Economic Impacts of Health Disparities in Texas 2020—an Update in the Time of COVID-19

Our health is fundamental to the quality of our lives. Many factors influence health, including individual characteristics such as genetic predispositions, and the physical and social environments in which we live, often called the “social determinants of health.” These social determinants have been shown to have a strong influence on lifetime health, especially for those who live in more challenging environments. We see evidence of this in the very different health outcomes and lifespans of people who live in the same city under different social and economic circumstances. For example, in Dallas County, boys born in the 75204 zip code (average household income $105,000) can expect to live to age 90, while boys born in the nearby 75215 zip code (average household income $41,000) have a life expectancy of only 63 years.

In Texas, as in much of the country, the social determinants of health, including access to health care, vary considerably by race and ethnicity. Black and Hispanic children are much more likely to be growing up in neighborhoods of concentrated poverty and their families are more likely to lack health insurance. Not surprisingly, there are also large disparities in health status, disease prevalence, and premature death by race and ethnicity. The COVID-19 pandemic is a real time reminder of how differences in environments and access to care lead to different health outcomes. Being more likely to work in front line service jobs, live in crowded and multigenerational housing, rely on public transportation, have underlying health conditions, and lack health insurance, the virus has taken a disproportionately deadly toll on Black and Hispanic people in the U.S. and in Texas.

Reducing the existing disparities in health will improve the lives of millions of Texans. Health can be improved by investing in public health and neighborhood infrastructure to make environments healthier and by increasing access to needed health care services. Most Texans say health care should be a priority and support more state spending on health programs. But there are always competing priorities for attention and resources. In weighing the value of investments to improve health, it is important to understand that disparities in health impose a substantial human cost and a significant economic burden to the Texas economy. This report puts numbers around that economic burden.

Updating estimates from our 2016 study, we find that differences in health status, disease prevalence, and life expectancy by race and ethnicity in 2020 cost Texas:

1. $2.7 billion in excess medical care spending annually;
2. $5 billion in lost productivity annually; and
3. 452,000 life years lost due to premature deaths, conservatively valued at $22.6 billion.

In a decade, these figures will increase by 22 percent as the Texas population grows larger and more diverse. By 2030, if current disparities remain, we estimate it will cost Texas: 

4. $3.4 billion in excess medical care spending annually, $6.1 billion in lost productivity annually, and 551,000 life years lost, conservatively valued at $27.6 billion.

The COVID-19 pandemic has created an additional set of economic impacts today due to environmental and underlying health disparities. Black and Hispanic populations are more likely to contract COVID-19, and when they do, are more likely to have a serious case that requires hospitalization or leads to death. While not a full assessment of the burden of disparities under this pandemic, we have created estimates of two types of economic impacts due to differences in the effects of COVID-19 on Black, Hispanic, and White populations in Texas.

5. If Black and Hispanic populations in Texas were hospitalized for COVID-19 at the same rates as non-Hispanic Whites, there would have been 24,000 fewer COVID-19 hospitalizations in Texas through September 2020. These hospitalizations represent an estimated $558 million in health care spending on the virus, health care resources that could have been saved or applied to meet other health needs. This figure does not account for the disproportionate human toll of stress and loss on Black and Hispanic families, the lost work time, or any long-term health impacts.
6. If Black and Hispanic populations in Texas had the same mortality rates as their non-Hispanic White counterparts, there would have been 5,000 fewer deaths as of the end of September 2020, reducing the Texas COVID-19 death toll by 30 percent, from 16,000 to 11,000. These premature deaths represent 60,000 life years lost, conservatively valued at $3 billion.

This study was funded by the Episcopal Health Foundation.

Download the full report: Economic Impacts of Health Disparities in Texas 2020