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January 10, 2005

Matt Y Misses the Costs of Illness

Matthew Y doesn't think good health saves money:

everyone (who doesn't die violently, or in accidents or natural disasters) gets sick and eventually dies, with the full set of related costs. At best, improving health shifts health care costs into the future, making things temporarily cheaper. In the long term, the bills come due no matter what. Death & taxes and all that.
Matt's broader point is that health care is tied up with issues like diet and exercise as much as with doctors and medicine, but he is implicitly promoting a dangerous fallacy. Good health is critical for not only individual economic well-being over one's life, but for promoting one's family's welfare-- which can be destroyed when a prime wage-earner falls ill.

This report from the Novartis Foundation for Sustainable Development (yes, a drug company, but the point holds):

good health is a precondition for sustainable economic and social development... One of the first effects of illness is to reduce the productivity of those who depend on physical labor for their income, and who have no alternative work to go to and no savings to cushion them against lost earnings. Losses of income and production due to prolonged sickness can reduce an entire household from a state of bearable survival to the greatest possible distress. According to a World Bank analysis, illness – in the worst case followed by death – is often the cause of extreme poverty and persistent debt. (4)A poor state of health also reduces people's ability to learn, and consequently leads to suboptimal benefits despite considerable investments in education and training.
The key point is that people getting sick when they are older has a very different societal effect than when they are the prime wage earners for their families.

The costs of illness may not change due to better health care systems, but the ability of members of that society to produce the wealth to pay for that health care changes dramatically.

Posted by Nathan at January 10, 2005 08:59 AM