Disparities in Healthcare Finance: Rural vs Urban Support

In the United States, there are widespread disparities in access to medical advancement or care based on geographical region. Particularly, when comparing those who live in more urban areas in the North/Northeast and West Coast, the quality of support provided to people in the Midwest and South — mostly rural and suburban — is deficient [1]. A probable explanation for this is that the US healthcare system was built around medical services sold as a commodity, rather than a basic human right [2]. As a result, it is important to understand the capitalist context of the U.S. healthcare system and how it tends to disparage areas with lower populations and wealth. Great, systematic actions are necessary in order to invoke real change.

Within the U.S. healthcare system, there are two main models of allocating finance and funding for medical services: capitation and fee-for-service (FFS). A capitation payment is the amount of money assigned to an individual, paid in advance to the physician, for a specified period of time by insurers or physician associations. This system often utilizes some form of risk adjustment that bases expenditures on individual characteristics. However, the “standard” level of care funded is based on historical levels of healthcare protections, and not on current health needs or rights. Thus, capitation systems tend to lack in what can reasonably be covered for rural and suburban areas, where the cost of delivering hospital care tends to be higher [3].

On the other hand, FFS deals with payments to doctors, hospitals, and medical practices as separate charges for each service performed. These types of payments are covered by patients or insurance companies, with the amount being up to the discretion of the healthcare provider [4]. While different in sources of payment, both financial transaction systems have in common the inequity in providing quality care and protections for patients in varying locations. With healthcare in more rural regions becoming more and more “impractical” economically, the amount of funding allocated is significantly less than necessary [3]. The limited amount of money then leads to difficulties in patients’ access to services, often forcing them to drive far distances and pay higher amounts to get the same services as people in more urban regions.

One example of the implementation of capitation and FFS systems comes from Medicare. Currently, the capitation for Medicare tends to be higher for urban areas in the Northeast and Southern California. While the capitation amounts are also high for rural regions in the South, this specification only reflects the increased costs for providing base level services in such areas. When accounting for the regional variances in spending needs, the high amounts being paid in rural areas do not result in more or equally effective care, often causing poor health outcomes [5]. Instead, further disparities arise in not only regional differences, but also income inequity.

When considering how health services and the funds necessary to provide them are distributed, it is important to recognize how income plays a role. The primary determinants of healthcare expenditures come from prices of medical services, type of illness, and regional preferences regarding healthcare usage [6]. Especially when considering the last determinant, the preferences individuals have toward healthcare services are heavily influenced by income level. As the income levels of rural regions tend to be lower than that of metropolitan areas, the quality of care able to be provided in Medicare tends to decrease as the amount of rurality increases [6].

With decreased support and worse outcomes in regard to healthcare for rural regions, it becomes clear that the differences in the distribution and allocation of healthcare finance — based on location — leads to stark differences in individuals’ health awareness and conditions. These differences are explicitly demonstrated through disparities in life expectancy. For urban residents, the life expectancy from 2005-2009 was 79.1 years, as compared to only 76.9 and 76.7 years for suburban and rural residents, respectively. Moreover, this not only displays the present disparities in healthcare finance and accessibility, but also portrays a widening gap that has formed over the past four to five decades. From 1969-1971, the difference in life expectancy between urban and rural areas was only 0.4 years (70.9 urban, 70.5 rural), whereas now it is ~2.3 years. The contributing factors to this include diseases and injuries which could largely benefit from increased treatment and financing opportunities in rural America [7].

In order to improve the quality and amount of healthcare finance and services provided within rural sections of the United States, major reform must occur associated with capitation and FFS systems and policies. Currently, those who cannot afford appropriate medical care will be forced into difficult situations where they are asked to prioritize their physical and mental health over financial comfort [2]. More equitable distributions of healthcare finance must be considered when allocating resources to varying regions within the United States, adjusting for differences in cost to deliver specific services [3]. By doing so, healthcare can gradually approach its ideal as a basic human right, accessible to all, and act less as a commodity only afforded by areas of increased population, and increased income/wealth.


  1. Noble, P., et al. (2020). NIH Funding Trends to US Medical Schools from 2009 to 2018. PLOS ONE, 15(6). https://doi.org/10.1371/journal.pone.0233367.

  2. Maharaj, S. R., Paul, T. J. (2011) Ethical Issues in Healthcare Finance. West Indian Medical Journal, 60(4): 498-501.

  3. Rice, N., Smith, P. C. (2001). Ethics and Geographical Equity in Health Care. Journal of Medical Ethics, 27(4): 256–261., https://doi.org/10.1136/jme.27.4.256.

  4. Zuvekas, S. H., Cohen J. W. (2016). Fee-for-Service, While Much Maligned, Remains the Dominant Payment Method for Physician Visits. Health Affairs, 35(3): 411–414., https://doi.org/10.1377/hlthaff.2015.1291.

  5. Wennberg, J. E., et al. (2002). Geography and the Debate over Medicare Reform. Health Affairs, 21(1). https://doi.org/10.1377/hlthaff.w2.96.

  6. Kumar, S., et al. (2011). Examining Quality and Efficiency of the US Healthcare System. International Journal of Health Care Quality Assurance, 24(5): 366–388., https://doi.org/10.1108/09526861111139197.

  7. Singh, G. K., Siahpush, M. (2014). Widening Rural–Urban Disparities in Life Expectancy, U.S., 1969–2009. American Journal of Preventive Medicine, 46(2): 19–29., https://doi.org/10.1016/j.amepre.2013.10.017.

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