1. CHAPTER 5 SOCIOECONOMIC ISSUES IN MEDICINE 17
5
SOCIOECONOMIC ISSUES IN MEDICINE
STEVEN A. SCHROEDER
All nations—rich and poor—struggle with how to improve the health of the
public, obtain the most value from medical services, and restrain rising health
care expenditures. Many developed countries also wrestle with the paradox
that their citizens have never been so healthy or so unhappy with their
medical care. Despite the reality that only 10% of premature deaths result
from inadequate medical care, the bulk of professional and political attention
focuses on how to obtain and pay for state-of-the-art medical care. By com-
parison, 40% of premature deaths stem from unhealthy behaviors—includ-
ing smoking (about 44%; Chapter 31); excessive or unwise drinking (about
11%; Chapter 32), obesity and insufficient physical activity (about 15% but
estimated to rise substantially in the years to come; Chapters 15 and 227),
illicit drug use (about 2%; Chapter 33), and imprudent sexual behavior
(about 3%; Chapter 293) (E-Fig. 5-1). Genetics (Chapter 39) account for an
additional 30%; social factors—discussed next—account for 15%, and envi-
ronmental factors (Chapter 18) account for 5%. Of the major behavioral
causes of premature deaths (Fig. 5-1), tobacco use (Chapter 31) is by far the

2. CHAPTER 5 SOCIOECONOMIC ISSUES IN MEDICINE18
most important, although recent increases in obesity (Chapter 227) and
physical inactivity (Chapter 15) are also alarming.
SOCIAL STATUS INFLUENCES HEALTH
Socioeconomic status, or class, is a composite of many different factors,
including income, net wealth, education, occupation, and neighborhood. In
general, people in lower classes are less healthy and die earlier than people at
higher socioeconomic levels, a pattern that holds true in a stepwise fashion
from the poorest to the richest. In the United States, the association between
health and class is usually discussed in terms of racial and ethnic disparities;
but in fact, race and class are independently associated with health status, and
it can be argued that class is the more important factor. For example, U.S.
racial disparities in adult smoking prevalence are relatively small among
whites, blacks, and Hispanic Americans (Fig. 5-2), whereas there are huge
differences among smoking rates by educational level (Fig. 5-3). U.S. physi-
cians have reduced their smoking prevalence to a record low of only 1%.
In part, the relationship between class and health is mediated by the higher
rates of unhealthy behaviors among the poor, such as the inverse relationship
between educational attainment and cigarette smoking, but unhealthy behav-
iors do not fully explain the poor health of those in the lower socioeconomic
classes. Even when behavior is held constant, people in lower socioeconomic
classes are much more likely to die prematurely than are people of higher
classes. Of interest is that first-generation immigrants appear to be more
protected from the adverse health consequences of low socioeconomic status
than are subsequent generations.
It is unclear which of the components of class—education, wealth (either
absolute wealth or the extent of the gap between rich and poor), occupation,
or neighborhood—makes the greatest impact on a person’s health. Most
likely, it is a combination of all of them. For example, the constant stress of a
lower class existence—lack of control over one’s life circumstances, social
isolation, and the anxiety derived from the feeling of having low status—is
linked to poor health. This stress may trigger a variety of neuroendocrinologic
responses that are useful for short-term adaptation and bring long-term
adverse health consequences.
What can clinicians do with this knowledge? Clearly, it is difficult to write
prescriptions for more income or for better schooling or neighborhoods or
jobs, but physicians can encourage healthy behavior. At key times of transi-
tion, such as during discharge planning for hospitalized patients, clinicians
should be attentive to social circumstances. For patients who are likely to be
socially isolated, clinicians should encourage or arrange interactions with
family, neighbors, religious organizations, or community agencies to improve
the likelihood of optimal outcomes. In addition, physicians should seek to
identify and to eliminate any aspects of racism in health care institutions.
Finally, in their role as social advocates, physicians can promote such goals as
safe neighborhoods, improved schools, and equitable taxation policies.
