Duke 2008 | ASHE | Equity and Efficiency in Health and Healthcare

Large health disparities across socioeconomic (SES) groups in the United States have received increasing attention in recent years from researchers, the health policy community, and the general public. Adults ages 25-50 that have a college degree will on average live 5 years longer than those with less than a high school education. And at every age while alive, health is better for the more highly educated: for example, 6% of college educated adults report being in fair or poor health, compared to 26% of those with less than a high school education.

This paper quantifies foregone economic value associated with worse health among low SES groups compared to the health of high SES groups. More specifically, we estimate the annual dollar value of the benefits that would accrue to disadvantaged American adults if they experienced the lower mortality rates and better health of more advantaged Americans. A recent European Commission report (Mackenbach 2007) studied the foregone benefits of lower health among low SES groups in Europe, estimating the value at 9.5% of GDP. We use an approach slightly different from that of Mackenbach, but with the same research objective.

Our modeling approach relies on estimation of SES differentials in mortality using the National Longitudinal Mortality Study, as well as secondary estimates of SES differentials in health from published studies. The primary measure of advantage/disadvantage in our study is based on education, which is very strongly related to economic status, closely associated with health and mortality, and the causal effect of which has been widely studied. We rely on existing literature for estimating the value of a Quality Adjusted Life Year. We then build a simulation model to estimate the potential benefits of improving the health of low SES groups in the United States.

Our estimates suggest a quite large potential benefit of improving the health of disadvantaged Americans. These estimates are not designed to be a full accounting of the social costs and benefits of particular policies and programs that could reduce health disparities. Instead, they provide a metric for comparing the order of magnitude of health disparities in relation to other social issues vying for attention. Our results suggest large potential aggregate payoffs to identifying cost-effective ways of improving the health of low SES groups.