Economic and health impacts of narrower health inequalities, Australia

Abstract

Objective: to estimate the health and economic impacts of narrower health inequalities in Australia. The health impacts are measured in terms of improved mortality and disability rates, and the economic impacts in terms of lower government expenditures on health care costs and on the disability support pension. Material and methods: this paper reports on an application of a dynamic microsimulation model which accounts – amongst many other variables - for the links between Australians' socioeconomic status and their health. The full model simulates individuals’ life cycles over a 20 to 30 year period. Its base year data was developed using a 1 per cent unit record Census sample of the Australian population. Health is proxied by linked mortality and disability equations, accounting for the fact that healthy people generally live longer than the disabled. For socioeconomic status the analyst can choose from four types of indicators. Results: if a policy was implemented which resulted in the lifting of the health status of all Australians to that of the most affluent 20% in the population, then close to one million fewer Australians are estimated to be disabled, over 180,000 life years could be saved, health care costs would be around A$3 billion lower and the government could save close to A$1 billion on the disability support pension. Conclusion: the narrowing of health inequalities at the national level has the potential to deliver, in the longer term, considerable health and cost saving benefits.