Social Determinants of Health Linked to Higher Health Care Costs, Payer Expenditures

New research exhibits the influence that social determinants of health (SDOH) have on health care spending across all major insurance programs in the US.¹ Significant links were observed between specific SDOH factors and health care spending, highlighting different cost drivers across Medicare, Medicaid, and private insurers, according to the study published today in JAMA Network Open.

The investigators aimed to assess the relationship between SDOH and health care expenditures across Medicare, Medicaid, and private insurers, drawing from data from the 2021 Medical Expenditure Panel SDOH Survey.

This cross-sectional study analyzed 14,918 insured adults representing the noninstitutionalized US population. The data analysis was conducted between October 2023 and April 2024 with a primary objective to determine whether SDOH factors were associated with health care expenditures.

Participants had a mean age of 52.5 years, and 56.8% were female. The majority, 70.5%, came from middle- to high-income families, and 68.5% were privately insured. Health care costs varied by insurance type, with median annual expenditures of $1648 for Medicaid, $3643 for Medicare, and $1369 for private insurance. Specific SDOH factors had a significant impact on costs.

Researchers categorized SDOH into 5 domains established by Healthy People 2030: educational access and quality, health care access and quality, neighborhood and built environment, economic stability, and social and community context. Using a 2-part econometric model—combining probit regression and a generalized linear model—the study examined the influence of cost in US dollars across different insurance types.

• Medicaid Expenditures:
  • Educational attainment: Medicaid beneficiaries with a high school diploma or GED had on average $2245.39 lower annual expenditures than those with less than a high school education (95% CI, −$3700.97 to −$789.80)
  • Social isolation: Medicaid beneficiaries who often felt isolated had $2706.94 higher annual health care costs than those who did not experience isolation (95% CI, $1339.06-$4074.82).
• Medicare Expenditures:
  • Neighborhood and built environment: Medicare beneficiaries living in neighborhoods with fewer parks faced $5959.27 higher annual costs compared with those in park-rich areas (95% CI, $1679.99-$10,238.55).
  • Economic stability: Confidence in covering unexpected expenses was associated with lower Medicare expenditures—those who were confident spent $3743.98 less per year than those who were not confident (95% CI, −$6500.68 to −$987.28).
• Private Insurance Expenditures:
  • Medical discrimination: Individuals who reported experiencing medical discrimination had $2599.93 higher annual private insurance costs than those who did not report such experiences (95% CI, $863.71-$4336.15).
  • Debt collection contact: Private beneficiaries contacted by debt collectors in the past year had $2033.34 higher annual expenditures than those without such contact (95% CI, $896.82-$3169.86).

Implications of SDOH and Rising Insurance Spending

These data demonstrate that SDOH factors, ranging from education and social isolation to neighborhood quality and medical discrimination, play a critical role in shaping health care costs. Medicaid, Medicare, and private insurance programs all showed significant variability in expenditures based on these nonclinical factors.

Over the past few years, the Center for Medicare and Medicaid Innovation has introduced several models to address health disparities with funding adjustments based on SDOH.² While these changes offer promise, the latest adjustments reflect a complex landscape where some regions benefit more than others, according to a recent evaluation published in JAMA Health Forum, which calls for ongoing refinement in policy design.³

The current findings support further attention from health care payers and policy makers that could integrate SDOH considerations into decision-making processes.¹ By addressing the root causes of higher expenditures—such as social isolation, economic insecurity, and lack of access to green spaces—insurers may be able to better manage health care costs while simultaneously promoting health equity.

References

1. Mohan G, Gaskin D. Social determinants of health and US health care expenditures by insurer. JAMA Netw Open. 2024;7(10):e2440467. doi:10.1001/jamanetworkopen.2024.40467

2. Grossi G. CMMI's latest payment models address health disparities, but challenges remain. AJMC^®. September 22, 2024. Accessed October 22, 2024. https://www.ajmc.com/view/cmmi-s-payment-models-address-health-care-disparities-but-challenges-remain

3. Powell WR, Chamberlain L, Buckingham WR, et al. Evaluating policy changes for adjusting payment to address health disparities. JAMA Health Forum. 2024;5(9):e242905. doi:10.1001/jamahealthforum.2024.2905