Beyond what is spent on health

Everyone knows that smoking, over-eating and laziness is the best recipe for a short life. But could our bad habits be cost-ing us more than just our health?

Various studies have shown that economic growth is significantly affected by health improvements. A 2005 study (Beraldo et al) of high-income countries found that spending on healthcare could be responsible for 16%-27% of growth rates compared with only 3% for education spending. In 2001 another report (Arora) investigated the impact of health on the growth of ten industrialised countries over 100-125 years - including Denmark, France, the Netherlands, Italy and the UK - and concluded that health improvements had increased the growth rate by 30%-40% during that time.

If these statistics are to be believed - and other studies have found the impact in rich countries to be rather less impressive - what are the contributing factors?

Last year the European Commission ordered an independent study into the impact of healthcare specifically on the economies of the EU member states.

Their findings, published in August 2005, were based on several indicators, with the most obvious one being the cost of illness itself.

While poorer countries suffer from continuous outbreaks of deadly infectious disease, in Europe our killers are non-infectious but the figures can be just as headline-grabbing.

Cardiovascular disease is the biggest burden on our health funds, with UK research in 2002 revealing that coronary heart disease was costing the UK government EUR 10.2 billion, or 1% of gross domestic product (GDP) and nearly 11% of national health spending.

In 2002, smoking-related diseases related to tobacco use cost the entire EU EUR 98bn-EUR 130bn in direct and indirect costs. While there are no European figures for the cost of obesity, current flavour of the month for both health ministers and the media, in 2003 the obese cost the US government EUR 60bn, around 6% of GDP.

But the impact of illness is not just about how much it costs to take care of the sick. Those suffering from health problems also affect employment rates. An Irish study in 2003 found that men were 30% less likely to work if they suffered from an illness or disability which only partially interfered with their ability to work. And in 1999 an EU survey showed that a married man with serious health problems was nearly 300% more likely to take early retirement even if his wife was not working.

Income can also be touched by illness. In 2001 a Swedish study discovered that a person who had suffered from long-term sickness within the past five years had lower earnings in the following years even if he or she was in perfect health. Another study from the Swedes showed that women's wages in particular were "significantly" reduced by taking sick leave. Various studies have shown that obesity in particular can affect earnings, especially among women partly because of discrimination by their employers.

People it appears suffering from illness save less. A US study has shown that the average inheritance left by those who have been chronically ill is less than those in good health. Education is another factor. A UK study in 2004 linked pre-natal and childhood health - including factors such as whether the mother smoked in pregnancy and the number of doctor-assessed health conditions - with the number of school exams passed at 16. Children suffering even minor ailments during their final school year were less likely to stay at school beyond the legal age requirement.

This makes uncomfortable reading for health ministries. "All the evidence shows that better health leads to more people staying in the workforce, people with higher income and more saving power," says Martin McKee, professor of European Public Health at the London School of Hygiene and Tropical Medicine and one of the authors of the 2005 Commission report.

"And yet governments are reluctant to invest, while they never question whether to invest in education or transport infrastructure."

According to McKee, more solid data collected at EU level rather than nationally could help to persuade finance ministers to think of healthcare as an investment rather than a burden on the budget. Healthcare accounts for around 8% on average of national EU budgets, but in the old member states, its output represents around 7% of GDP.

"We need standardised means of finding out the macro-economic effect of long-term smoking or diet patterns," says McKee.

One of the problems is that there is no one-size-fits-all recommendation of where to invest to get the best outcome, weakening the political clout wielded by health ministries which is already virtually invisible to the naked eye. The situation is further complicated by the fact that the solution to some health problems may lie outside the traditional scope of health treatment or prevention. For example, the recent move by some member states to curb tobacco abuse by making bars and restaurants smoke-free zones.

Another problem for those overseeing the national accounts is that medical services tend to be localised and, with little or no international competition, can become extremely inefficient. The proposed EU law to open up the services market could have had some impact here but it is now extremely unlikely to cover healthcare.

But governments could do well to wake up to the untapped growth potential of investing in healthcare. This is particularly true in the new member states where, with the low priority historically accorded to healthcare, life expectancy can be more than ten years below the 'old' European average.

McKee warns that, unless the governments in the new member states invest more in healthcare, "if present trends continue there will be no convergence with the EU15 for another 30 years".

Major analysis feature looking at the impact of public health on economic growth and the real cost of healthcare. Article is part of a European Voice Special Report 'Healthcare'.