Healthcare costs could triple by 2040, analysis shows

Business News | 22 Jun |

A Deloitte analysis shows that healthcare costs for an average American could triple by 2040 if health inequities are unaddressed, while annual spending could exceed $1 trillion.

“Healthcare costs are already at a crisis level for the industry, and if left unaddressed, the trajectory of costs could result in an even greater number of unaffordable bills and declining health and productivity for everyone,” says Neal Batra, principal, life sciences and health care, Deloitte Consulting LLP. “It’s critical that we act now to change this trajectory to achieve a better, more equitable future of health for all.”


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Key takeaways

• Health inequities account for approximately $320 billion in annual health care spending today, and if unaddressed, this figure could grow to $1 trillion or more by 2040.

• The projected rise in health care spending could cost the average American at least $3,000 annually, up from today’s cost of $1,000 per year.

• Every organization today should address health inequities by intentionally designing for an equitable future of health.

• Trust, partnerships, measurement, and addressing individual and community level disparities are critical underlying mechanisms for the industry to eliminate health inequities.

Why this matters

Inequities across the U.S. health care system not only affect underserved populations’ access to affordable, high-quality care, but they also create avoidable costs and financial waste that impact all of society. Inequities impact the ability for every individual to achieve health and well-being and the costs have greater impact on historically underserved populations. The health care sector is under pressure to reduce health care spending while increasing quality of care. Persistent health inequities have a substantial impact on health outcomes and spending; however, the industry hasn’t found a way to address them within this context.

To understand how far-reaching this issue is, Deloitte developed a model to quantify the link between health spending and health inequities related to race, socioeconomic status, and sex/gender as summarized in the report, “U.S. health care can’t afford health inequities.” Deloitte analyzed several high-cost diseases (e.g., diabetes, asthma, cardiovascular), to determine the proportion of spending that could be attributed to health inequities today, and forecast this spending to 2040, taking into account population and per capita spending changes.

The analysis — a multi-pronged research approach meant to quantify and vet the costs of health inequities — showed that health inequities cost approximately $320 billion in annual health care spending today and could add up to more than $1 trillion by 2040. The cost could exceed that if unaddressed, directly impacting affordability and access, costing the average American at least $3,000 annually, up from $1,000 annually. Historically underserved communities could be even more disproportionately impacted.

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