Why a Strong Healthcare System is Crucial to Economic Growth

Why a Strong Healthcare System is Crucial to Economic Growth


Part 1 of a 3-part series

If we lived between the 16th century and mid-19th century we would be lucky to live beyond the age of 40.

According to David Bloom, David Canning and Dean Jamison in their article “Health, Wealth, and Welfare” (International Monetary Fund, Health and Development), “a global transformation in human health” over the last 150 years has resulted in people living longer, healthier, more productive lives.

They noted that life spans slowly but steadily increased in the second half of the 19th century and then jumped markedly in the 20th century, initially in Europe and then in the rest of the world. The average life span in the Asia Pacific region in 1960 was 39, which increased to 67 in 1990 and 69 in 2001. In 2014, the average life expectancy in the Philippines was 68 for men and 73 for women.

Bloom et al believe…

[pq]…the key factors that caused the progressive reduction in death rates during the 19th century were rising income levels and resulting improvements in sanitation and food availability.[/pq]


For the 20th century, they point to major advances in medical knowledge and technology as the catalysts, particularly the discovery of the germ theory of disease, a better understanding of hygiene, and the development of antibiotics and vaccines.

Better health boosts GDP per capita

Bloom et al point out that a healthier global population has boosted rates of economic growth worldwide, particularly in speeding up the growth of GDP per capita. GDP stands for Gross Domestic Product, which refers to the total monetary value of all the goods produced and services provided in a country in a year.

Put simply, GDP per capita is a country’s total production divided by the country’s total population—the output of a country’s economy per person. In effect, GDP per capita is a measurement of how prosperous a country feels to each of its citizen.

[pq]According to the U.S. Centers for Disease Control and Prevention (CDC), healthier workers in general are more productive.[/pq]


They are less likely to call in sick and file sick leaves. Moreover, healthy employees usually have health-conscious families as well that cook and eat nutritious meals at home and lead an active lifestyle. As such, they may miss less work days to care for ill family members.

The CDC cites the negative effects of overweight and obesity on work productivity:

  • Obese employees experience higher levels of absenteeism due to illness than normal-weight employees.
  • Normal-weight men miss an average of 3.0 days each year due to illness or injury.
  • Overweight and obese men (Body Mass Index or BMI of 25 to 35) miss approximately 2 more work days per year than normal-weight men, a 56% increase in missed days.
  • Normal-weight women miss an average of 3.4 days each year due to illness or injury.
  • Overweight women miss 3.9 days, a 15% increase in missed days. Obese women (BMI greater than 30) miss 5.2 days, a 53% increase in missed days. Women with morbid obesity (BMI of 40 or higher) miss 8.2 days, a 141% increase in missed days—almost one week more of missed work each year than normal-weight women.

The CDC believes that an effective workplace health program that promotes employee health and safety can provide cost savings through lower rates of absenteeism among employees, reduced overtime to cover for absent employees, and lower expenditure to train replacement employees.

Healthy workforce, healthy economy

Aside from boosting GDP per capita, better health also raises per capita income. One way, according to Bloom et al, is by altering a person’s decisions about expenditures and savings over his or her lifetime. A person will plan for retirement only if living beyond the age of 60 or 70 is a realistic prospect. With increasing life spans in developing countries, planning for retirement has become a strong incentive to save for a lot of people.

oBloom et al say this incentive can have dramatic effects on national saving rates. Granted that this “saving boom” lasts for only one generation and is cancelled out by the healthcare needs of the elderly once population aging occurs, Bloom et al believe it can substantially boost investment and economic growth rates while it lasts.

Another way a healthy population can drive economic progress is by encouraging foreign direct investment. Conversely, Bloom et al aptly note that investors shun environments where the labor force suffers from a heavy disease burden.

Increasing economic burden of NCDs

Non-communicable diseases (NCDs) have emerged as a major public health problem. NCDs—primarily cardiovascular diseases, cancers, chronic respiratory diseases and diabetes—cause 63% of all deaths worldwide. According to the World Health Organization, NCD deaths are distributed widely among the world’s population, from high income to low-income countries and from young to old—about 1 in 4 of all NCD deaths involve people below the age of 60.

NCDs exact a heavy economic toll in terms of substantial healthcare expenditures (cost of hospitalization and medicines, etc.) both for the population and the healthcare system, loss of income of both the patient and family members who have to care for their ailing loved one, and savings depletion or even bankruptcy due to high out-of-pocket healthcare expenditures.

Experts estimate that sickness and deaths caused by the leading NCDs mentioned previously will, over the next two decades, result in a cumulative output loss of US$ 47 trillion—a loss that represents a staggering 75% of global GDP in 2010 (US$ 63 trillion).

Although high-income countries currently bear the biggest economic burden of NCDs…

[pq]…the WHO warns that the developing world, especially middle-income countries such as the Philippines, is expected to assume an increasing NCD (Non-communicable diseases) burden as these countries’ economies and populations grow.[/pq]


Key role of healthcare systems

The health of a country’s population depends, to a large extent, on the quality of its healthcare system. In part 2 of this 3-part series, we will look at an overview of the Philippine healthcare system.


– Eric Michael Santos, Medical Observer



1. http://www.imf.org/external/pubs/ft/health/eng/hdwi/hdwi.pdf

2. http://www.doh.gov.ph/sites/default/files/3%20Chapter1.pdf

3. http://useconomy.about.com/od/glossary/g/Gdp-Per-Capita.htm

4. http://www.cdc.gov/workplacehealthpromotion/businesscase/benefits/productivity.html

5. http://apps.who.int/medicinedocs/en/d/Js18806en/