Association between health literacy and medical care costs in an integrated healthcare system: A regional population based study

Background: Low health literacy is associated with higher health care utilization and costs; however, no large-scale studies have demonstrated this in the Veterans Health Administration (VHA). This research evaluated the association between veterans' health literacy and their subsequent VHA health care costs across a three-year period. Methods: This retrospective study used a Generalized Linear Model to estimate the relative association between a patient's health literacy and VHA medical costs, adjusting for covariates. Secondary data sources included electronic health records and administrative data in the VHA (e.g., Medical and DCG SAS Datasets and DSS-National Data Extracts). Health literacy assessments and identifiers were electronically retrieved from the originating health system. Demographic and cost data were retrieved from the VHA centralized databases for the corresponding patients who had VHA use in all three years. Results: In a study of 92,749 veterans with service utilization from 2007-2009, average per patient cost for those with inadequate and marginal health literacy was significantly higher ($31,581 [95 % CI: $30,186 - $32,975]; $23,508 [95 % CI: $22,749 - $24,268]) than adequate health literacy ($17,033 [95 % CI: $16,810 - $17,255]). Estimated three-year cost associated with veterans' with marginal and inadequate health literacy was $143 million dollars more than those with adequate health literacy. Conclusions: Analyses suggest when controlling for other person-level factors within the VHA integrated healthcare system, lower health literacy is a significant independent factor associated with increased health care utilization and costs. This study confirms the association of lower health literacy with higher medical service utilization and pharmacy costs for veterans enrolled in the VHA. Confirmation of higher costs of care associated with lower health literacy suggests that interventions might be designed to remediate health literacy needs and reduce expenditures. These analyses suggest 17.2 % (inadequate & marginal) of the Veterans in this population account for almost one-quarter (24 %) of VA medical and pharmacy cost for this 3-year period. Meeting the needs of those with marginal and inadequate health literacy could produce potential economic savings of approximately 8 % of total costs for this population.