The findings of the Report confirm that the cost of Government inaction on the social determinants of health leading to health inequalities for the most disadvantaged Australians of working age is substantial. This was measured in terms not only of the number of people affected but also their overall well-being, their ability to participate in the workforce, their earnings from paid work, their reliance on Government income support and their use of health services.

Substantial differences were found in the proportion of disadvantaged individuals satisfied with their lives, employment status, earnings from salary and wages, Government pensions and allowances, and use of health services between those in poor versus good health and those having versus not having a long-term health condition. Improving the health profile of Australians of working age in the most socio-economically disadvantaged groups therefore would lead to major social and economic gains with savings to both the Government and to individuals.

If the health gaps between the most and least disadvantaged groups were closed, i.e. there was no inequity in the proportions in good health or who were free from long-term health conditions, then an estimated 370,000 to 400,000 additional disadvantaged Australians in the 25-64 year age group would see their health as being good and some 405,000 to 500,000 additional individuals would be free from chronic illness depending upon which socio-economic lens (household income, level of education, social connectedness) is used to view disadvantage (Figure 1). Even if Government action focussed only on those living in public housing, then some 140,000 to 157,000 additional Australian adults would have better health.

People’s satisfaction with their lives is highly dependent on their health status. On average, nearly 30 per cent more of disadvantaged individuals in good health said they were satisfied with their lives compared with those in poor health (Figure 2). Over eight in every 10 younger males who had poor health and who lived in public rental housing were dissatisfied with their lives. If socio-economic inequalities in health were overcome, then as many as 120,000 additional socio-economically disadvantaged Australians would be satisfied with their lives. For some of the disadvantaged groups studied, achieving health equality would mean that personal well-being would improve for around one person in every 10 in these groups.

Rates of unemployment and not being in the labour force are very high for both males and females in low socio-economic groups and especially when they have problems with their health. For example, in 2008, fewer than one in five persons in the bottom income quintile and who had at least one long-term health condition was in paid work, irrespective of their gender or age. Changes in health reflect in higher employment rates, especially for disadvantaged males aged 45 to 64. Achieving equity in self-assessed health status (SAHS) could lead to over 110,000 new full- or part-time workers when health inequality is viewed through a household income lens, or as many as 140,000 workers if disadvantage from an educational perspective is taken (Figure 3). These figures rise to over 170,000 additional people in employment when the prevalence of long-term health conditions (LTC) is considered.

If there are more individuals in paid work, then it stands to reason that the total earnings from wages and salaries for a particular socio-economic group will increase. The relative gap in weekly gross income from wages and salaries between disadvantaged adult Australians of working age in good versus poor health ranges between a 1.5-fold difference for younger males (aged 25 to 44) who live in public housing or who experience low levels of social connectedness to over a staggering 6.5-fold difference experienced by males aged 45 to 64 in the bottom income quintile or who are public housing renters.

Closing the gap in self-assessed health status could generate as much as $6-7 billion in extra earnings and, in the prevalence of long-term health conditions, upwards of $8 billion (Figure 4). These findings reflect two key factors – the large number of Australians of working age who currently are educationally disadvantaged having left school before completing year 12 or who are socially isolated and the relatively large wage gap between those in poor and good health in these two groups. In terms of increases in annual income from wages and salaries, the greatest gains from taking action on the social determinants of health can be made for males aged 45 to 64.

Potential savings to the health system through Government taking action on the social determinants of health were difficult to estimate because of the lack of socio-economic coded health services use and cost data. As an example of the possible savings that might accrue, changes in the use and cost of health services – hospitals, doctor and medically related (Medicare) services, and prescribed medicines subsidised through the PBS – from changes in self-assessed health status for individuals in the lowest household income quintile were modelled.

Nearly 400,000 additional disadvantaged individuals would regard their health as good if equity was achieved with individuals in the top income quintile. Such a shift is significant in terms of health services use and costs as there were very large differences in the use of health services by individuals in the bottom income quintile between those in poor versus good health. More than 60,000 individuals need not have been admitted to hospital. More than 500,000 hospital separations may not have occurred and with an average length of stay of around 2.5 days, there would have been some 1.44 million fewer patient days spent in hospital, saving around $2.3 billion in health expenditure.

