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Socio-economic Disparities in U.S. Healthcare Spending: the Role of Public vs. Private Insurance

Aged care support

Elena Capatina, Michael Keane, and Shiko Maruyama

In the US healthcare system, patients of different socio-economic status (SES) often receive disparate treatment for similar conditions. Prior work documents this phenomenon for particular treatments/conditions, but we take a system-wide view and examine socio-economic disparities in spending for all medical conditions at the 3-digit ICD-9 level. We also compare SES spending gradients for those covered by private vs. public insurance (Medicare). We use the Medical Expenditure Panel Survey 2000-14 to measure medical spending (total and out-of-pocket) for adult respondents. We estimate multivariate regressions for individual spending that control for medical conditions, demographics, health, and health insurance. Models are estimated separately by sex, education, and age. Within age-sex categories, we assess how spending on each condition varies with education (a proxy for SES). In the predominantly privately insured population aged 24-64, we find that system spending for several of the most socially costly medical conditions is strongly increasing in education. Prime examples are breast cancer for women and chest symptoms for men. These disparities are not explained by differences in health, insurance status, or ability-to-pay, suggesting they arise due to discrimination. But we find no clear evidence of SES spending gradients for individuals over 64 covered by the public Medicare program, suggesting that Medicare plays an important role in improving equity.