The Economic Benefits of Reducing Racial Disparities in Health: The Case of Minnesota

Abstract

This paper estimates the benefits of eliminating racial disparities in mortality rates and work weeks lost due to illness. Using data from the American Community Survey (2005–2007) and Minnesota vital statistics (2011–2015), we explore economic methodologies for estimating the costs of health disparities. The data reveal large racial disparities in both mortality and labor market non-participation arising from preventable diseases and illnesses. Estimates show that if racial disparities in preventable deaths were eliminated, the annualized number of lives saved ranges from 475 to 812, which translates into $1.2 billion to $2.9 billion per year in economic savings (in 2017 medical care inflation-adjusted dollars). After eliminating the unexplained racial disparities in labor market participation, an additional 4,217 to 9185 Minnesota residents would have worked each year, which equals $247.43 million to $538.85 million in yearly net benefits to Minnesota.