The question of how much to pay for “closing the gap” in Aboriginal health ought to be debated more on ethical lines than on economic lines but the two inevitably intersect. While the federal government and COAG have come to the party to some extent, to date their promises of money remain limited.

Of course, the issue here is not just about how much but about how. On the former it looks like all too little. On the latter the extent of mainstreaming that the government is indulging in is worrying. Also concerning is the seeming lack of understanding of the importance of the social determinants of Aboriginal health — witness the threats to the homelands movement where there is now good evidence that health is better than in more centralised communities.

I have previously argued that as a nation we should be prepared to pay an amount up to $340 billion to close the gap. This figure is derived by multiplying by 17 (the gap in life years) the number of Aboriginal people (400,000) and in turn multiplying that by the implied value of a year of life (about $50,000) as set by the decisions of the Pharmaceutical Benefits Advisory Committee (PBAC). It seemed a large figure at the time but in calculating it I did not build in the savings that might accrue, so in net terms maybe it is not so enormous.

There are economic savings to be obtained in closing the gap. A recent report from US researchers shows the way. A Johns Hopkins University-based study estimated “how much of a financial burden racial disparities are putting on [the US] health care system and society at large”. They calculated “the direct costs associated with the provision of care to a sicker and more disadvantaged population, as well as the indirect costs of health inequities such as lost productivity, lost wages, absenteeism, family leave and premature death”.

They found that “more than 30% of direct medical costs faced by African Americans, Hispanics, and Asian Americans were excess costs due to health inequities — more than $230 billion over a four-year period. And when you add the indirect costs of these inequities over the same period, the tab comes to $1.24 trillion”.

What is the cost of inequities in Aboriginal health in Australia?

There are so many differences that it is difficult to say but in the US the figure in health care costs alone amounts to nearly $800 for every American citizen or more than  $3000 if all costs are taken into account. The proportion of the US population who fall into the category examined by these researchers — African Americans, Hispanics, and Asian Americans — is higher than the proportion of our population who are indigenous but the gap in life expectancy here is greater.

Maybe, just maybe, we might be better off financially if we did close the gap. I doubt it but we need to find out at least what the net cost is likely to be. This kind of thinking does not appeal to me ethically but it is relevant. We need a good solid study in Australia to examine the issue. How about the NHMRC funding that?

Despite the fact that the economy is picking up, the government still seems to need a push to get them to accept the responsibility that follows from the Prime Minister’s apology last year. Showing that it ain’t all costs in closing the gap might spur the government on to provide the means to do so.

OK, there is no moral argument here but nonetheless one that might appeal to government.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey