Summary: The Direct Economic Burden of Socio-Economic Health Inequalities in Canada

People with higher socio-economic status based on income, education or occupation tend to be healthier. As such, they also generally incur lower health care costs. This report compares health care costs between socio-economic groups and estimates what these differences cost Canada's health care system. Report findings indicate that improving health and reducing inequalities could produce economic and other gains.

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Background

Less healthy individuals and those more likely to be exposed to health risks tend to need more health care. Canadian who are less healthy tend to have:

  • lower incomes
  • less education
  • lower occupational skill levels

Conversely, those with greater advantages in these areas tend to be healthier, resulting in lower health care costs.  This uneven distribution of health across different socio-economic groups is referred to as socio-economic inequality in health.

Evidence of the economic cost of health inequalities helps us better understand the benefits of reducing these inequalities. However, Canada has limited data linking health costs and socio-economic characteristics. This has restricted our ability to assess the degree to which health costs are associated with socio-economic inequalities across Canada.

Organization: Public Health Agency of Canada

Date published: 2016-04-11

Purpose

The purpose of this report is to estimate the health care cost of socio-economic health inequalities. It compares health care costs between socio-economic groups in order to estimate what these differences cost Canada's health care system. This estimate is called the direct economic burden of socio-economic inequalities in health.

This report provides the first national-level estimate of this direct economic burden. Its findings inform Canadians about the estimated health care cost reduction that could result from improving health and reducing health inequalities. It suggests that cost reduction could be achieved by addressing the social, economic and environmental conditions that strongly influence health.

Approach

The Public Health Agency of Canada (PHAC) worked with Statistics Canada on this study. The study tests the feasibility of a new approach to collecting and linking data on health costs and socio-economic characteristics. Income was used to measure socio-economic status because:

  • it is a widely accepted indicator of socio-economic position
  • data linking income and health is most widely available in Canada

This report uses national-level data for 3 health care services:

  1. acute care in-patient hospitalizations
  2. prescription medications
  3. physician consultations (general practitioners and specialists)

These services represented about a quarter of all health care spending in Canada from 2007 to 2008. This report does not include all health care services due to a lack of data.

Main findings

The main findings presented in this report are as follows.

  • Health care costs generally decline as income rises. This pattern is the same for both women and men.
  • For the services included in this report, socio-economic health inequalities cost Canada's health care system at least $6.2 billion annually.
    • This represents over 14% of total spending on acute care in-patient hospitalizations, prescription medications and physician consultations.
    • There is potential to reduce these costs if all Canadians could match the health care usage patterns of the highest income group.
  • The lowest income group accounts for 60% ($3.7 billion) of the health care costs of socio-economic health inequalities.
    • Improving the health of this group could significantly reduce these costs.

Conclusion

This report provides the first national-level estimate of the direct economic burden of socio-economic inequalities in health. The burden measures the scale of the health care costs associated with health inequalities. This is important in order to assess the significance of these inequalities for policy development.

A better understanding of the direct economic burden can help us consider how:

  • improving health and reducing health inequalities could produce economic and other gains
  • to balance health spending between prevention and treatment
  • to assess investments in other social, economic and environmental policy areas that support healthy lifestyle choices

Supplementary material

Statistics Canada has produced a technical report on this study that provides further detail about the:

  • sources of data used
  • development of health cost estimates by income level
  • limitations of currently available data

The technical report is a useful reference that should be considered alongside this study.

Order a publication copy

To order an electronic copy of either the PHAC study or the Statistics Canada report, contact publications@hc-sc.gc.ca.

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