LOWN Institute releases report “California’s health paradox: Too much health care spending may lead to poor community health”

Earlier this month, the LOWN Institute of California released a report examining the relationship between health outcomes and social spending, titled “California’s health care paradox: Too much health care spending may lead to poor community health.”

The report finds that California, like many states, has responded to the rising health care costs by shifting public spending away from other social services such as education, public health, housing, and environmental protections.

According to the Government Accountability Office (GAO), health care spending is the major driver of state spending growth. The GAO predicts that spending in other public sectors will continue to decline as state spending on health continues to increase. California spending on social programs such as education, social services and housing (community conditions) rose 39% from 2007 to 2018. However, health care spending rose 146% in that time period from $48.3 billion in 2007 to $188.9 billion in 2018.


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The report states that community conditions are major contributors to health disparities among different populations. For example, even comparing within one county (Fresno), people living in the poorer Edison neighborhood had a hospitalization rate for diabetes that was 39 times the rate of the affluent neighborhood, Woodward Park.

Social determinants of health have often been linked to poor health conditions – yet the spending doesn’t reflect the relationship between the two. The report states that limiting public financial investment in community conditions has led to worse health outcomes in America when compared to every other high-income country. This is despite significantly higher per capita spending on health.

Within the report, researchers interviewed 15 local policy makers and state health advocates, who overall, felt that health care access and funding were the biggest health issues in California. Most of the interviewees disagreed with the notion that community conditions reform should be a focal point in improving health outcomes. Additionally, the report found that the economic incentives for state and local leaders to pursue health care spending outweighed incentives for contributing to other social programs. The report stated that

“Local policymakers also do not perceive a tradeoff between health care spending and spending on community conditions because, most of the time, they must rely on siphoning off health care dollars to use as seed money for projects that have an impact on those community conditions. Without using health care funding, there is no other way to get these projects off the ground, except for grants from foundations or local business groups, sources that are unstable and often time-limited.”

Researchers recommended approaches to improve health through community conditions, while working within funding priorities and constraints. Addressing excessive prices and volume of services (such as MRI for low back pain, routine cardiac stress testing, and other treatments of low value to patients), could lower the cost of health care for consumers and states. The authors contend that reducing waste in health care would allow states to redirect spending on other social programs that improve community health.

“The state has three ways it can respond: raise taxes, constrain health care spending, or both. None of these choices will be easy, and they will not be made until state officials, community activists, and the public recognize the importance of community conditions to health—and commit to addressing the waste in health care.”