ECONOMIC ISSUES IN MEDICAL CARE
Medical care today is on a collision course. On the one hand, an ever-expand-
ing science base continuously generates new technologies and drugs that
promise a longer and healthier life. Add a public eager to obtain the latest
breakthroughs touted in the media and over the Internet, plus a well-stocked
medical industry eager to meet that demand, and it is easy to understand why
expenditures continue to soar. On the other hand, payers for medical care—
health insurance companies, government (federal, state, and local), and
employers—increasingly bridle at medical care costs.
The United States continues to lead the world in health care expenditures
(Fig. 5-4). In 2008, it spent about $2.4 trillion, amounting to 17% of its gross
domestic product. It is projected that expenditures will continue to rise,
exceeding20%by2014.Mostpolicyanalystscontendthatthisrateofincrease
in medical care expenditures is unsustainable, but the same has been said for
many years. Few other countries have double-digit health care expenditures,
and none comes close to 15% (see Fig. 5-4). A potent combination of supply
and demand factors explains why the United States spends so much. On the
supply side, it far exceeds other countries in the availability and use of expen-
sive diagnostic technologies, such as magnetic resonance imaging and com-
puted tomography (E-Fig. 5-2). For example, the United States has four times
as many magnetic resonance imaging machines per capita as does Canada.
Similar patterns exist for therapeutic technologies, whether coronary angio-
plasty, cancer chemotherapy, or joint prostheses. The differences are espe-
cially dramatic in older patients. For example, in the 65- to 69-year age group,
the United States performed 1.95 more carotid endarterectomy procedures
per capita than did Canada; but above the age of 80 years, the ratio was 8.7.
Other supply factors that drive high medical expenditures in the United
States include a fee-for-service payment system that compensates physicians
much more for using expensive technologies than when they do not; a
medical professional work force that earns much higher incomes relative to
the population than in other nations and that emphasizes specialist rather
than generalist practice; accelerated development of new and costly medica-
tions that are directly marketed to consumers; much higher administrative
costs; higher rates of fraud and abuse; and a high rate of defensive medicine
in response to pervasive fears about medical malpractice suits. Supply factors
that do not appear to be unique to the United States are the number of physi-
cians or hospitals. Many other developed countries have a much larger
0
50
100
150
200
250
300
350
400
450
20
85
43 29 17
112
365
435
*
Sexual
behavior
Alcohol
Numberofdeaths(thousands)
Motor
vehicle
Guns Drug
induced
Obesity
inactivity
Smoking
* Also suffer from mental
illness and/or substance abuse
FIGURE 5-1. Number of U.S. deaths from behavioral causes. (Data from Mokdad AH,
Marks JS, Stroup DF, Gerberding JL. Actual causes of death in the United States, 2000. JAMA.
2004;291:1238-1245; Mokdad AH, Marks JS, Stroup DF, Gerberding JL. Correction: actual
causes of death in the United States, 2000. JAMA. 2005;293:293-294; Flegal KM, Graubard
BI, Williamson DF, et al. Excess deaths associated with underweight, overweight, and
obesity. JAMA. 2005;293:1861-1867. Adapted from Schroeder SA. Shattuck lecture: we
can do better—improving the health of the American People. N Engl J Med. 2007;357:
1221-1228.)
0% 10% 20% 30% 40% 50%
36.4%
American Indian/Alaska Native*
21.4% White*
*Non-Hispanic
19.8% Black*
13.3% Hispanic
9.6% Asian*
FIGURE 5-2. Prevalence of adult smoking by race/ethnicity, United States, 2007. (From
Centers for Disease Control and Prevention. Cigarette smoking among adults—United
States, 2007. MMWR Morb Mortal Wkly Rep. 2008;57:1221-1226.)
0% 10% 20% 30% 40% 50%
24.8% No high school diploma
44.0% GED diploma
23.7% High school graduate
20.9% Some college
11.4% Undergraduate degree
6.2% Graduate degree
FIGURE 5-3. Age-adjusted prevalence of cigarette smoking in 2007, among persons
25 years of age or older, according to educational level. GED = General Education Devel-
opment test. (From Centers for Disease Control and Prevention. Cigarette smoking among
adults—United States, 2007. MMWR Morb Mortal Wkly Rep. 2008;57:1221-1226.)

