Socio-Economic Disparities in US Healthcare Spending: The Role of Public vs Private Insurance

Abstract

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 socioeconomic 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). Using data on adult respondents from the Medical Expenditure Panel Survey 2000-14, we estimate multivariate regressions for individual medical spending (total and out-of-pocket) controlling for medical conditions, demographics, health, and insurance, 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, system spending for several of the most socially costly conditions is strongly increasing in education (e.g., 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. However, we find no positive SES gradients for individuals over 64 covered by the public Medicare program, suggesting that Medicare plays an important role in improving equity.

Keywords: Education Gradient, Health Insurance Systems, Healthcare Equity, Private and Public Health Insurance, Socio-Economic Disparities

JEL Classification: I13, I14, I18