The links between socio-economic disadvantage and poor health are well established. The mechanisms by which socio-economic factors such as education, employment and housing influence health are complex and varied, but lower-income people are more likely to have unhealthy behaviours such as tobacco use, physical inactivity and poor nutrition that lead to higher rates of non-communicable diseases and earlier deaths from preventable causes. They find it more difficult to make healthy choices and often struggle to access healthcare services.
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The excess morbidity and mortality directly attributable to disadvantage is a major economic burden to the community due to increased health and social costs and reduced economic productivity. There is growing evidence of the fraying of the social welfare and universal healthcare safety nets in Australia in recent times, highlighted by the growing disparities gap and increasing out-of-pocket costs. This will inevitably lead to increased healthcare costs.
A recent analysis of international data helps support this case. It is well-known that the United States spends more than twice as much on healthcare as other developed countries in the Organisation of Economic Cooperation and Development (OECD), but this is not just a consequence of its greater gross domestic product and higher prices for healthcare services.
Income inequality, which is more prevalent in the US than any other OECD country except Chile, Mexico and Turkey, is assessed as contributing to 31 per cent of this difference. Social spending in the US is 33 per cent less than predicted from GDP and recent political problems have constrained this further by limiting funds for food stamps, housing subsidies, and programs that serve children, the elderly, and the homeless.
A British study indicates that radical cuts to social welfare spending to reduce budget deficits in OECD countries not only cause economic pain but cost lives. Declining levels of social spending in Europe are strongly associated with risks of death, especially from diseases relating to social circumstances, such as heart attacks and alcohol-induced illness. This study estimates that each £70 ($118) reduction in social welfare spending per person results in a 2.8 per cent increase in alcohol-related deaths, and a 1.2 per cent increase in cardiovascular deaths.
Other studies show that European austerity is achieving short-term savings at the price of long-term consequences. Suicide is on the rise, breast cancer surgeries are delayed, the rate of new HIV infections is increasing, drug costs are climbing.
Together these data support the argument that, although governments may feel they are protecting health by safeguarding healthcare budgets, social welfare spending is as important, if not more so, for population health.
Australia cannot smugly consider itself immune from these problems. Compared to the US, our healthcare system has delivered much better results at considerably less cost. But we are currently doing little to address obesity and to take a population-based approach to prevention and nothing to tackle out-of-pocket costs for healthcare.
Although income inequality is increasing and is now above the OECD average, this has been mitigated by an increase in education levels in the past decade.
However, the 2013 Human Capital Report from the World Economic Forum shows Australia ranking just slightly better than the US in terms of social safety net protection and the Gini index, which measure the distribution of income or consumption expenditure among individuals or households within an economy.
The indicators show we are approaching a tipping point and these reports send a warning signal: governments' efforts to balance the budget on the backs of social welfare, education and healthcare programs can result in untoward consequences with decreases in health status and substantial increases in healthcare costs.
As one commentator said about European efforts in budget cutting, ''If austerity had been a clinical trial, it would have been stopped'' and even modest budget cuts can have a significant impact on public health.
Dr Lesley Russell is a research associate at the Menzies Centre for Health Policy at the University of Sydney.
