by Guest Contributor | Sep 12, 2017 | Opinion
In 1970, conservative Republican US President Richard Nixon introduced a health bill into the American Congress. It passed but was defeated in the Senate. He did not realize it was a health bill, nor did many of his fellow politicians. It was called the Family Assistance Plan, a guaranteed income for families with children, not adequate to bring the income up to the poverty line, but substantially more than was previously on offer.
It required the breadwinner to accept work if available. Thus it was targeted, conditional, and inadequate by itself to eliminate poverty, but it was a huge change in thinking from a conservative leader in the United States. It came with this impressive rhetoric
“Initially this new system will cost more than welfare, but unlike welfare this is designed to correct the condition it deals with and thus lessen the long range burden and cost.”
The health-income gradient and the failure of ‘welfare’
We know that health and poverty are inextricably linked, that health outcomes follow the income gradient, and that the basis for this association in wealthy countries with good health systems is not simply access to care, but poverty and its own associations. Thus the Nixon proposal was a health bill.
The famous Whitehall study of British public servants who all had similar access to the National Health Service demonstrated a clear association of income with health outcomes. Those most in control of their own lives lived longer and suffered less.
Because of concern about wasting taxes on welfare and about the so called ‘welfare trap’, we have developed a highly targeted welfare system in Australia, with a strong emphasis on mutual responsibility. Our efforts to identify any welfare ‘fraud’, accidental or intentional, have become increasingly intense.
We continue to force people to chase jobs which do not exist or which they could not do. We hound them with letters generated by computers and then make it difficult for them to question any charges against them. We demean them. We dis-empower them even further than their poverty, unemployment, mental illness, or physical illness already does.
A BIG idea
An alternative is needed. The concept of a Basic Income Guarantee (BIG) is not new. Thomas More wrote about it 400 years ago in his book Utopia. Variations of it have been advocated for centuries. Bismark’s social insurance in Germany has some elements of the concept. Nobel Laureate economist and free marketeer Milton Friedman advocated it in the form of a negative income tax (NIT).
Dr. Tim Woodruff
Four trials in the 1960-70s in the United States used Friedman’s model (p 107-109). If an individual’s tax return indicated a low or no income, a tax rebate was paid as a monthly deposit to a bank. The size of the rebate declined slowly as income was earned, ensuring earned income led to an increase in total income. The largest of these four trials involved 4,800 families, and the amount given varied from 50 to 100 percent of the poverty level. There were no work requirements.
The alternative model to NIT is a cash payment. This was trialed in Canada in 1974, where 60 percent of the Low Income Cutoff (poverty level) was paid. For every dollar earned the payment was reduced by fifty cents. Analysis of results showed that even though only one third of the population ever qualified over the 4 years of the trial, high school completion results increased and hospital admissions decreased during the trial compared to the control group.
An even more simple model is one in which the cash payment goes to every individual adult and is not means tested. This eliminates any negative perception of being needy, because everyone receives it. For those who do not need it, the money can easily be recouped by changes in taxation.
Counting costs, reaping benefits
The Basic Income Earth Network established in 1986, defines a basic income guarantee (BIG) as “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement”. This does not specify the level of the cash payment but the simplest and likely the most effective method would be to make the level at or slightly above the poverty line.
Concerns about the basic income guarantee relate both to the benefits and the costs. The Canadian trial mentioned above, demonstrated both health and education benefits. Analysis of the effect of increased household income in the Cherokee Indian community as a result of distribution of profits of a Cherokee owned casino showed less criminality and improved education down the track. None of this is surprising.
But does this mean people will not work as hard? The US trials referred to previously showed a decrease in hours worked particularly among women and young adults. Is that bad? It is not clear from the data what they did instead of working so much. Were women spending more time looking after their families? Were young adults looking more carefully at work options and training?
Men reduced their work hours by about six percent but it did not appear that they were permanently unemployed. Rather, it appears they were spending more time between jobs. The sky did not fall in. Most people who can earn a little more than a poverty level income will do just that.
Is it affordable?
A basic tax free income guarantee of $22,000 (the poverty line at 50% of the median income for a single person) for every adult Australian (18 million people) would cost $400 billion a year. But the idea is not to increase the net income of millionaires by $22,000. It keeps administration simple to give the basic income to everyone and recoup in taxes from the wealthy. So the real cost is much less.
