Healthcare spending gap between high- and low-income Americans continues to widen, study finds

A new study led by a University of Chicago researcher finds that healthcare spending in the United States has increasingly diverged between high- and low-income Americans over the past two decades. The analysis shows that through 2023, spending has grown faster for high-income Americans, particularly in outpatient care and prescription drugs. This gap may signal growing differences in access to and use of healthcare across income groups.

The research, published July 7 in the journal Health Affairs, builds on earlier work that documented similar income-based differences in health care spending extending back to the 1960s. That prior research found that spending gaps narrowed for several decades before beginning to widen again in the early 2000s, the last years included in that study. The new study uses the Medical Expenditure Panel Survey, a government-run national survey of health care spending that includes both healthcare costs paid by individuals and their insurers, to extend the analysis through 2023. 

“We were really curious about what had happened more recently,” said Betsy Q. Cliff, PhD, Assistant Professor of Public Health Sciences at UChicago and a co-author of the study. “We had seen earlier work showing increasing differences in spending and we wanted to know whether that continued and whether major policy changes, like the Affordable Care Act, had shifted those patterns.”

A marked difference in spending patterns

To better understand where spending patterns were diverging, the researchers examined four major categories of healthcare spending: inpatient care, outpatient services, prescription drugs, and emergency department care. They specifically compared spending among individuals in the lowest 20 percent of each year’s income distribution to individuals in the highest 20 percent of incomes. They found that much of the growing gap between high- and low-income Americans was driven by outpatient services and prescription drug spending, while spending on inpatient and emergency care remained comparatively similar across income groups. 

Because outpatient visits and prescription medications often involve more routine, ongoing, and discretionary forms of care than hospitalizations or emergency treatment, the findings may point to differences in how people access and use healthcare rather than simply differences in medical need. 

The differences in spending also likely reflect two reinforcing trends: higher-income people use more services and pay more for each service used than those in the lowest income group. 

“Spending trends reflect some mix of price differences and utilization differences among income groups,” Cliff said. “Medicaid pays lower reimbursement rates than commercial insurance, and that gap has been growing over time. But if it were purely prices, you wouldn’t see any divergence over age 65—when nearly everyone has Medicare—and we do.  That suggests utilization differences are part of what’s driving this.”

Researchers also found that the Affordable Care Act (ACA) played a role in shaping spending patterns in the early part of the study period. After 2014, when Medicaid expansion and insurance marketplace reforms increased coverage for lower-income Americans, the gap between income groups narrowed.

However, that narrowing did not persist. From 2018 to 2023, spending growth slowed or declined among lower-income Americans while continuing to rise among higher-income groups. The findings suggest that broader structural forces—including pricing differences, reimbursement policies, and changes in how care is used—may continue to shape disparities even after coverage expands.

Implications for health equity

Researchers say the growing gap raises concerns about whether lower-income Americans are receiving comparable levels of care and whether affordability constraints are limiting access to valuable health services. 

“If people are increasingly unable to access care, you end up with a healthcare system that only serves higher-income individuals,” Cliff said. “That is the worry, and it’s something we need more research to understand.”

The findings also suggest that overall spending trends can obscure important differences across income groups. While healthcare spending growth has slowed nationally since the early 2000s, which is generally viewed as a positive development, diverging spending among income groups suggests that these overall trends may mask increasing concentration of spending in higher-income individuals. 

Next, the researchers aim to better understand what is driving the divergence in spending, particularly the balance between price effects and utilization patterns.

“We really need to look under the hood and better understand what’s driving these patterns,” Cliff said.

Future work will also examine how different categories of care—such as preventive services, chronic disease management, and specialty care—contribute to spending differences, and what those patterns mean for long-term health outcomes.

Understanding those mechanisms, Cliff said, will be essential to determining whether the trends reflect differences in how people are choosing to spend their income or emerging disparities in access to essential healthcare.