When physicians speak of the economics of medicine, we are usually focused on our reimbursement system and its counterproductive incentives or its unpredictability. The former has encouraged some practices to purchase technical equipment, such as CT and PET scanners, which studies have shown substantially increases the practices' per patient usage and charges for imaging. The economy, politics, and lobbyists drive the unpredictability of reimbursement. We also worry about shortages of drugs, especially cancer drugs, which generic makers claim is due to FDA regulations that make such production unprofitable.
These are important issues, but we seldom look at the economics faced by our patients as a whole. Two articles that brought the plight of patients to mind recently appeared in our newspaper on the same day.
The first, written by Associated Press reporter Hope Yen, who mined US census data for the article, begins with this sentence: “The wealth gap between younger and older Americans has stretched to the widest on record, worsened by a prolonged economic downturn that has wiped out job opportunities for young adults and saddled them with housing and college debt.” (Net worth includes the value of a person's home, possessions, savings, bank accounts, stocks, real estate, cars, boats or other property, minus any debt such as mortgages, credit card bills, and college loans.)
This first struck me as just another symptom of the economic downturn, but as I read further, the magnitude of this problem and its medical implications began to capture my interest.
A typical household headed by a person age 65 or older has a net worth 47 times a household headed by a person under 35, the highest gap ever. Some gap is common because older people have over the years accumulated wealth in homes, savings, and retirement benefits and they usually are no longer responsible for growing and educating children. But the gap was only 10-fold 25 years ago and less than half of today's gap as recently as 2005. The main reason for this change is the poor economy, but also many young adults are pursuing college degrees and incurring that debt because college graduates are more employable (more on this later).
Households headed by someone under 35 saw their median net worth reduced by 27% in 2009 as a result of unsecured liabilities such as credit card debt and student loans and homes worth less than their purchase price. This age group suffered most; the 35-44 age group was the next closest at a 10% drop.
The median net worth of households headed by someone 65 or older was $170,494—42% more than in 1984. For the under 35-headed household, it was $3,662, down 68% from 25 years ago. In all, 37% of the younger age households have a net worth of zero or less, while in the 65 and above group it is 8%, largely unchanged over the years. Social Security and Medicare clearly have helped the elderly in this respect.
The second article, by David Brooks of the New York Times (10/31/11, “The Wrong Inequality), addresses the growing inequality of income in America. He describes the inequality most evident in major metropolitan areas like New York, Los Angeles, Dallas, etc. (he calls it “Blue Inequality”). In these places, earnings of the top 1% are “zooming upward.”
Studies of this group, Brooks writes, show that roughly 31% started or manage nonfinancial businesses, about 16% are doctors, 14% are in finance, 8% are lawyers, 5% are engineers, and 2% are in sports, the media, or entertainment. “Up until 1970 or so, a chief executive would have been embarrassed to take home more than $20 million. Now there is no shame and top compensation zooms upward.”
Brooks also describes “Red Inequality,” which is most evident in smaller communities such as Scranton, Des Moines, Macon, Fresno, “and almost everywhere else.”
In these communities, he relates, the inequality is not between the top 1% and the remaining 99%; it's between those with a college degree and those without. This disparity has been growing for several decades. The average college graduate earned 38% more than the average high school graduate in 1979; today it is over 75% more. Moreover, the offspring of college graduates have an excellent chance of getting a college degree; children of parents with only a high school diploma have a poor chance.
Another eye-opener in the column is that in the 1970s, high school attendees and college graduates had similar family structures. Today, college grads are much more likely to get married, much less likely to divorce, and much less likely to have a child out of wedlock. College grads are less likely to smoke, less likely to be obese, more active in their communities, enjoy much more social trust, and they speak many more words to their children at home. “The social divide is even starker than the income divide,” says Brooks.
He believes the Red Inequality is more important than the Blue. Among the tens of millions who have dropped out of high school or college, 40% of their children are born out of wedlock. They represent stagnant human capital, stagnant social mobility, and a disorganized social fabric.
How It Relates to Our Patients
So what has this got to do with our patients, especially the younger ones who suffer a disease and also bear the brunt of the social and financial ills of our time?
Unless one's practice is limited to college graduates and upper income families, we are faced with all these social and economic issues among our patients. They seek treatment later in the course of disease, they often have little supporting infrastructure at home when ill, and they miss appointments and fail to fill prescriptions because of financial or transportation or family problems.
As is common the world over, in an environment of disrupted social and family structures and medical care, it is the children who suffer most during their crucial period of growth and development. There is little any one of us can do about the national situation, but any negative impact should concern us. For our patients' sakes, we should be prepared to speak out in appropriate venues, but more important, we should try to mitigate the problems as best we can in our daily practices. We should do our best to set an example.