Income Inequality and Its Affects on Healthcare Essay

Mastrianna (2010) speaks of income inequality as variations in earnings among individuals and households. He states that some income disparity is desirable for creating an incentive for individuals to invest in education and training and to take risks in employment and investment for greater rewards. Concerns are being voiced as to the income inequality in the United States due to the degree of inequality which is shown in the Lorenz Curve and Gini Index. (Pg. 189) Some of the causes of income inequality that have the greatest impact Mastrianna says are first, education. Education or lack thereof has a great effect on income inequality. In 2007, the median incomes of a high school dropout were $22,256, compared to $31.408 for a high school graduate and $51,324 for an individual with a bachelor’s degree. Over a work life an individual with a bachelors degree can earn at least one million dollars more than a high school drop out (based on 2007 dollars). Employment opportunities have also shifted toward medical, business, and other services that disproportionately employ college graduates. Rapid employment in restaurants and retailing explain the low wages of high school graduates. (Pgs. 189, 190) Second is technology, Mastrianna says that the use of computers in the workplace has increased and the estimate is that over 55 % of the labor force now uses computers on the job. These workers earn an average of 10-20 % more in wages than those who do not. Highly educated employees are also more likely to adjust to computers complexities than less educated employees. Consequently, income inequality is increased as the economy is becoming more technologically efficient. According to the AeA, the average technology worker earns $79,500 compared to $42,400 for all private sectors which will widen the income gap as more bright people head toward the information economy. (Pg 190) Thirdly Mastrianna mentions unions stating that the decline in the number of workers belonging to labor unions also contributes to income inequality. This decline in the organized workers is largely due to the loss in manufacturing jobs which leads to fewer jobs at a higher pay forcing many to work in lower paying service jobs which in turn adds to income disparity. (Pgs 190,191) Fourth, Mastrianna notes abilities. There are individuals that are gifted with talents such as the â€Å"smarts† to become doctors and lawyers, or have the physical abilities such as Tiger Woods to become a star athlete, or have artistic talents such as Angelina Jolie. These talents enable certain individuals to contribute substantially to total output but these high incomes have become a highly controversial issue during a time of income inequality. Especially when it comes to CEO’s collecting high salaries, bonuses, and stock options even when their companies fail while laying off thousands of workers. (191) Fifth Mastrianna points out wealth. Income from wealth is more unevenly distributed than income from labor he states. Wealth can be generated by its current owners as well as by previous generations through inheritance. The Bureau of the Census estimates that 84% of the nation’s wealth is held by 20% of households. The collapse of the housing bubble left many households with negative household equity or in bankruptcy. Updated figures may show that this phenomenon has served to further increase the uneven distribution of wealth. (Pgs 191, 192) Finally Mastrianna states that discrimination plays a part in income inequality among the races and sexes. The U.S. Census Bureau indicated in 2007 that the median income of all white, non-Hispanic households was $54,920, while for blacks it was $33,916, and for Hispanic households it was $38,679. Asian and Pacific Islanders had the highest household medians with $66,103. The U.S. Census Bureau also indicates that females who worked year-round made $35,102 annually, compared to men who made $43,113. More often than not labor market discrimination is based on channeling groups of people into occupations for which they are considered suitable. Women and minorities are channeled into occupations that are reserved for them. Such crowding increases the supply of labor in these fields, driving wages down. At the same time, wages are higher in the restricted fields because labor is reduced. (Pgs 192 – 194) The condition of poverty is one extreme of income inequality and the remainder of this paper will compare another extreme; the healthcare and the mortality rates of people due to their income inequality. According to doctor’s Alex Y. Chena and Jose J. Escare numerous studies have found that high-income Americans use more medical care than their low-income counterparts, irrespective of medical â€Å"need.† The methods employed in these studies, however, make it difficult to evaluate differences in the degree of income-related inequality in utilization across population subgroups. In this study, the doctors derived a summary index to quantify income-related inequality in need-adjusted medical care expenditures and reported values of the index for adults and children in the United States. They used the summary index of income-related inequality in expenditures developed by Wagstaff et al. The source of data for the study was the Household Component of the 1996-1998 Medical Expenditure Panel Survey, which contained person-level data on medical care expenditures, demographic characteristics, household income, and a wide array of health status measures. They used multivariate regression analysis to predict need-adjusted annual medical care expenditures per person by income level and used the predictions to calculate the indices of inequality. Separate indices were calculated for all working-age adults, seniors, and children ages 5 to 17. For all age groups, predicted expenditures per person, adjusted for medical need, generally increased as income rose. The