HEALTH As Human Capital

Health: can be defined as physical, mental, and social wellbeing, and as a
resource for living a full life. It refers not only to the absence of disease,
but the ability to recover and bounce back from illness and other problems.
Factors for good health include genetics, the environment, relationships,
and education.
Health as human Capital:
Health is a foundational investment in a country’s human capital. Will a
child live to celebrate her fifth birthday and be ready to attend school? Will
she actually be able to learn and thrive in school? Will she grow to be an
adult who can productively contribute to the society in which she lives?
All of this depends on robust health and nutrition, at every stage in her life.
Universal Health Coverage (UHC) —ensuring that all people have access
to the quality health services they need at an affordable cost—underpins all
of the Health Nutrition and Population (HNP) investments at the World
Bank. Last year, these reached $15 billion—our highest ever for HNP.
This is a good indication of how much demand there is from countries at all
income levels to invest in health.
For too long, investing in people’s health and education has been seen as a
consumption expense and an anchor on growth. The HCP reverses this
unsubstantiated view by placing investments in people at the epicentre of a
country’s plans for sustained and inclusive economic growth. It thus
represents a huge opportunity to elevate country demand for investments in
health even further.

A growing body of evidence shows that without a healthy, educated and
resilient population, countries cannot compete effectively in the global
economy. When investments in health begin in the early years of life and
are sustained through the life cycle, they lay a strong foundation for the
growth and competitiveness of nations. Investing in health systems that
ensure that all people have access quality, affordable health services so that
they are healthy and productive throughout their lives – the essence of
Universal Health Coverage-- is thus a key human capital investment.

Nations need to ensure that their people are healthy so they can not only
thrive in school and arrive at their jobs ready to work—but also continue to
be skilled and able to perform those ‘jobs of the future’ over a lifetime.
Poor health and nutrition hold people back from achieving their fullest
potential at any point in life. Investments in prenatal care for women, early
nutrition and vaccination against common diseases can ensure the best
possible start to life for children – but what’s equally needed is a focus on
infectious and non-communicable diseases which hold adults back from
leading full and productive lives.

UHC Day is a time to face up to some big basic deficits.
 Half the world’s population still lacks access to essential health

services.
 Unaffordable healthcare costs push 100 million people into extreme
poverty every year.
 800 million people worldwide spend at least 10 percent of their
household budget on health expenses—which means they are
having to choose between their children’s health needs and other
necessities like education, food or bus fares.
Here are three principles for more and better investments in health:
 Commit to universality: A truly universal system, with a

commitment to equity so that all people are entitled to and receive
quality healthcare, is non-negotiable.
 Ensure affordability: People cannot thrive as long as they are
bankrupting themselves to pay for healthcare when they or their
children are sick. This is the most inequitable, expensive and
inefficient way to pay for healthcare.
 Mobilize a “whole of government” approach to health: UHC cannot
be achieved with just the expertise and resources of the health
sector. For example, clean water and sanitation are essential to good
health and nutrition.
Impact on economic performance:

In developing countries, the most effective methods of improving health
require public sector involvement.
In developing countries, the main cause of ill health and premature
mortality are infectious diseases. These can be tackled effectively through
the provision of clean water and sanitation systems and wide scale
vaccination programs.
Government spending on education, transport and communication
infrastructure, and on legal institutions that ensure personal security and
property rights can be shown to have a positive impact on economic
growth.
It can be argued that spending on health delays such investments and so
hampers economic growth.
In this we argue that health is not only a consumption good that adds to
wellbeing, but also an investment good that increases the future productive
power of individuals and the economy.
Health has a direct effect on the productivity of workers. Together with the
moral argument, worker productivity is the main mechanism put forward
by the World Health Organization (2001, 2002) to justify increased
transfers to developing countries for health spending.
However, there are also more indirect mechanisms through which health
can influence productivity. These indirect mechanisms, while less obvious,
may be more important in practice.
One indirect mechanism is that health can be a complementary input to
other forms of human capital. There is a great deal of empirical evidence
that productivity and wages rise with education levels and worker job
experience.
These returns may be higher for healthy workers so that the gains from
education and work experience accrue mainly to healthy workers who are
working. In addition, these higher returns may induce greater investment in
education and on-the-job training when workers are healthy. Ill health and
premature death essentially lead to wasted investment in human capital and
reduce the incentive to invest in people.
Another indirect benefit of improvements in health is that the prospective
life span of healthier workers is longer.
Long life spans increase the need for retirement income. In countries with
low life expectancy the prospect of retiring is remote. Once longer
lifespans become common, retirement becomes a real possibility and
workers have to consider saving for their retirement.
In developed countries savings for retirement is the main source of
investment funds. Increasing longevity can generate the need for retirement
income and set off a savings and investment boom.
Finally, reductions in mortality rates change the age structure of the
population. Initially, health improvements tend to reduce the mortality rates
of infants and children who are particularly susceptible to disease.

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Health: can be defined as physical, mental, and social wellbeing, and as a

 Half the world’s population still lacks access to essential health

 Commit to universality: A truly universal system, with a

Impact on economic performance:

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