Dodwell's blog 5 on SOM3 in Cebu

September 02, 2015


Wed Sep 2 2015
 
APEC Cebu
 
Many look at a strong health care system, and measure it as a cost to an economy. Rarely do they seem to recognize that it is really an investment, saving us billions of dollars in lost economy activity, shortened working lives, and pernicious costs in supporting the elderly sick.
 
But in APEC’s High Level Meeting on Health in the Economy last week, a team from Australia’s Victoria Institute tabled stark numbers not just on the broad cost of ill health in an economy, but on the cost to governments – the additional fiscal cost – in terms of sickness benefits, forced early retirement and disability pensions due to ill health, and lost tax revenues when the sick fall out of the workforce.
 
The Victoria Institute research, strongly supported by the APEC Business Advisory Council, calculates gross costs to our economies ranging from 2.1% of GDP (Peru and Singapore) to 3.6% (the United States). In dollar terms, economic losses for the US amounted in 2012 to $780 billion and $51 billion in Australia. Even in comparatively small economies like Malaysia and Peru, losses in 2012 amounted to $11 billion and $7 billion respectively.
 
In measured dollar terms, rich countries like the US and Australia appear to lose immensely more, but this is merely an illusion. Because these rich countries have formal benefits systems for disability and early retirement, and so bear direct and substantial fiscal costs borne by taxpayers. But in poorer developing economies,  it is families that pick up the tab for sick family members: they lose income earners and have hospital bills to pay.
 
The message from the research is clear: governments across the region should invest significant resources to primary health care and in-community wellness care. By keeping people well, countries have more people in work, and fewer people drawing disability benefits and early pensions, or weighing on the finances of an already-poor family. And more people in work means higher economic growth, more affluence – and more tax payments pouring into government coffers.
 
This Victoria Institute work compliments a wide body of work currently being undertaken in APEC on the cost to our economies of ill health. Studies have over the past two years been completed on the cost of mental ill health, and on the unique health challenges faced by women. Work is also now underway on the health challenges facing adolescents, who through the protracted recession since 2018 have suffered rising stress and mental health problems linked with prolonged joblessness.
 
The role for business is clear: company health insurance schemes that help to keep staff healthy and at work are a good investment. They mean few sick days among staff, and staff that are more productive when they are at work.
 
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