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15 - Social Determinants of Health and Health Spending

Can Healthcare Change the World?

Published online by Cambridge University Press:  26 September 2025

Mark V. Pauly
Affiliation:
Wharton School, University of Pennsylvania
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Summary

This chapter addresses the factors outside of medical care that are responsible for health outcomes: social and structural determinants of health (SDOH). It outlines economic stability, education, health access, neighborhood, built environment, and community context (including income inequality and racism) as some of the upstream drivers of the health-income gradient. These SDOH are framed in economic terms as a local public bad. Managers therefore must take SDOH into account if they are aiming to optimize health outcomes and costs for their population, especially if they are in a population-based or capitated payment system. The evidence about what actions to take is still developing, but some interventions are reviewed including Medicare’s direct contracting model, Medicaid’s section 1115 waivers, community health workers, meal delivery programs, and screening and referring to community organizations. Larger actions such as disparate impact monitoring and changing payment incentives and risk adjustment will need to be taken in the future.

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Chapter
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Applied Healthcare Economics
Unexpected Insights for Management and Policy
, pp. 328 - 347
Publisher: Cambridge University Press
Print publication year: 2025

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