Why does this happen?
A major contributing factor to the reason healthcare tends to be more expensive in predominantly black neighborhoods is accessibility.
For instance, in a University of Michigan study, published in the Journal of the American Geriatrics Society, the research found that the cost of the last six months of life under the Medicare healthcare insurance system for patients is $7,100 more expensive for black people. This translates to 20% more than the cost for a white person, which is considerably staggering.
The racial composition of neighborhoods significantly influences the use of healthcare due to its impact on health provider supply. According to a PubMed research study, based on the 2006 Medical Expenditure Panel Survey and the 2000 Census, fewer health providers were located in minority neighborhoods. This was revealed to be largely due to low reimbursement rates for providers.
Hospital location is a major player in how price is located, as many healthcare options are curated in response to residential segregation. For instance, studies have shown that it is statistically more likely for hospitals with better quality care, more advanced equipment and technology, as well as staff with greater expertise, to be placed in areas where reimbursement is higher. In black neighborhoods, there tends to be 60% more reliance on community-based healthcare providers due to the resulting lack of primary care within the residential area. Evidently, there is less incentive for large healthcare providers to base themselves within black neighborhoods.
Hospitals serving the largest share of black Medicare patients saw $283 lower mean per patient day revenue than other hospitals from 2016 - 2018, which also equates to $111 less mean per patient profit. These numbers translate to a 21.6% lower average reimbursement rate. This is in comparison to white neighborhoods, where there are typically higher proportions of individuals who are insured and are able to pay for services out-of-pocket.
The National Academy of Medicine (formerly recognized as the Institute of Medicine), released a report in 2005 that identified that racial and ethnic minority groups receive lower quality care for higher costs when compared to predominantly white neighborhoods. The black community, specifically in impoverished areas, is less likely to have access to appropriate cancer, cardiac, kidney, and AIDS type care than white people. A further study highlighted that 400 hospitals across the United States had black patients receiving older and more conservative treatments. Over time, this contributes to higher costs due to treatment inefficacy.
Naturally, there are several other significant factors of consideration that contribute to higher expenses in black neighborhoods, which include the following:
- Commute costs: It can be significantly more expensive for black people to access healthcare, as due to residential segregation, the appropriate hospitals are not closely approximated. Black citizens are more likely to fork out greater costs in order to travel to their appointments at hospitals that are able to provide the right care.
- Insurance barriers: Many people within particularly poverty-stricken areas do not have access to insurance, with lower income levels not fulfilling insurance eligibility criteria. Several states have not expanded their Medicare coverage, with around 30 million black people remaining uninsured. This means healthcare comes at an inevitably higher cost, which can set back communities from receiving the care they need.
- Higher health risks: There is ample evidence to suggest black citizens have a higher predisposition to certain health conditions, such as diabetes. Statistics emphasize the need for greater healthcare at lower costs so that high-quality treatment and effective care are both accessible and affordable.
