A stronger focus on prevention could help governments rein in health care and social spending

At the start of the new year, many of us will commit to joining a gym, eating healthier or cutting back on drinking and smoking. We do this knowing that investing in our health today will pay off into to the future – that prevention is better (and cheaper) than the cure.

It’s advice the Productivity Commission thinks federal and state governments should also follow to improve Australia’s finances and productivity.

Late last year, my co-authors and I gave the federal government the final report of our inquiry on delivering quality care more efficiently.

We found preventative investments could save taxpayers billions of dollars in health and social care costs. But to achieve these gains, the way we think about investing in prevention needs to change.

Investing in early intervention

Australia’s spending on health and social care is growing as a share of the economy and now makes up five of the top seven fiscal pressures facing the federal budget. The care sector is also absorbing more of our workforce – close to one-third of new jobs since the pandemic have been in the care sector.

In many respects this reflects changing preferences. As the nation has become wealthier, we care more about our health and wellbeing. But making the most of this spending is one of Australia’s key productivity challenges.

That means investing early to save costs later. Take for example the SunSmart skin cancer awareness campaign, which is estimated to have prevented more than 43,000 skin cancers from 1988 to 2010.

Investments like this save lives and money. We estimate that an investment of A$1.5 billion across all prevention programs over five years could be expected to save governments $2.7 billion over ten years. Factoring in the broader health, social and economic benefits, the total benefits would be about $5.4 billion.

Other countries are ahead of the game: Canada, the UK and Finland spend over twice as much of their health budgets on prevention as Australia.

Australia’s own health prevention strategy recommends that we increase spending on prevention from 2% to 5% of the health budget.

The big picture

Prevention goes beyond just health care. Investments in youth justice, out of home care and homelessness improve outcomes in a range of other areas, improving Australians’ quality of life and governments’ bottom lines.

For example, when people experiencing homelessness get stable housing, they tend to end up in hospital less often, make fewer trips to the emergency department, and in some cases, even avoid incarceration. It’s also easier to look for and hold down a job when you have a stable place to call home.

Such investments can also address systemic inequities in both access and quality of care.

One early childhood education program in outer Melbourne led to improved IQ and language development among socially disadvantaged Australian children, with participants reaching the same level of development as their peers within three years.

Evaluations of similar initiatives in the United States suggest that benefits can persist well into adulthood and even intergenerationally, through improved lifetime education attainment, employment and health, and reduced criminal behaviour.

A whole of government approach

Unfortunately, the way our government is structured can work against these investments. While it’s often one agency or level of government that needs to put up the money for these investments, they only enjoy part of the benefit.

The way governments think about and invest in prevention and early intervention needs to change. The Productivity Commission’s proposed solution is for a National Prevention and Early Intervention Framework to support strategic investments in programs that improve outcomes and reduce demand for future services.

The framework’s consistent approach to assessing interventions would bring all levels of government to the table, so that worthwhile investments no longer fall between the cracks.

It offers a practical way to put into operation the government’s Measuring What Matters framework. By directing funding towards outcomes and tracking progress against them, it would give federal and state governments confidence that they are investing in effective programs.

Like a person struggling with a new year’s resolution, policymakers often find it hard to delay gratification.

But given health and social care spending is only set to grow further, we need to start thinking long term to ensure we can afford to give future generations the standard of care we enjoy today. With a greater focus on prevention and early intervention, we can better care for future generations and put our care sector on a more sustainable path.