The Relationship Between Healthcare and Economy
Investment in health is not only desirable but also a top priority for most economies. Yet, health systems across the world face tough challenges – in part derived from a complex regulatory environment, aging population, growing prevalence of chronic diseases, and extensive use of expensive yet vital health technologies. Add to it the mounting expectations from citizens for quick and affordable access to healthcare. Most economies today are struggling to promote more value for money in the health sector while ensuring universal access, equity and raising the quality of care. According to the World Health Statistics 2017, the amount of money that Malaysia spends on healthcare, as a percentage of the total government expenditure is a mere 6 percent, as compared to Singapore and Vietnam, which spend 14 percent and Thailand which contributes 13 percent. This brings us to the issue of how to ensure the financial sustainability of health systems while making a positive contribution to the macroeconomy.
The eternal bond
A basic message has emerged from across the world: investments in health and the design of healthcare policies should be addressed in terms of the interaction between health and the economy. Just as economic growth, GDP, investment and employment contribute to the performance and quality of the economic system, its regulatory frameworks, trade policies, labor markets, etc., healthcare also has a big role to play in the status of an economy. Health performance depends not just on standards of living, but on the actual performance of health systems themselves. Let’s understand how:
- The economic performance of any country is directly linked to its health performance. Wealthier countries have healthier populations, and also far better mortality rates. Developing and under-developed countries, which have high percentage of poverty, suffer from poor life expectancy, mainly due to infant malnourishment and mortality.
- The national income of any economy also plays a major role in the development of health systems. This is demonstrated majorly in the form of insurance coverage and public spending on health. Countries with a larger fiscal base are more successful in the universal provision of insurance coverage, which countries otherwise find tough to implement.
- A poor health system hinders institutional performance and impacts foreign investment as well. Many countries that depend on tourism to improve their GDP get severely affected by the inability to contain a deadly disease. If an economy doesn’t have the money or resources to fix it, it is sure to shun tourists away and bring down the performance of the economy.
- Another relationship between healthcare and the economy is based on the health policies implemented. Take, for instance, the case of tobacco use. Wealthier and more efficient fiscal systems that levy higher taxes on tobacco tend to reinforce other public health policies such as restrictions on smoking in public places – which can lead to better health of the population in general.
- Poor economies, suffering from recessions, civil wars, and poverty, do not have the capability to support the healthcare system. This directly translates to hospitals not having the staff they need to take care of patients or the money to upgrade equipment. Because less funding is directed to health, the healthcare system gets weakened; people get sick, are not be able to go to work, which further weakens the economy.
- Globalization and trade liberalization also affect healthcare, via constrained pricing and trade policies of pharmaceuticals, and the need for enhanced health surveillance across borders and populations.
What economies can do
The effects of health on economic development are clear. Countries with poor health conditions find it harder to achieve sustained growth. Economic evidence confirms that a 10 percent improvement in life expectancy at birth is associated with a rise in economic growth of 0.3-0.4 percentage points a year. Here’s what economies can do:
- Policy choices should not be taken lightly; poor health financing can put the entire population under substantial cost burdens that can block development and deepen the disease/poverty trap. Since health systems need financing and investment to improve their performance, economies need to allocate a reasonable portion of the national spending in the development of health policies and systems.
- Although a decent amount of investment in healthcare should be part of the yearly budget, it should not be to the extent where economies are forced to make cuts elsewhere. Fiscal balance is important, but not at the cost of cutting down social expenditure. Good investment in health cover, facilities, and insurance for citizens should not translate into lowering of minimum wage structure, more expensive housing, a reduction in funding in education or severe tax reforms.
- Economies should put in an effort to make healthcare more accessible to the general population. In developing economies, several geographical, cultural and economic barriers come in way of accessibility to health care services. Steps should be taken to enable easy access to healthcare, especially in rural areas, and help in improving the overall health of the economy.
- Countries should also drive efforts in realizing the benefits of technology and help in acquiring advanced equipment and educating health professionals on how to use it. Modern healthcare technology like IoMT, AI, and telemedicine can help predict and prevent outbreaks and contribute to a higher life expectancy; this means people can contribute more to society, without worrying about their health.
Good healthcare means a good economy
With factors such as GDP, healthcare and life expectancy affecting a country’s growth, it is obvious that an efficient and reliable healthcare system is an influential factor in establishing a good economy. Although healthcare spending in Malaysia is expected to reach RM 80 billion by 2020, the country would also have to make access to healthcare quick and affordable to combat illness. This also means that there are no financial burdensbecause of healthcarein the country, and hence can lead the economy to better performance. Economies must never forget that decisions, which are taken in one sphere of development impact conditions, stakeholders and policies in another. Countries must drive efforts to blend health and economic policies to improve health outcomes, minimize negative influences while encouraging synergies wherever possible.