Impact of Neighborhood Social and Environmental Resources on Medicaid Spending

In an era of COVID-19, Black Lives Matter, and unsustainable healthcare spending, efforts to address the root causes of health are urgently needed. Research linking medical spending to variation in neighborhood resources is critical to building the case for increased funding for social conditions. However, few studies link neighborhood factors to medical spending. This study assesses the relationship between neighborhood social and environmental resources and medical spending across the spending distribution.

Individual-level health outcomes were drawn from a sample of Medicaid enrollees living in Baltimore, Maryland during 2016. A multidimensional index of neighborhood social and environmental resources was created and stratified by tertile (high, medium, and low). Differences were examined in individual-level medical spending associated with living in high-, medium-, or low-resource neighborhoods in unadjusted and adjusted 2-part models and quantile regression models. Analyses were conducted in 2019.

Enrollees who live in neighborhoods with low social and environmental resources incur significantly higher spending at the mean and across the distribution of medical spending even after controlling for age, race, sex, and morbidity than those who live in neighborhoods with high social and environmental resources. On average, this spending difference between individuals in low- and those in high-resource neighborhoods is estimated to be $523.60 per person per year.

Living in neighborhoods with low (versus those with high) resources is associated with higher individual-level medical spending across the distribution of medical spending. Findings suggest potential benefits from efforts to address the social and environmental context of neighborhoods in addition to the traditional orientation to addressing individual behavior and risk.