3. CHAPTER 5 SOCIOECONOMIC ISSUES IN MEDICINE 19
physician work force relative to their population, as well as a much higher
ratio of primary care physicians to specialists. The number of hospitals and
hospital beds, the frequency of hospitalizations, and the length of hospital
stay are relatively low in the United States, although it does have a much
greater proportion of intensive care beds. Finally, recent analyses suggest that
a principal driver of high expenditures on health care in the United States is
the much greater price charged per unit of service compared with other
developed countries.
Demand factors also drive medical expenditures. The extent to which the
media and the medical profession feature medical “breakthroughs” is exten-
sive and one-sided. New promising treatments merit front-page stories and
commercial advertisements, whereas subsequent disappointing results are
buried or ignored. The cumulative result is to whet patients’ appetite for more
and to leave the impression that good health depends only on finding the
right treatment. This same quest explains the popularity of alternative medi-
cine, for which patients are willing to spend $34 billion annually out of their
own pockets (Chapter 38).
It could be argued that rising expenditures for medical care are not a bad
thing, as what could be more important than ensuring maximal health? There
are several rebuttals to that argument. First, it is not clear that money spent
on medical care brings appropriate value in the United States, given that its
health statistics are worse than those of virtually every other developed
country. Second, there are substantial regional differences in the supply and
use of medical care, such as a two-fold difference in the supply of acute hos-
pital beds in metropolitan regions (even with adjustment for demographic
variables) and a four-fold difference in the risk of being hospitalized in an
intensive care unit at the end of life. Similar regional differences exist for
procedures such as transurethral prostatectomy, hysterectomy, and coronary
artery bypass surgery. Yet there is no evidence that “more is better” on a
regional basis. In fact, geographic areas with higher consumption of medical
services have been shown to have worse outcomes for some conditions, such
as acute myocardial infarction.
Money spent on medical care means less to spend on other important
social priorities—schools, the environment, job creation, and competition
with overseas manufacturers that spend less on health care. Furthermore,
many businesses are reducing their health insurance contributions to employ-
ees and retirees, passing those costs along to the beneficiaries. Consequently,
health insurance coverage has emerged as the most important issue in labor
contract negotiations and strikes. In addition, rising health care expenditures
are stressing public programs such as Medicare, Medicaid, the Veterans
Administration health system, and municipal hospitals, with budget requests
outstripping the tax base to pay for them. Medical debt is by far the most
important cause of bankruptcy. Finally, as health care becomes less affordable
5.75.9
6.46.86.8
7.37.47.67.7
8.18.28.48.58.78.78.98.99.19.29.39.69.89.89.910.110.110.210.4
10.811.0
UnitedStates
France
Switzerland
Germany
Belgium
Canada
Austria
Portugal(1)
Netherlands
Denmark
Greece
Iceland
NewZealand
Sweden
OECDAverage
Norway
Italy
Australia(1)
Spain
UnitedKingdom
Finland
Japan(1)
SlovakRepublic
Ireland
Hungary
Luxembourg(1)
Korea
CzechRepublic
Poland
Mexico
Turkey(2)
% GDP
16.0
2
4
6
8
10
12
14
16
0
FIGURE 5-4. Health expenditure as a
share of gross domestic product (GDP),
2007. OECD = Organisation for Economic
Co-operation and Development. (Data from
Organisation for Economic Co-operation
and Development Health, 2009.)
for businesses and government, the number of people without health insur-
ance will continue to increase.
