Income inequality & health

John Wicks

The historical wealth-health relationship

Historically there has been a relationship between wealth and health. The wealthy have lived in larger, cleaner houses, had better ablution facilities, ate fresher, more expensive and generally healthier foods and could flee to other locations when outbreaks of disease occurred - and hence generally enjoyed better health.

But we now, at least in the developed world, live in an age of democracy, where every adult has a vote and governments including those in Australia, like to claim that they pursue policies and administration that promote a duty of care for all. Indeed, the wealth generated by modern mass production, distribution, transport and communication provides a sound basis to break that historical nexus between wealth and health through;

(a) a more equitable distribution of wealth because of the huge resources available to governments, with a reduction in inequality;

(b) and a greater focus on universal health care in all its forms (doctors, hospitals, dental treatment, pharmaceuticals etc).

Australia certainly has the technical and financial resources to achieve both, but over the past decade or so, has not been pursuing such a path. Whilst general health outcomes have been improving in broad terms eg average age, total number of people receiving health care, disease prevention, inequality in both income and access to health care in Australia is growing and not reducing. Opportunities offered by economic growth to pursue 'the common good' are being sacrificed for policy directions based on individualistic, self interest.

Neo-conservatism (look after yourself)

This approach in Australia is being driven by a general drift on a broad front to conservatism, and in particular an ascendancy on the far right of neo-conservatism or neo-liberalism. That philosophy promotes:

• unfettered and as far as possible, unregulated free markets;
• the supremacy of the profit motive as arbiter of success or failure in all activities;
• the concept of fierce competition and individualism in preference to communal development;
• the treatment of people as little more than commodities in the production process rather than as unique human beings;
• and expounds a patently false doctrine that material self interest and personal accretion of wealth promotes the welfare of everyone because the wealth will trickle down.

As a result there has been in Australia a wholesale drift to deregulation, privatisation, policies of maximum self care and minimalist approach to public expenditure on social infrastructure, including education, transportation, communications and especially health. For obvious reasons, it has been accompanied by growing levels of inequality and deprivation - because, at the end of the day, if you can pay you can quickly get what you want, if you can't afford the price then don't expect the same service. Yes - there is a safety net for all of those at the back of the queue, but you might die waiting.

Growing inequality in Australia

Research by NATSEM (Simon Kelly) shows that, through the 20th century to the 1960s, Australia was indeed accelerating towards the egalitarian society, of the 'fair go' that seems to have become enshrined in the Australian psyche but that from the 1970s there has been a strong reversal.

As a measure of the redistriution of wealth, oin the 1915 census, the wealthiest 20 percent owned 89.7 per cent of the wealth, in a 1967 survey, this had fallen to 53.5 per cent, and in the 1998 survey this had risen again to 62.8 per cent. Further research indicates that by 2030 on current trends the richest 20 per cent of Australians will own 70 per cent of the wealth.

Moreover, as the Reserve Bank confirmed in 2004, some 20 per cent of Australians own 63 per cent of all new wealth, while the bottom 20 per cent own just 0.2 per cent. Hence, in 2004 the wealthiest 20 per cent of Australian had net wealth of over $1.2 million, the poorest 20 per cent had a net worth of $4500.

Whilst average full time weekly earnings in Australia are officially put at over $1000 per week, and boasted by many as a sign of economic success, several million Australians live in households where the weekly income is less than $400 a week - less than half of that earnings average.

With widespread privatisation and deregulation, the labour market has seen the growth in casualisation in the workforce with around 30 per cent now so employed. Hourly rates in some cases might be higher, but weekly and annual incomes are much lower and characterised by a lack of sick leave, recreation leave, and little or no superannuation.

This is deemed necessary to meet the competitive challenge of globalisation. That is questionable because most of the casualised workforce is in the tertiary or service sector who do not compete with overseas; for example, how many send their lawns to China to have them mowed? how many hotels import housekeepers from Zimbabwe to make the beds? The plain fact is that the bulk of casualised jobs are non-import competing. Poor pay and working conditions is a business sector choice for profit maximisation and not a necessity to stay in business.

Moreover, official claims are made that the unemployment rate is a low 5 per cent compared to say Germany at 10 per cent or so. But they fail to mention that Australia uses the ridiculous definition of employment as have one hour of work per week. Germany, by contrast, clings to a definition of 15 hours of work a week. On that basis, and taking into account numbers deliberately excluded from labour force data in Australia, our unemployment rate is 10-12 per cent, similar to that of Germany.

The result has been in Australia, as has already occurred in the USA, an acceleration in the development of the working poor. Households with one or even two jobs but at such low wages they cannot afford a standard of living considered the norm.

Moreover, the cost of putting a roof over your head in Australia has been rising at such a rapid rate that poor families are paying up to 50 per cent of their income for accommodation. They are driven to postcodes of poverty away from metropolitan areas where jobs are occurring but where the poor cannot afford to live.

We at St Vinnies have and continue to claim that around 15 per cent of the Australian population or around three million live in deprived circumstances and there are others who move in and out of that group.

Income inequality = health inequality

Moreover, health access inequality is probably significantly greater than income inequality, because so many households are deemed to be above any poverty line you care to nominate - the Henderson Poverty Line 1975, 50 per cent of average weekly income; NATSEM, 60 per cent of average OECD - cannot afford the extremely high costs of dental care, specialist services and the GP costs necessary to access them, travel and accommodation costs to medical services etc.

