Depiction of The economic cost of health inequalities in England

The economic cost of health inequalities in England

Health inequalities are unfair and avoidable differences in health across the population in England. They are to a large extent driven by individuals’ differences in socio-economic circumstances, such as levels of income, employment, education and exposure to crime and are measured by deprivation. High levels of deprivation can have wide-ranging negative effects on individuals and society, of which the most severe impact is avoidable deaths—deaths from health conditions that could have been prevented or treated. In England in 2021, people in the most deprived areas were over four times more likely to die from an avoidable cause than those in the least deprived areas.

Avoidable deaths are tragic, and represent a loss not only to the loved ones of those affected, but also to wider society. In economic terms, one way to measure the impact of avoidable deaths is to estimate the loss of output resulting from a person dying prematurely. This lost output is representative of the economic value a person could have contributed during their working life if their life had not ended early.

Progress was made between 2001 and 2012 in reducing the gap in avoidable mortality rates between the least and most deprived local authorities in England. However, since then, progress has been stagnant, with the gap starting to increase during the pandemic—even after taking into account the avoidable deaths caused by COVID-19.

There are also substantial risks that health inequalities and, as a result, the economic costs of health inequalities, will continue to rise. The combination of the cost-of-living crisis, pressures on the NHS workload, and high absence rates in schools are likely to have a disproportionate impact on the most deprived areas.

The substantial and rising economic costs from health inequalities demonstrate the potential economic value that can be created by implementing policy measures to reduce the gap. In particular, measures aimed at preventing ill health are effective in reducing avoidable deaths.

Oxera estimates that the economic cost of lost output in England due to differences in avoidable deaths has risen by over 20% higher since the COVID-19 pandemic—from £6.3bn in 2019 to £7.7bn in 2021, equivalent to over £250,000 per person who died in 2019 rising to almost £290,000 in 2021. These estimates control for the impact of avoidable deaths that resulted from COVID-19 directly and reflect the aggregate lost earnings over the working lives of the individuals who prematurely lost their lives in 2019 or 2021.

If these impacts persist over a decade this would represent a substantial loss of the productive capacity to the economy of around £60bn to £80bn, equivalent to the cost of building between around 250 and 350 new hospitals. These costs are likely underestimates since health inequalities have widened and this trend risks continuing.

Back to top