Healthcare investments could pay off with an 8% rise in GDP by 2040, as healthier populations become more productive, according to a study by McKinsey Global Institute.
In a report, “Prioritizing Health: A prescription for prosperity,” published July 8. McKinsey Global said current treatments and health interventions hold the potential to reduce global disease by about 40% in the next 20 years.
Such investment could mean about one-third fewer deaths from cancer and cardiovascular diseases and 60% less mortality from tropical diseases and malaria. The reduced death rates were estimated to result in 230 million more people alive by 2040.
“The economic payoff would be significant as their productive potential is realized. By expanding the labor force and increasing productivity, we estimate, the health benefits could be worth $12 trillion in additional annual global GDP in 2040, an 8% uplift to GDP without including additional benefits from future innovations and welfare gains,” according to the report.
“Improving global health would also improve the resilience of societies and economies when they face unexpected health shocks such as pandemics,” it added.
The report said that with currently available medical interventions, 10 years could be added to middle age and child mortality could fall by 65%.
It said that it quantified the economic impact of improved health through reduced early deaths and health conditions, as well as expanded participation in the workforce and increased productivity.
It also said a larger number of healthy older citizens can still be active consumers, increasing consumption growth.
“This could account for a lion’s share of the $1.8 trillion in consumption increase globally in 2040 from a healthier and larger population. Raising future demand expectations would encourage investment and help expand productive capacity over two decades,” it said.
McKinsey Global also said that despite progress, in a typical year, poor health and health inequity “continue to limit economic prosperity” as premature deaths reduce the potential labor force and poor health or morbidity prevent those suffering from illnesses “to be economically active.”
It said that the cost of poor health in 2017 was more than $12 trillion. equivalent to 15% of global GDP.
The report said that while the pandemic led to an “unexpected spike in mortality,” the impact of the premature deaths during the initial wave of the disease is not expected to shift population projections in the next 20 years.
The pandemic and the resulting “shelter-in-place” measures are projected to reduce global GDP in 2020 by 3-8%, McKinsey Global said.
The report said health should be social and economic priorities as improving health would have a substantial impact on the economy.
“Governments around the world should consider developing and delivering a healthy life agenda in all areas and, at the same time, consider shaping employment and labor market policies to ensure that better health can deliver economic benefits,” it said.
Healthcare systems should also be improved. Community health advancement should also be prioritized as living environments “shape health opportunities, choices, and behaviors,” said the report.
It also said innovations such as “advanced analytics, artificial intelligence, telehealth, digital health management for chronic conditions, wearables, and other next-generation health technologies” provide low-cost healthcare and broaden access to primary care. —Vann Marlo M. Villegas