[EU] Economic arguments for addressing the social determinants of health inequalities.
[Jose's Comments]
The paper below makes the argument that the health status of a population has a measurable economic impact.
It would seem beyond dispute and self-evident that a healthy population leads to strong, productive workers that can then earn good salaries with which to become robust consumers of products and services.
From a purely capitalistic point of view, you’d expect industry to strongly support activities and programs that deliver a strong consumer base for their wares.
What we know for a fact is that the current illness-focused care system is both very expensive and fails to improve the health of our population.
Maybe we should ask new questions (i.e. “how do we improve e/a family’s health?”) instead of throwing more money at new answers to the failed old questions (i.e. “let’s automate the treatment of poor health”)?
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Economic arguments for addressing the social determinants of health inequalities.
Working Document No.4 – 2009
DETERMINE – EU Consortium for Action on the Socioeconomic Determinants of Health (SDH).
http://www.health-inequalities.eu/pdf.php?id=25d4fa63460c83d64115e80cd65980d3
http://www.health-inequalities.eu/
…
2. Making the case: Establishing economic arguments
Introduction
This chapter presents the findings of a literature review conducted in June 2008 together with further research in April 2009. The review was undertaken to help inform and shape further data collection by establishing the main economic arguments for addressing social determinants of health inequalities.
Health can be considered in economic terms as both a capital and a consumption good. In the case of health as a capital good, people in good health attract a higher value than those in poor health due to their greater ability to be economically productive. Health as a consumption good is concerned with the contribution that good health makes to an individual’s wellbeing, happiness or satisfaction.
Targeted investment to address health inequalities by action on social determinants of health is more cost effective than paying later for the consequences of these inequalities. It follows then that addressing health inequalities is not only a matter of social justice but also contributes to economic growth.
The economic benefits of better health
There are strong economic arguments for investing in health at population level. In 2001, the WHO Commission on Macroeconomics and Health demonstrated that a healthier population can bring substantial economic benefits to countries with developing economies. The authors estimated that 50% of the growth differential between rich and poor countries was due to ill health and shorter life expectancy. Increasing life expectancy at birth by 10% through targeted investment to tackle the major causes of premature deaths could increase the economic growth rate by 0.35% per year. (1)
Benefits to the economy may not be limited to developing countries. In 2005, a review of evidence in high income countries concluded that “there is considerable and convincing evidence that significant economic benefits can be achieved by improving health not only in developing but also in developed countries.” The report outlines four channels through which this may occur: higher productivity, higher labour supply, improved skills as a result of greater education and training and increased savings available for investment in physical and intellectual capital. (2) However more recent work suggests that the evidence is less conclusive about the links between health and the economy particularly at the macro level. (3)
These issues have been considered in the development of a health strategy for the EU which commenced with a reflection process in 2004. (4) The second of four principles in the strategy Together for Health “Health is the greatest wealth” states that health is a prerequisite for economic productivity and prosperity.
It also emphasises that healthy life expectancy not merely life expectancy is the key factor for economic growth and points to the inclusion of Healthy Life Years as a Lisbon Structural Indicator to underline this distinction. (5) The role of healthcare systems in supporting growth and employment has been recognised in a report commissioned as part of the mid-term review of the Lisbon strategy. Facing the challenge: The Lisbon strategy for growth and employment notes the importance of healthcare systems “… in generating social cohesion, a productive workforce, employment and hence economic growth.” (6)
The economic costs of ill health
Clear understanding of the cost of ill health is a prerequisite for assessing the economic returns of investing in health. While healthcare costs are substantial and increasing, these represent only one part of the overall picture.
Failure to include the welfare costs of ill health risks understating the true economic benefits derived from health interventions. Three perspectives have been identified to gain a more complete picture of the costs of ill health. The broad perspective encompasses social welfare costs; the limited perspective considers micro- and macroeconomic costs; while the very limited perspective focuses on healthcare costs. (7)
Cost of illness studies separate costs into three components: direct costs, i.e. those associated with treating illness; indirect costs, i.e. costs associated with loss of productivity due to morbidity or premature death and; intangible costs which include the psychological dimensions of illness. However in many cases only the first two are measured. A review of cost of illness studies found that the cost of chronic diseases ranged from 0.02% to 6.77% of a country’s GDP. Cardiovascular disease in particular was found to account for between 1-3% of GDP in most developed countries. (8)
The cost of health inequalities
Health inequalities are understood to be the difference in health outcomes between different population groups, including socioeconomic groups. Such inequalities are estimated to reduce average life expectancy across the EU252 by 1.84 years which equates to approximately 11.4 million life years lost. At the same time, healthy life expectancy is reduced due to the existence of inequalities by an average of 5.14 years or approximately 33 million healthy life years lost. (9) While these figures represent the EU25 as a whole, the large variation in the magnitude of health inequalities within member states is well recognised, with some southern European countries having smaller inequalities and most countries in the East and Baltic regions having larger inequalities than the European average. (10)
These inequalities have significant economic implications for the EU and for member states. When health is valued as a capital good, inequalities related losses have been estimated to cost around Euro$141 billion in 2004 or 1.4% of GDP. This rises sharply to Euro$1,000 billion or 9.5% of GDP when health is valued as a consumption good. (9)