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Closing the gap between rich and poor could save billions in health-care costs

A person’s health is strongly influenced by that person’s wealth. In the past, we thought this was because higher incomes meant better access to health care; we thought this was why the rich lived longer…

Australia has failed as a nation to properly consider the root causes of most illness and disease. Keoni Cabral

A person’s health is strongly influenced by that person’s wealth. In the past, we thought this was because higher incomes meant better access to health care; we thought this was why the rich lived longer. Today we know more.

Australia suffers the effects of major differentials in the prevalence of long-term health conditions and people’s self-reporting of their health status. Those who are most socioeconomically disadvantaged are twice as likely to have a long-term health condition than those who are the least disadvantaged.

And the most disadvantaged Australians will die, on average, three years earlier than the most affluent. Household income, level of education, employment, housing tenure and social connectedness all matter when it comes to the health of working-aged Australians.

To investigate the link between social disadvantage and health, Catholic Health Australia commissioned my team at the National Centre for Social and Economic Modelling (NATSEM) to produce The Cost of Inaction on the Social Determinants of Health Report - the first study of its kind. The final report was released on Monday.

We calculated the social and economic costs to Australia of the Commonwealth government ignoring the World Health Organization’s (WHO) recommendations on social determinants of health. We found that if the health gaps between the most and least disadvantaged groups of Australians of working age were closed and the World Health Organisation’s recommendations were adopted within Australia, we would see the following health and economic improvements:

  • 400,000 additional disadvantaged Australians aged 25 to 64 years would be in “good” health and 500,000 Australians could avoid suffering a chronic illness;

  • 170,000 extra Australians could enter the workforce, generating A$8bn in extra earnings from wages and salaries;

  • Annual savings of A$4bn in government welfare support payments could be made;

  • 60,000 fewer people would need to be admitted to hospital annually, resulting in more than 500,000 fewer hospital admissions with savings of A$2.3bn in hospital expenditure;

  • 5.5 million fewer Medicare services would be needed each year, resulting in annual savings of A$273 million;

  • 5.3 million fewer Pharmaceutical Benefit Scheme scripts would be filled each year, resulting in annual savings of A$184.5 million each year.

These remarkable economic gains are only part of the equation. The real opportunity for action on social determinants is the improvements that can be made to people’s overall well-being.

Early learning is fundamental to a child’s lifelong development. Kymberly Janisch

People’s satisfaction with their lives is highly dependent on their state of health. Our findings show that if the socioeconomic inequalities in health between the most and least disadvantaged groups were overcome, as many as 120,000 Australians of working age and who live in the poorest 20% of households would no longer be dissatisfied with their lives.

Reducing health inequalities is a matter of social inclusion, fairness and social justice. The fact that so many disadvantaged Australians are in poor health or have long-term health conditions relative to individuals in the least socioeconomically disadvantaged groups is simply unfair. So are the impacts on people’s overall satisfaction with their lives, missed employment opportunities, levels of income and need for health services.

Australia has failed as a nation to properly consider the root causes of most illness and disease. A large body of research indicates that a person’s health is first influenced by their time in the womb. We know the early years of childhood define health expectations over the lifetime. And we know educational attainment, participation in the workforce, and income levels all influence people’s health outcomes.

Yet when we talk about health in Australia, we don’t immediately think of vibrant childhoods, good schooling, satisfying work lives and fairness in income. Socioeconomic inequalities in health persist because the social determinants of health persist.

We have failed as a nation to address the social determinants of health. But it’s not to late to act. All levels of government can consider the long-term health impacts of all their social inclusion policies.

Drug-, alcohol-, tobacco- and crisis-free pregnancies, for instance, are understood to be fundamental to a child’s lifelong development. So, too, is early learning that occurs in a child’s first three years of life. School completion, successful transition into work, secure housing and access to resources necessary for effective social interaction are all determinants of a person’s lifelong health.

These are factors mostly dealt with outside of the health system, yet they are so important to the health of the nation.

Now we have the evidence, it makes economic sense to implement the WHO recommendations in its 2008 Closing the Gap Within a Generation report.

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