index of inequality for all adults was +0.087 (95% confidence interval, +0.035, +0.139); for working-age adults, +0.099 (+0.046, +0.152); for seniors, +0.147 (+0.059, +0.235); and for children, +0.067 (+0.006, +0.128). Through their study they found that there exists income-related inequality in medical care expenditures in the United States, and it favors the wealthy. The inequality was highest among seniors despite Medicare, intermediate among working-age adults, and lowest among children. Sarah Glenn author of another article â€Å"Income Inequality Linked to Hospital Readmission† states that income inequality is linked to a greater risk of hospital readmission but not to mortality. The finding that she speaks of came from a large study of older patients in the U.S. and was published in the British Medical Journal. Investigators said that over a three year research period that about 40,000 extra hospital admissions resulted from income inequality. Although the experts are not positive why there was no consistent association between income inequality and mortality, they suggested that, over one month, â€Å"readmission is more sensitive to social conditions than is mortality, and that an effect on mortality might have been observed had they extended the period of observation to one year.† The article also states that scientists have known that income inequality is linked to a diversity of negative health consequences such as: reduced life expectancy, higher infant mortality and poorer self-reported health. Previous research also in BMJ, demonstrated that there is also an association between low standards of child well-being and income inequality. In an article written by doctor’s Diane McLaughlin and Shannon Stokes they speak about whether or not minority racial concentration matters when it comes to income inequality and mortality. The study that they did examined the relationship in all counties in the United States to see if relationships found for states and metropolitan areas extended to smaller geographical areas and if the influence of minority racial concentration did affect the inequality-mortality link. The results of their study proved that the relationship between income inequality and minority concentration show that mortality is robust for counties in the United States. Minority concentration interacts with income inequality, resulting in higher mortality in counties with low inequality and a high percentage of Blacks than in counties with high inequality and a high percentage of Blacks. The research that has been done on income inequality on mortality offers 2 main pathways in which income inequality operates. First, Daly et al. 7 and Lynch et al. 5 posit that political units with highly unequal income distributions are less likely to have affordable housing, education, environmental protection, economic development, and other resources required for the health of their populations. This underinvestment has negative consequences for the health of poor and middle-class individuals. Second, as Daly et al. note â€Å"inequitable income distribution may directly affect people’s perceptions of their social environment which may in turn have an impact on their health.† 7(p319) This postulated psychosocial pathway linking health and mortality stems from conditions in highly equitable communities that result in lower social cohesion, inequities in social and political influence, and less willingness to participate in community activities. Further, Wilkinson argues that the impacts of inequality result less from the experience of inferior material conditions than from social meanings that individuals give to their circumstances and from the effects of stress on both the endocrine and immune systems. While the exact pathways through which income inequality influences mortality are still being defined, there is strong agreement that the determinants of health and mortality include factors beyond the level of the individual. In conclusion, it seems that Mastrianna is correct in his theory; a lack of education, not having special abilities or not being wealthy as well as being discriminated against does factor in on a person’s income inequality. Not only do these factors affect income inequality but they also affect a person’s healthcare and in the case of high concentrations of blacks also affect the person’s psychological and social views which can contribute to their mortality. I was somewhat surprised as well to find in the study by Daly et al. that social relationships influence the health outcomes of adults as well as those social relationships should be taken as seriously as other risk factors that affect mortality. Myself having to deal with treatment for breast cancer can see how social relationships are very important as I am somewhat isolated and it makes me feel good to have social relationships through my online friends as well as with my healthcare professionals and social worker to better be able to cope in my situation as my family has not been there for me like I had hoped that they would be. Without that support from others I could become very depressed which could in turn affect my healthcare outcome. BIBLIOGRAPHY Qualifying Income-Related Inequality in Healthcare Delivery in the United States Wolters Kluwer Health/Lippincott Williams and Wilkins Retrieved on February 17, 2003 from http://www.jstor.org/discover/10.2307/4640689? Glynn, Sarah. (February 15, 2003) Income Inequality Linked to Hospital Readmission Medical News Today Retrieved on February 17, 2013 from http://www.medicalnewstoday.com/articles/256412.php Mastrianna, Frank V. (2010) Basic Economics. Mason. OH: South-Western, Cengage Learning. Pp. 189 – 200 McLaughlin, Diane K. PhD and Stokes, Shannon C. PhD (January 2002) Income Inequality and Mortality in US Counties: Does Minority Racial Concentration Matter? Retrieved on February 17, 2013 from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1447397/