Only about six million Australians currently receive income support. Another one million or so have some funding from the Federal Government. Being generous, for eight million to receive the BIG would cost $176 billion, almost completely offset by replacing the welfare budget of $150 billion. That could be abolished.
Removing the tax free threshold of $18,200 for the 12 million earning more than that would generate $41 billion. But anyone on a low income would still have a total income of more than $22,000.
Tweaking the tax rates on higher incomes would effectively remove the BIG from higher income earners. Provision for children would add to the cost. Reducing BIG for dual income households to a level which would reflect economies of scale, in the same way as pensions do currently, would reduce the cost.
Most Australians would not lose a cent. All Australians would be guaranteed a basic income, whether sacked, disabled, unable to find work, or simply unemployable. The NDIS and Medicare would continue unchanged. This is all possible. Even the Productivity Commission thinks it’s worth investigating (p69):
“While Australia’s tax and transfer system will continue to play a role in redistributing income, in the longer term, governments may need to evaluate the merits of more radical policies, including policies such as a universal basic income.”
A bold move for health
If Australia introduced BIG we would have a system that almost eliminates poverty, thus appealing to those deeply concerned about the plight of the disadvantaged. We would also have a system which gives such people the genuine capacity to make their own decisions about what they do with their lives, which should appeal to those committed to individual responsibility.
Implementing this idea would do away with the current cruel, dis-empowering, wasteful welfare system. It would improve health outcomes. It could improve productivity. It would improve the life prospects of the 13% of Australians who currently live in poverty, the 17.4 percent of kids who are being raised in poverty, and the 40 percent of children in single parent families who live in poverty.
This is a health issue. Medical groups of all types should think about how we might use our knowledge and concern about health to bring this issue to the minds and actions of our politicians.
About the author:
Dr. Tim Woodruff is president of the Doctors Reform Society, an organisation of doctors and medical students promoting measures to improve health for all, in a socially just and equitable way. On twitter @drsreform
Edited by Tyler Prochazka
by Guest Contributor | Aug 30, 2017 | Opinion
The relationship between health and social context includes a range of factors influencing overall well-being. Social status, class, lifestyle, education, and environment primarily shape these factors. Age, gender, race, and ethnicity are structural variables of equal importance to health outcomes. Health is being facilitated or inhibited by the socioeconomic, cultural, and political backgrounds, in which one is born and raised. The people that view these data points and makes correlations between socioeconomic status and backgrounds to health issues have an interesting career because they constantly have to adapt to the understanding of new societal groups and focus on why a certain group would make a certain decision, for example.
In the last few decades, we have seen growing income inequality between the poor and rich. Since the 1980’s, the United States of America has seen a shift in wealth from the middle class towards the wealthiest people and transnational companies. The top one-tenth of 1 percent owns as much as the bottom 90 percent. Firebaugh and Beck argued economic growth would automatically benefit the masses, which in hindsight seems questionable.
As health outcomes and life expectations closely liaise to within-country income inequality, policies should aim at finding appropriate actions to address this phenomenon. Meaning, getting basic family urgent care, in terms of medical needs cannot be compromised. Currently, in some countries, those who earn more are able to find medical treatments to treat their injuries or illnesses, whilst those who don’t have as much money are having to cope with their illness or find other treatments. For example, those who suffer from digestive problems would have to pay a significant amount to get their illness looked at, so people on lower incomes will find supplements to help them instead. The bio complete 3 supplement can deliver prominent improvements for people’s digestive systems, so people are able to treat these problems. However, not all problems can be treated with supplements. This is why changes have to be made.
Wilkinson and Pickett found health issues to be strongly correlated to income inequality within a country. To support this finding, they used two different measurement tools. The first index, applied to Western countries, was a ratio of the 20 percent top incomes in relation to the 20 percent of the bottom earners. For different states within the USA they used a second index, the Gini-index, which adopts a different methodology. Where ‘Gini = 0′ represents perfect equality (same income for everyone) and ‘Gini = 1′ is total inequality (if all income goes to one person). The outcome of these results showed that the widening income gap led to an increase of different health issues related to mental disorders, life expectancy, infant mortality, obesity and teenage births. Societal problems that correlated to income inequality included: lower levels of trust, less educational performance, more homicides, higher imprisonment rates and a lack of social mobility. Some authors found Wilkinson and Pickett’s dismissal of poverty in relation to health outcomes incorrect as they did not measure it. On the other hand, research by Beckfield and Bambra confirmed the correlation between life expectancy and health stating that the lagging welfare state in the USA led to an average loss of 3.77 quality life years in comparison to other OECD countries. The USA has an income gap of 8:1 (the average biggest earners have 8 times the wage of those at the other end of the spectrum) leading to a life expectancy of 78.7 years, which is in contrast with Japan reaching an average of 83.0 years with an income gap of 4:1. The same age dependent relation has been found in Scandinavian countries having similar income gaps as Japan.
