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The Fiscal, Social and Economic Dividends of Feeling Better and Living Longer

28 Pages Posted: 30 Oct 2013  

J. C. Herbert Emery

University of Calgary - Department of Economics

Kenneth Fyie

Independent

Ludovic Brunel

Independent

Daniel Dutton

Independent

Date Written: June 19, 2013

Abstract

While Canada has socialized most of the costs of treating illness, Canada has maintained a reliance on individuals interacting through private markets to invest in upstream health promotion and disease prevention. The failure of the market to provide the efficient level of upstream investment in health is leading to large and avoidable increases in the need for downstream medical treatment. The way to reduce the future deadweight loss of illness and disease is for provincial governments to address the upstream market failures through an expansion of the scope of public payment for health care to include upstream services for health promotion and disease prevention. Perhaps somewhat counterintuitively, spending public health-care dollars across a broader range of health and wellness services can result in spending less in total, because of the efficiency gains that will come from better health in the population.

That is certainly what the evidence from a unique Albertan pilot project leads us to conclude. The Pure North S’Energy Foundation is a philanthropic initiative that pays for and provides preventative health-care services for Albertans drawn from groups that are vulnerable to poor health. This includes homeless people, people suffering from addiction, people with low incomes, people in isolated areas and susceptible seniors. The health improvements observed in those participating in the Pure North program have been significant.

Effective health-promotion and disease-prevention services obviously benefit patients. But there are also substantial benefits to society as well. The annual health-care bill for a Canadian in poor health is estimated to be more than $10,000 higher than for someone in good health, meaning that keeping people in good health can be an important means for controlling public health-care budgets, and can free up scarce acute care hospital resources. If the Pure North program were scaled-up province-wide to cover the nearly quarter million Albertans in poor health, the resulting health improvement seen in Pure North participants could translate into a nearly 25-per-cent reduction in hospital days used by Alberta patients every year and a net savings of $500 million on hospital and physician costs. That does not even include the economic benefits of keeping workers in better health and productive, while spending fewer days ill or hospitalized.

To date, Canada’s approach to health care has largely left it to patients to choose whether to seek health promotion and disease-prevention services on their own, suggesting an implicit deference to an individual’s rights and responsibilities. But for many low-income, isolated, addicted or aboriginal Canadians, there often is no choice: These services, when delivered privately, are often too expensive or may be otherwise inaccessible. The initial spirit behind Canadian medicare was to correct a health-market failure, so that no patient would face barriers to accessing necessary treatments. That same philosophy also recommends extending universal coverage for health-promotion and disease-prevention to vulnerable Canadians who today face similar barriers to access. If the Alberta government wants to show both foresight and fairness, the benefits from this kind of program, economically and societally, are simply too attractive to disregard.

Keywords: health, promotion, Alberta, care, preventative

JEL Classification: I11, I12, I18

Suggested Citation

Emery, J. C. Herbert and Fyie, Kenneth and Brunel, Ludovic and Dutton, Daniel, The Fiscal, Social and Economic Dividends of Feeling Better and Living Longer (June 19, 2013). SPP Research Paper No. 6-20. Available at SSRN: https://ssrn.com/abstract=2346972

J. C. Herbert Emery (Contact Author)

University of Calgary - Department of Economics ( email )

2500 University Drive, NW
Calgary, Alberta T2N 1N4
Canada
403 2205489 (Phone)
403 2825262 (Fax)

HOME PAGE: http://econ.ucalgary.ca/emery.htm

Kenneth Fyie

Independent ( email )

Ludovic Brunel

Independent ( email )

Daniel Dutton

Independent ( email )

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