A two-fold difference in the use of doctor and medical services was found between disadvantaged persons in poor versus good health. Improving the health status of 400,000 individuals of working age in the bottom income quintile would reduce the pressure on Medicare by over 5.5 million services. Such a reduction in MBS service use equates to a savings to Government of around $273 million each year. With respect to the use of prescription medicines, in 2008, disadvantaged individuals in the 45 to 64 age group and who were in poor health and who were concession cardholders used 30 prescriptions on average each. While those aged 25 to 44 averaged 19 scripts, both age groups used twice as many scripts as concessional patients in good health. Over 5.3 million PBS scripts would not have been required by concessional patients if health equity existed. However, a shift to good health through closing socio-economic health gaps would shift around 15,000 persons in low-income households from ‘having’ to ‘not having’ concessional status, resulting in a net increase of 41,500 scripts (a 6 per cent increase) for general patients. Health equity for concessional patients was estimated to yield $184.7 million in savings to Government and a $15.6m reduction in patient contributions. However, there would be an increase in the out-of-pocket cost of medicines to general patients by some $3.1m.

This is the first study of its kind in Australia that has tried to gauge the impact of Government inaction on the social determinants of health and health inequalities. Reducing health inequalities is a matter of social inclusion, fairness and social justice (Marmot et al, 2010). The fact that so many disadvantaged Australians are in poor health or have long-term health conditions relative to individuals in the least socio-economically disadvantaged groups is simply unfair. So are the impacts on people’s satisfaction with their lives, missed employment opportunities, levels of income and need for health services. This study shows that major social and economic benefits are being neglected and savings to Government expenditure and the health system overlooked.  The findings of this Report are revealing and are of policy concern especially within the context of Australia’s agenda on social inclusion. However, in this study the health profile of individuals of working age in the most socio-economic disadvantaged groups only was compared with that of individuals in the least disadvantaged groups. The first CHA-NATSEM Report (Brown et al, 2010) on health inequalities showed that socio-economic gradients in health exist in Australia.  It is not only the most socio-economically disadvantaged groups that experience health inequalities relative to the most advantaged individuals, but also other low and middle socio-economic groups.  Thus, this Report provides only part of the story of health inequalities in Australians of working age.

Social gradients in health are common in Australia – the lower a person’s social and economic position, the worse his or her health – and the health gaps between the most disadvantaged and least disadvantaged groups are typically very large.  This Report confirms that the cost of Government inaction on the social determinants of health leading to health inequalities for the most disadvantaged Australians of working age is substantial. This was measured in terms not only of the number of people affected but also their overall well-being, their ability to participate in the workforce, their earnings from paid work, their reliance on Government income support and their use of health services.

Health inequality was viewed through a number of different socio-economic lenses – household income, education, housing tenure and social connectedness – with attention being focussed on the health gaps between the most and least disadvantaged groups. The cost of Government inaction was measured in terms of the loss of potential social and economic gains that might otherwise have accrued to socio-economically disadvantaged individuals if they had had the same health profile of more socio-economically advantaged Australians. The modelling ‘shifted’ disadvantaged individuals from poor to good health, or having to not having a long-term health condition, to replicate the health profile of the least disadvantaged group. It was assumed that any ‘improvement’ in health did not move individuals out of their socio-economic group but rather that they took on the socio-economic characteristics of those in the group who were ‘healthy’.

If the health gaps between the most and least disadvantaged groups were closed, i.e. there was no inequity in the proportions in good health or who were free from long-term health conditions, then an estimated 370,000 to 400,000 additional disadvantaged Australians in the 25-64 year age group would see their health as being good and some 405,000 to 500,000 additional individuals would be free from chronic illness, depending upon which socio-economic lens (household income, level of education, social connectedness) is used to view disadvantage. Even if Government action focussed only on those living in public housing, then some 140,000 to 157,000 additional Australian adults would have better health.

Substantial differences were found in the proportion of disadvantaged individuals satisfied with their lives, employment status, earnings from salary and wages, Government pensions and allowances, and use of health services between those in poor versus good health and those having versus not having a long-term health condition. As shown in the Report findings, improving the health profile of Australians of working age in the most socio-economically disadvantaged groups therefore leads to major social and economic gains with savings to both the Government and to individuals.

