[D]isparities in health and health care impose costs on many parts of society, including individuals, families, communities, health care organizations, employers, health plans, and government agencies, including, of course, Medicare and Medicaid. These costs include direct expenses associated with the provision of care to a sicker and more disadvantaged population as well as indirect costs such as lost productivity, lost wages, absenteeism, family leave to deal with avoidable illnesses, and lower quality of life. Premature death imposes significant costs on society in the form of lower wages, lost tax revenues, additional services and benefits for families of the deceased, and lower quality of life for survivors.

Estimating direct medical costs and indirect costs to the economy and to individuals is methodologically complex (Russell, 2011) and beyond the focus of this report, but the existing literature hints at its scale (Cutler et al., 1997; Gold et al., 1996; LaVeist et al., 2009; Waidmann, 2009). For example, one analysis that focused only on the health disadvantage experienced by U.S. blacks, Asians, and Hispanics relative to non-Hispanic whites found that the combined costs of health inequalities and premature death between 2003 and 2006 was $1.24 trillion (LaVeist et al., 2009). This estimate relies on certain assumptions, but it suggests that the costs associated with the entire population having a health disadvantage relative to other high-income countries are also very high. Although current thinking on this topic is still evolving (e.g., see Acemoglu and Johnson, 2007), some economists have found a strong positive correlation between life expectancy and economic growth (Bloom et al., 2004). Quantifying the net effects of longevity and illness on economic growth and productivity is an area of ongoing research, but it seems likely that the economic costs of the U.S. health disadvantage are substantial.

The pervasive U.S. health disadvantage documented in this and the preceding chapter could arise from problems with health care, individual behaviors, social factors, the environment, or various policies. In Part II of the report, we explore these issues in an effort to explain why, compared with their counterparts elsewhere, Americans face shorter lives and greater illness at almost all ages.

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