Zip code matters: Study links health costs to social factors like income & housing
The study found that per-member per-month (PMPM) health care costs increased as the state ranking for health decreased.
A new study finds significantly higher health care risks linked to community health status and social factors that affect health. The study, which looked at employees of mid- and large-sized companies across the country, found that where an employee lives and the social factors they experience can have a dramatic effect on their health care costs.
The report, called “Community insights: Key factors that influence employee health,” is the seventh annual white paper by Health Action Council (HAC) and UnitedHealth Group exploring community health and the social determinants of health (SDOH).
The new study looks at claims data for employees and finds that there are significant connections between where employers live and how that effects life expectancy and health care costs for both employers and their employees. The report examined claims data from 2022 and 2023 for more than 200,000 employees with an average age of 34.
Health disparities, social challenges play a role in health—and health care costs
Social determinants of health include things like safe housing, transportation, income, access to education, and job opportunities. Among the HAC claims data, it found that health risks in four areas stood out: financial (36%), social isolation (30%), food (13%), and housing (11%).
Where employees have more SDOH issues, they were more likely to utilize ER departments, less likely to participate in preventive care visits, and more likely to receive behavioral health diagnoses.
The study found that per-member per-month (PMPM) health care costs increased as the state ranking for health decreased. For example, Des Moines, Iowa had a state health ranking of 15 nationally, and a PMPM average cost of $354. Greenville, South Carolina had a ranking of 41st overall in health, and had a PMPM cost of $543.
Overall, the study said, employees who lived in less healthy states cost employers more (rankings were taken from United Health Foundation’s America’s Health Rankings). Employees that lived in states ranked in the top 10 for health care made up 4% of the HAC employees and had a PMPM health cost of $454. States in the bottom ten for health rankings made up 11% of HAC employees and had a PMPM cost of $478. The cohort that had the highest percentage of employees was states that ranked 31-40, with 55% of HAC employees, and that group had a $507 PMPM cost.
The study found that most HAC employers had employees living in the 20th lowest ranked states, with 66% living in those lower-ranked states.
“HAC plan sponsors and other employers in those states have greater headwinds in their population’s health and cost,” the report said. “In fact, if the population analyzed lived in the top 20 healthiest-ranked states, the total covered PMPM cost may be reduced by $61 million—7% of spend or $24 PMPM. Additionally, those living in the 10 least healthy states are 13% more likely to face high-risk SDOH. This shows that the health of the state in which employees live may lead to increased health challenges and consequently higher costs for employees and employers.”
Different SDOH risks at different ages
The study found that age also played a role in measured SDOH risk. It said that younger workers had higher-risk SDOH risk factors. For example, Gen Z (born from 1997 to 2012) had an 11% higher rate of employees with SDOH risk compared to employees with no risk. Gen X (born 1965-1980) had the highest risk, at 23% higher. But the Baby Boomer workers (born 1946 to 1964) had only a 6% increase of risk between workers with risk compared to workers with no risk.
“The analysis further evaluated the percentage of the population by generation having 3 or more SDOH risks. It reveals that millennials have the highest rate of SDOH risk, particularly in the areas of finance and isolation,” the report said. “From a gender standpoint, there is little difference in the SDOH risk between women and men. The one outlier? Men tend to see their PCP less frequently, so chronic conditions may be under-diagnosed.”
The report also found other geographic factors in health. For HAC employee claims, states with more funding for health programs had higher state health rankings and lower PMPM costs. Additionally, the risk was not evenly spread when it came to employees from rural, suburban, or urban areas. “Overall, risk in rural areas was more than 6% higher than in suburban and urban areas,” the study said. “While rural employees had more financial and food insecurity than their urban and suburban peers, rural employees faced a lower risk of housing insecurity and social isolation.”