For example, as many as 120,000 additional socio-economically disadvantaged Australians would be satisfied with their lives. For some of the disadvantaged groups studied, achieving health equality would mean that personal well-being would improve for around one person in every 10 in these groups. Rates of unemployment and not being in the labour force are very high for both males and females in low socio-economic groups and especially when they have problems with their health. For example, in 2008, fewer than one in five persons in the bottom income quintile and who had at least one long-term health condition was in paid work, irrespective of their gender or age. Changes in health reflect in higher employment rates, especially for disadvantaged males aged 45 to 64. Achieving equity in self-assessed health status could lead to more than 110,000 new full- or part-time workers when health inequality is viewed through a household income lens, or as many as 140,000 workers if disadvantage from an educational perspective is taken. These figures rise to more than 170,000 additional people in employment when the prevalence of long-term health conditions is considered.

If there are more individuals in paid work then it stands to reason that the total earnings from wages and salaries for a particular socio-economic group will increase. The relative gap in weekly gross income from wages and salaries between disadvantaged adult Australians of working age in good versus poor health ranges between a 1.5-fold difference for younger males (aged 25-44) who live in public housing or who experience low levels of social connectedness to over a staggering 6.5-fold difference experienced by males aged 45 to 64 in the bottom income quintile or who are public housing renters.

Closing the gap in self-assessed health status could generate as much as $6-7 billion in extra earnings, and in the prevalence of long-term health conditions upwards of $8 billion. These findings reflect two key factors – the large number of Australians of working age who currently are educationally disadvantaged having left school before completing year 12 or who are socially isolated and the relatively large wage gap between those in poor and good health in these two groups. In terms of increases in annual income from wages and salaries, the greatest gains from taking action on the social determinants of health can be made from males aged 45 to 64.

A flow-on effect from increased employment and earnings and better health is the reduced need for income and welfare support via Government pensions and allowances. Those in poor health or who have a long-term health condition typically received between 1.5 and 2.5 times the level of financial assistance from Government than those in good health or who were free from chronic illness. Irrespective of whether an income, education or social exclusion lens is taken, closing the gap in health status potentially could lead to $2-3 billion in savings per year in Government expenditure, and in the order of $3-4 billion per year if the prevalence of chronic illness in most disadvantaged socio-economic groups could be reduced to the level experienced by the least disadvantaged groups.

Potential savings to the health system through Government taking action on the Social Determinants Of Health were difficult to estimate because of the lack of socio-economic coded health services use and cost data. As an example of the possible savings that might accrue, changes in the use and cost of health services – hospitals, doctor and medically related (Medicare) services, and prescribed medicines subsidised through the PBS – from changes in self-assessed health status for individuals in the lowest household income quintile were modelled.

Nearly 400,000 additional disadvantaged individuals would regard their health as good if equity was achieved with individuals in the top income quintile. Such a shift was shown to be significant in terms of health services use and costs as there were very large differences in the use of health services by individuals in the bottom income quintile between those in poor versus good health. More than 60,000 individuals need not have been admitted to hospital. More than 500,000 hospital separations may not have occurred and, with an average length of stay of around 2.5 days, there would have been some 1.44 million fewer patient days spent in hospital, saving around $2.3 billion in health expenditure.

This is the first study of its kind in Australia that has tried to gauge the impact of Government inaction on the social determinants of health and health inequalities. Reducing health inequalities is a matter of social inclusion, fairness and social justice (Marmot et al, 2010). The fact that so many disadvantaged Australians are in poor health or have long-term health conditions relative to individuals in the least socio-economically disadvantaged groups is simply unfair. So are the impacts on people’s satisfaction with their lives, missed employment opportunities, levels of income and need for health services. This study shows that major social and economic benefits are being neglected and savings to Government expenditure and the health system overlooked. The findings of this Report are revealing and are of policy concern especially within the context of Australia’s agenda on social inclusion. However, in this study the health profile of individuals of working age in the most socio-economic disadvantaged groups only was compared with that of individuals in the least disadvantaged groups. The first CHA-NATSEM Report (Brown et al, 2010) on health inequalities showed that socio-economic gradients in health exist in Australia. It is not only the most socio-economically disadvantaged groups that experience health inequalities relative to the most advantaged individuals, but also other low and middle socio-economic groups. Thus, this Report provides only part of the story of health inequalities in Australians of working age.