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Mind the Gap Between the Rich and the Poor

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Inequality in income has been a hot topic of late. In 2011 the occupy movement drew attention to the gap between the rich and the poor, and while they could be dismissed as a bunch of radicals, it is the establishment that have been drawing attention to income inequality in recent months.

A recent Conference Board of Canada study detailed income inequality in Canada and how that fits with the rest of the world (see figure below). The Conference Board states that “Canada’s 12th-place ranking suggests it is doing a mediocre job of ensuring income equality.” They gave Canada a ‘C’ grade.  The UK, Italy, Australia and Japan are marginally worse than we are with the US ranking worst overall.

Income inequality refers to how income is shared throughout a population. The number used is called the Gini coefficient. If everyone had the same income, the Gini coefficient would be zero. If one person had all the income, it would be 1.

Gini Coefficient

 

Why is everyone upset about inequality?  Inequality is unfair.  Most people agree that the CEO of a company should earn more money than the average worker.   Even 20 times what the average worker makes might be fair. But when a CEO makes 100s of times what the average worker does, most people think that is unfair. In a recent speech, Barack Obama, President of the United States, noted that today’s CEO in the US now makes 273 times more than the average worker.

In his recently published blockbuster “Capital in the Twenty-First Century,” French author and economist Thomas Piketty, stated that inequality is increasing. The International Monetary Fund even went so far as concluding that inequality is bad for economic growth.

In Canada, the top 20% money earners make about 40% of the income – the bottom 20% make just 7%.  The top 1% of Canadians earnsover $191,100 a year and the average income among the top 1% was $381,300 a year or about ten times the average Canadian income of $38,700 a year.

Why is inequality bad for health care?

Poverty is linked with poorer health. Almost every physical and mental health problem is greater in poverty. In fact one of the most powerful health interventions is having a job that pays well. Poor people live in worse housing than those with money, live in places where there is more air pollution and less clean drinking water, and they cannot afford nutritious food.  Early stress from poverty also alters human biology and results in long term health effects.

Being poor in the midst of plenty, has an additional effect on health. If one is poor in an environment where everyone else is poor, the effects are not as great. In our society, however, wealthy lifestyles of fancy cars, foreign travel, opulent homes and decadent meals are flogged incessantly, and the extremely wealthy in the realms of sports, entertainment and business are idolized while the myth that anyone can become rich is perpetuated. Nowhere is a modest lifestyle idealized.  Wealth is constantly flaunted in the face of those less well off.

Knowing that one is poor in the midst of plenty leads to a wide range of complications including mental and physical health problems. Stress is thought to be the major culprit.

How does poverty and inequality impact health care?

First of all, policies that decrease inequality and poverty will improve health.  These policies may also decrease health care costs. Policies that create more affordable housing and better wages for the working poor mean better health. The effects of poverty on children are especially devastating since they can last a lifetime. Growing up poor means a shorter, more illness filled life.

Secondly, we need to ensure that health care is available to the poor since they have the greatest burden. We think Canadian health care is free but much of it is not. About 30% of our health care requires private payment, usually by private health insurance. The working poor are excluded from many public subsidy programs and most do not have private insurance. Most minimum wage jobs do not have health insurance benefits. Moreover, there are many incidental costs to free health care. This includes time off of work, transportation costs and restaurant meals. These expenses can quickly add up and put a real burden on poor families. Direct and incidental costs of health care should be reduced.

Thirdly, groups outside the mainstream such as Aboriginals, the disabled, immigrants, refugees, homeless and some in rural areas do not have ready access to health care.   The reasons are many and include a lack of culturally sensitive health care, transportation, language and stigma. Health care should be designed to ensure access by these groups and any others in need.

By focusing a bit more on the groups in need and on such great inequalities, perhaps we can begin to see ways to bridge this wide and unfair gap.

~Dr. Patrick McGrath

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2 thoughts on “Mind the Gap Between the Rich and the Poor

  1. It’s not so much about health care as it is about what we know already about the determinants of health. A guaranteed annual income could be a tool to eliminate poverty across the board just as the CPP virtually eliminated seniors’ poverty when it was first introduced (that is no longer true and the government seems unwilling to make it a livable pension). Progressive taxation is a tool we currently use to try to mitigate the inequality inherent in a capitalist system. The problem is our taxation system is not progressive enough. Another idea would be to have a 100% tax rate on income above a certain threshold, i.e. a guaranteed maximum annual income. And then as Piketty argues, wealth should also be taxed, not just income. Of course, this is all just social justice pie in the sky right now because no political party or level of government in this country is willing to even begin the conversation about these issues.

  2. Epiong is right. Poverty as a determinant of health is of critical importance and perhaps of more importance than making our free health care system more equitable. The role of poverty in health has to be constantly restated. I agree, there is limited appetite for changing this even though the costs of inequity are devastating not only on individuals but on all of us.

    I focused on inequity in our health system as well because there is, I think, a belief that our health system is “equitable” because it is said to be free. In many respects it is not free or equitable. One that deserves a detailed treatment is drug costs (guest blog anyone?). The inequities in our health system are more likely to be corrected because they fly in the Canadian view of our health system as being available to all.
    Patrick

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