The Impact of Income Inequality on Out-of-Pocket Healthcare Costs

At our office, like at most doctors’ offices, patients grumble about paying copays and other out-of-pocket expenses. Last week, one patient in particular caught my attention when she complained that her neighbor doesn’t have to pay any out-of-pocket costs for her kids because their family qualifies for Massachusetts' Medicaid program.

My initial reaction was to dismiss the complaint. I reasoned to myself that the $15 copay is nothing compared to the money this patient clearly paid for her cell phone, her clothes, and other luxury goods I could see she had. What stopped me, though, was her comment about the neighbor. For this patient it was the perceived unfairness of who had to pay and who didn’t that mattered to her.

Let’s look at this situation another way. Our pediatric practice is located in Plymouth County, Massachusetts (you know: the Pilgrims, America’s Hometown, we have a famous rock stamped 1620), and we draw patients from towns throughout the county. According to the U.S. Census Bureau, the median family income in Plymouth County is $86,251 which, while high for the nation as a whole (U.S. median family income is $62,982), in Massachusetts it ranks us 7th out of 14 counties; our county is the Massachusetts "middle" class.

What’s important to note is that, within Plymouth County itself, the income differences between "poor" and "middle" classes are insignificant when you compare them to the huge differences between the "middle" and "upper" class. For example in Carver, Mass., the average family income is $85,996 while our neighbors in Duxbury, Mass., just two towns over, have an average family income of nearly double that at $139,873. Now place that in the context of the fact that a Massachusetts family of four can earn up to 400 percent of the federal poverty limit (currently $94,200/year) and receive totally free healthcare for their children under age 18. Given this, it was starting to make sense to me that our patient that earned only slightly more than the neighbor who received healthcare with no personal out-of-pocket costs felt it was unfair she had to pay. After all, she only has to look as far as Duxbury to know that she was far from rich.

That understanding aside, what really troubles me is that my complaining patient begrudges her even less-fortunate neighbor who doesn’t have to pay. The middle class blaming the poor class for their financial woes isn’t going to help any of us.

So, I’ve decided to do something about it. I am using this blog post to promote two resources to my readers, my patients, and anyone else who will listen to me:

1. For an easy-to-follow overview of how our current income inequality got this way, I highly recommend visiting Inequality Is, a public-education site designed to help voters better understand income inequality.

2. See the new documentary and winner of the Special Jury Prize at the Sundance Film Festival:" Inequality for All, A Passionate Argument for the Middle Class." Find a showing near you here.

I’ll end with this quote from Dr. Richard ("Buz") Cooper, the director of the Center for the Future of the Healthcare Workforce at New York Institute of Technology and a senior fellow in the Leonard Davis Institute of Health Economics at the University of Pennsylvania:

 "Costs are higher and outcomes poorer in countries where income inequality is greater, and the US is #1. This is not to say that our system doesn’t have other problems, from over-regulation to over-utilization, nor that better ways to care for the poor cannot be found. What it does say is that, no matter what else is done, the US will not be able to afford the high health care costs of income inequality and that the only durable solutions are to deal with its root causes."