Since the mid-1970s, a variety of strategies to contain rising medical
expenditures have yielded limited success. These attempts have tried to
restrict the supply of costly medical technologies as well as the production of
physicians, especially specialists; to promote health maintenance organiza-
tions that have incentives to spend less on medical care; to ration indirectly
by limiting health insurance coverage; to institute prospective payment for
hospital care; to use capitation payments or discounted fee schedules for
physician reimbursement; to introduce gatekeeper mechanisms to reduce
access to costly care; to put patients at more financial risk for their own
medical care; to reform malpractice procedures; to reduce administrative
costs; and to encourage less aggressive care at the end of life. The most recent
suggestions—comparative effectiveness research to curtail unnecessary tech-
nology use, electronic medical records to avoid duplication of tests, and
payment for performance—all hold the promise to improve quality, but their
potential for substantial cost reduction is only theoretical at present. Funda-
mentally, all these strategies have failed because the political will to enforce
them was missing. Americans—at least those with medical insurance—
strongly resist limits on their choice of medical care, and the combined power
of hospitals, medical professionals, and the pharmaceutical, medical device,
and insurance industries overwhelms the meager forces pushing cost contain-
ment. Add to that the continuous production of new technologies and drugs
plus the public’s avidity for the latest innovations, and it is easy to see why
medical costs are projected to keep rising. As a result, the costs of even
modest health insurance plans are a challenge for most blue-collar and many
middle-class families.
Payment for medical care varies by country. In the United States, health
insurance coverage is an incomplete patchwork, consisting of government-
sponsored programs for elderly people (Medicare), poor people (Medicaid),
and veterans, plus employer-based coverage for workers and their families.
Medicare covers acute care services in the hospital and in physicians’ offices
but has limited coverage for prescription drugs and long-term care. More than
half of all Medicare subscribers also buy supplemental insurance. Medicaid
covers more services than Medicare does, but Medicaid payments to physi-
cians and hospitals are so low in many states that patients have restricted
access to care. At any given time, more than 46 million Americans lack health
insurance, and 70 million are without insurance at some point during the
year. In addition, millions of immigrant workers are also uninsured. This large
group must depend on charity care, often at community clinics and public
hospitals, and it is well documented that lack of health insurance contributes
to poor health, such as delayed diagnosis and undertreatment of asthma,
diabetes, hypertension, and cancer.

4. CHAPTER 5 SOCIOECONOMIC ISSUES IN MEDICINE20
The 2010 Patient Protection and Affordable Care Act (PPACA) contains
insurance reform measures that took effect in 2010 and 2011, as well as cover-
age expansion that starts in 2014. About 32 million new people will be
insured, about 50% privately and 50% in Medicaid. Revenue generating pro-
visions are split about evenly between spending reductions and cost contain-
ment. In contrast to the passage of Medicare and Medicaid in 1965, the
PPACA did not receive bipartisan support, and it is difficult to predict which
of its components—if any—will survive.
Because medical care is both so valued and so expensive, physicians every-
where will inevitably become more involved in issues of medical economics.
As cost-containment pressures force patients to assume more of their medical
expenses, they will become more aware of costs and more demanding about
the price and value of care. Informed clinical decision making will require
that physicians have accurate information about the risks, benefits, and costs
of medical care and better ways to communicate what is known and what
is not.
SUGGESTED READINGS
Aaron HJ, Ginsburg PB. Is health care spending excessive? If so, what can we do about it? Health Affairs.
2009;28:1260-1276. Analyzes the reasons the United States spends so much more on health care.
Cubbin C, Vesely SK, Braveman PA, et al. Socioeconomic factors and health risk behaviors among
adolescents. Am J Health Behav. 2011;35:28-39. Shows the strong link in adolescents.
Hajat A, Kaufman JS, Rose KM, et al. Long-term effects of wealth on mortality and self-rated health
status. Am J Epidemiol. 2011;173:192-200. Details the strong inverse relationship of wealth with poor
health status and mortality.
Marmot M, for the Commission on Social Determinants of Health. Achieving health equity: from root
causes to fair outcomes. Lancet. 2007;370:1153-1163. The quality of health and health services within
and across countries corresponds with health outcomes.
Schroeder SA. Shattuck lecture: we can do better—improving the health of the American People. N Engl
J Med. 2007;357:1221-1228. Reviews why, despite its high expenditures, the United States does so poorly
in health outcomes.
Seligman HK, Schillinger D. Hunger and socioeconomic disparities in chronic disease. N Engl J Med.
2010;363:6-9. Perspective.