Reputable study, after study, after study shows that without any shadow of a doubt, income inequality generates health inequality:

University of Queensland, Mater Hospital: Monitored child health from pre-natal to adulthood and clearly showed that children from lower socio-economic backgrounds, by age 14, had poorer mental health, poorer abilities to learn, had unhealthy lifestyles but more importantly, concluded that the cost of targeting those at risk while they were young was considerably less than dealing with the problem later in their lives.

NSW Cancer Council Study: Its report showed that people in poorer socio-economic areas are more likely to die once diagnosed with cancer. The average survival rate was 61 per cent, in poorer areas 56 per cent, but in North Sydney there was the highest survival rate of 67 per cent.

Parliamentary Library Research: Worldwide data showed that as the costs of pharmaceuticals rise, more patients fail to fill their prescriptions - are Australians such superior human beings that rising pharmaceutical costs will not generate the same outcome?

University of Melbourne Study (Anne Kavenagh): In a survey of 5000, found that obesity is more prevalent in poorer socio-economic neighbourhoods and less in affluent ones.

Senate Committee Report on Poverty and Financial Hardship (2004): Found that people aged 45-64 in the lowest 20 per cent income group are eight times more likely to have no natural teeth. That around 500,000 people are on waiting lists for public dental care and that only about 11% of those eligible for treatment will receive it in a given year.

Several other studies in Mental Health: Clearly indicate the disastrous levels of funding and provision of facilities for mental health problems in Australia.

At the national level, the decline in government priority attention to health outcomes of the nation is more than apparent. Government health expenditure as a proportion of total health expenditure in Australia ranks second last in the OECD, only behind the USA.

On the other hand, expenditure on health in the USA as a proportion of GDP at 13.9 per cent is higher - clearly showing that a 'look after yourself at your own expense for the profit of providers' appears to be more costly and less efficient.

What do we have in Australia as a result of mimicking the neo-conservative, free market, competitive individualistic approach to health as in the USA:

• growing waiting lists for elective surgery (where the pain may be excruciating but nature of the surgery deemed 'elective';

• poor bulk billing rates for GP services especially in low socio-economic areas;

• massive waiting lists for dental surgery (and all of the medical complications that accompany it);

• unacceptable waiting times for GP services at public hospitals;

• a substantial shortage of aged care facilities;

• gross negligence in the provision of mental health care and mental care facilities.

On top of this we are entering an era of rising pharmaceutical costs, which are unlikely to be assisted by the USA and Australia free trade agreement. Perhaps we should have a national neo-conservative campaign "How to live woith pain and sufferring".

Vertical fiscal impbalance, and the blame game

The 'blame game' is rooted in the division of responsibilities for health between the federal government and the States; where the states have primary responsibility for hospitals and a range of care facilities while the federal government is responsible for the subsidy general practitioner services, pharmaceutical benefits, areas of dental care - but where the borders are grey and fuzzy eg GP services at public hospitals.

But this is not the real issue, the real issues are twofold.

1. All Australian citizens should have accessible healthcare available to them (regardless of location, age, wealth);

2. Vertical Fiscal Imbalance where the federal government has over 80 per cent of total tax revenues, and the states and territories have 15 per cent, but the states are responsible for around 45 per cent of expenditure - means that much of the ultimate responsibility must rest at the federal level.

At the federal level there is all too often the claim that the states are responsible - maybe, but if the Commonwealth holds the purse strings, where does the ultimate responsibility lie?

Many federal claims also have mischievous implications. Commonly and officially the inflation rate is proclaimed for many years to be around 3 per cent per annum - readily picked up by the media with tacit official approval that its cost of living is rising only by the same 3 pewr cent per annum. In fact, the level of inflation never was, is not and never will be a true reflection of the cost of living for all household types at different locations.

In fact, level of inflation at 3 per cent is made up of an average of prices. It includes numerous crucial expenditure items which low income families must buy, and which have risen 100 per cent or more above the inflation rate (housing and rent, health care, transport, energy, education) offset by substantial numbers of goods low income households don't buy (new motor vehicles, jewellery, perfume, new electronic equipment, new white goods, etc).

Research by Gavin Dufty of St Vincent de Paul has looked closely at this issue. In particular, he has looked at health costs and it is no surprise that they are well above official inflation data (CPI all groups - 148.4; Health Group - 211.6; Health services - 225.0; Hospital and Medical Services - 235.9: see above graph).

Conclusion - Options for action

There are several areas where action for the 'common good' in healthcare seems obvious and others where analysis is warranted, these include:

1. Increased public expenditure on health, particularly in view of large budget surpluses in opening years of 21st century.

2. Reduced health welfare for the wealthy and introduction of:
- Means testing of private health insurance rebate
- Greater means testing of tax rebates for health expenditure.

3. Government regulation for better national health outcomes:
- Fast food and obesity (fat, sugar, salt content of foods)
- More stringent food labelling
- Banning of all forms of tobacco advertising
- Banning of alcoholic drinks aimed at the young (e.g. spirits laced with fruit juice and advertising such drinks, etc).

4. Federal government guarantees and funding of bulk billing doctors at public hospitals:
- Guaranteeing bulk billing doctors a salary equivalent to national or local standards where revenue from bulk billing does not meet that standard.

5. Examine the application of the same approach and requirements of healthcare/medical unions as to that are applied to the community generally:
- Surgeons Union (RACS)
- Doctors Union (AMA)
- Radiologists Union
- Chemist Union
- and so many more.

6. Increased provision of health/medical related student positions at universities.

7. Improved statistical and other data collection relating to health care in Australia.


These are the speech notes of John Wicks from the National Social Justice Committee, St Vincent de Paul, for his presentation to the Save Medicare Alliance in February 2006.