Goda and Torres Garcia looked at the rise of global inequality and confirmed previous results by stating that within-country inequality is responsible for 70 percent of the global inequality, suggesting 30% is due to in-between country inequality.
Taking national and local figures into account for the UK, the Office for National Statistics observed a life expectancy for new-born baby boys to be 83.3 years in the Kensington and Chelsea area. Meanwhile, the life expectancy for the same cohort in Blackpool is merely 74.7 years. Nationwide, the female life expectancy is 86.6 years in Purbeck and the lowest in Glasgow City with an expectancy of 78.5 years. The authors conclude that inequality has increased over the last two decades despite improvements in these local areas.
Medical technology has improved greatly over the past two decades, with many illnesses that were fatal twenty years ago proving simple to treat now. Simple technological breakthroughs such as RFID labeling and instant messaging have meant that medical practices can be streamlined, saving time and money which can then be invested back into treating patients. With all these improvements in technology, why is there still little improvement in life expectancy in some areas? The answer lies again with income inequality, with areas that suffer from low income also suffering from lower government funding. This directly impacts the access local hospitals have to new technology, meaning they have fewer new technologies to utilise for their patients.
We may assume a strong relation between income inequality and health outcomes on a global scale as Dorling in recent research concludes there are overarching arguments. Dorling (2007) confirmed a strong relation between income inequality and negative health outcomes on a global scale after an observational study performed in 126 countries.
The academic world has provided alternatives to deal with the widening gap between poor and rich. Reformed minimum wages, living wages, basic income or a global ‘fair tax’ and redistribution are only a few austerity counter-proposals to ensure overall well-being by reaching or transcending the poverty line. Minimum wages have proven insufficient and a basic income is still globally debated. An international fair tax may even prove more challenging as this requires global political support.
Minimum wages and living wages have the same aim; raising income for the least fortunate to reduce the impact of a growing income gap. A minimum wage is defined as a minimum market valued income, imposed by law and paid by employers. A living wage is a locally liaised and negotiated pay rate that a fulltime employee needs for a household of four to reach the poverty line. For the latter, societal context is important, as living in a metropolitan area is more expensive than living in the countryside. The Basic Income Earth Network defines basic income as “a periodic cash payment unconditionally delivered to all on an individual basis, without means, test or work requirement”.
A locally implemented living wage project in the UK, facilitated by the General and Municipal Boilermakers Union in 400 councils, has proven to be successful in reducing (health) inequalities as well as being beneficial for government tax income. Awareness within the community influenced policy in a way that living wages became accepted as a benchmark for society. In this regard, a living wage clearly will contribute to individual well-being and social cohesion – both factors improve health within communities.
Proposals for a Universal Basic Income (UBI) are slowly reaching the minds of global policymakers, but this process will take more time in achieving broader support. In developing a short-term response tackling inequality, a living wage appears to be a possible solution for developed countries yet remains a huge challenge for developing countries.
Emerging new technologies will demand economical strategies that are able to cope with less job certainty and keeping up with growing demands in healthcare.
A redistribution of capital, as proposed by Thomas Piketty in his book ‘Capital in the Twenty-First Century’, in combination with a UBI may prove to be the best strategy in the long-run to counter income-related health inequalities on a global scale. We must urge politicians to finally face transnational companies and the top one percent in order to obtain a globally acceptable taxation rate.
About the author:
Sam Brokken hails from Belgium and lives near the city of Leuven. He studied physiotherapy, sports physical therapy and manual therapy practicing these areas for years in private practices within local communities. He lectures in musculoskeletal disorders in relation to manual handling and ergonomics for healthcare service providers.
He is currently engaged in postgraduate work at the Robert Gordon University (Aberdeen – Scotland) within the MSc Public Health and Health Promotion course.
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