the Davos World Economic Forum last week, income inequality was a prominent theme. WEF reported that in the past decade, 92% of global income growth in the past decade has benefited the world’s richest 5%. Income inequality, as it turns out, is widespread in developed nations. And globalization of commerce by multi-national companies contributes to widening gaps between the rich and poor.

 It’s not a surprise, then, that Income inequality is a challenge in the U.S. The facts are undeniable, but the implication for the health industry is not so clear. First, the facts:

 The gap between our rich and poor in the U.S. is wide and growing: In 2012, the top 1% of earners in the U.S. collected 19.3% of total household income per a study by Emmanuel Saez at the University of California. The incomes of the top 1% grew by 31.4% from 2009 to 2012, compared to 0.4% for the remaining 99% per government data.

 The public, especially the young, is sympathetic to income inequality but unclear about what to do about it. A USA Today/Pew poll of 1504 adults January 15-19 found 65% believed the gap between the rich and poor had increased in the past 10 years vs. 25% who felt it was the same and 8% who thought it had decreased.  The majority (50%) felt ‘circumstances beyond an individual’s control ‘were more to blame than lack of effort (35%). 82% favored increased government attention to poverty, but opinions split on whether previous programs to help the poor had been effective. Adding complexity, a Brookings poll (June, 2013) found younger adults more sympathetic to the plight of the poor than older generations.

Not so clear are the implications for the health care industry. Though a valid case can be made that certain not for profit public hospitals and academic medical centers bear the brunt of the care and costs of the poor, the industry as a whole is profitable and healthy. It has not been disadvantaged by our nation’s growing income inequality.  The costs of caring for the 47 million uninsured and 48 million in Medicaid has absorbed by charging more to others and by purging unprofitable products and services from our offerings (unless restricted by regulations or constrained by mission statements). But the national issue of income inequality is increasingly a health industry problem. And the system’s ability to absorb these costs may be at its limit.

 Our poorest are sicker, their care is costly, and their numbers are growing. They have less access to physicians and hospitals. Their “health system” is a patchwork of public clinics, hospital emergency departments, and specialists on call willing to see them. They are young and frail elderly, urban and rural, black, brown and white, educated and not, and their numbers are increasing.

 Those who pay the $70,000 membership fee to the World Economic Forum and attended the Davos Summit last were no doubt enlightened, but in reality, the four-day cocktail party in the Swiss Alps was more about mingling with the 1% than finding a solution to the 99%. But to its credit, WEF cast its spotlight on the issue of income inequality.

 That spotlight in the U.S. will shine brightly on the health care industry. It is an issue that confronts our organizations and professionals everyday. But the solution involves more than Medicaid expansion, access to coverage through health exchanges and bigger discounts from drug companies. It involves new incentives for risk takers to manage underserved populations and elimination of institutional barriers between health and human services programs. It requires investment that’s targeted, and results that are measurable. It requires a new paradigm for training and keeping a healthcare workforce for whom caring for the poor provides a measure of income security and professional satisfaction. It means increased investments in preventive health and primary care integrating physical and mental health. No less.

The health care industry will play a key role in solving the national dilemma of income inequality.  It is not the cause. But it can be a big part of the solution.

One Comment

  • Paul Shillam says:

    I was particularly taken by your comment, "It involves new incentives for risk takers to manage underserved populations and elimination of institutional barriers between health and human services programs. It requires investment that’s targeted, and results that are measurable." As a tax-exempt provider, this has impacts in expanding the scope of the former patient financial services to a broaden human services. I can see that organizations will need to expand their connection with other human service organization to include health, housing, education, behavorial, and family engagemenrt collaboratives. What is needed is a robustness in the care of the underseved that has not been realized; truly providing a "hand-up".