Why Care About Health Inequality?

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Adam Oliver


Adam Oliver
Office of Health Economics 12 Whitehall London SW1A 2DY


© January 2001, Office of Health Economics, Price £7.50

ISBN 1 899040 81 1

Printed by BSC Print Ltd., London

Acknowledgements Health inequalities research is undertaken within most social science and medical disciplines and provokes almost as many opinions as there are researchers. Therefore, in order to keep the text focussed and of reasonable length I have concentrated on the opinions that some health economists hold about some of the issues in the health inequalities debate. I am very grateful to Gwyn Bevan, Martin Buxton, Tony Culyer, Peter Zweifel and, in particular, Hugh Gravelle for useful comments and suggestions on previous drafts, and for editorial advice provided by Jon Sussex and Adrian Towse. That said, the choice of issues raised, and any mistakes in the text, are my sole responsibility.

About the author Adam Oliver is a health economist at the Office of Health Economics and is Chair of the UK Health Equity Network.


Terms of Reference


The Office of Health Economics (OHE) was founded in 1962. Its terms of reference

are to:

● commission and undertake research on the economics of health and health care;

● collect and analyse health and health care data from the UK and other countries;

● disseminate the results of this work and stimulate discussion of them and their policy implications.

The OHE is supported by an annual grant from the Association of the British Pharmaceutical Industry and by sales of its publications, and welcomes financial support from other bodies interested in its work.

Independence The research and editorial independence of the OHE is ensured by its Policy Board:
Chairman: Professor Tony Culyer – University of York Members: Professor Michael Arnold – University of Tübingen Mr Michael Bailey – GlaxoWellcome plc Professor Patricia Danzon – The Wharton School of the University of Pennsylvania Mr Bill Fullagar – Novartis Pharmaceuticals UK Limited and President of the Association of the British Pharmaceutical Industry Professor Naoki Ikegami – Keio University Dr Trevor Jones – Director General of the Association of the British Pharmaceutical Industry Professor David Mant – University of Oxford Dr Nancy Mattison – Consultant Professor Sir Michael Peckham – University College, University of London
Peer Review All OHE publications have been reviewed by members of its Editorial Board and, where appropriate, other clinical or technical experts independent of the authors. The current membership of the Editorial Board is as follows: Professor Christopher Bulpitt – Royal Postgraduate Medical School, Hammersmith Hospital Professor Martin Buxton – Health Economics Research Group, Brunel University Professor Tony Culyer – Department of Economics and Related Studies, University of York Professor Hugh Gravelle – Centre for Health Economics, University of York Mr Geoffrey Hulme – Director, Public Finance Foundation Professor Lord Maurice Peston – Professor of Economics, Queen Mary and Westfield College


Professor Carol Propper – Department of Economics, University of Bristol

Mr Nicholas Wells – Head of European Outcomes Research, Pfizer Ltd

Professor Peter Zweifel – Socioeconomic Institute, University of Zurich


1 Introduction



2 Evidence of health inequalities in the UK


3 Causes of health inequality across social class


4 Why reduce health inequality?


5 Are all inequalities in health inequitable?


6 What does equity in health mean?


7 The Acheson Report


8 Evaluating policies to address health inequalities 50

9 Conclusion






Public policy in the UK is placing increasing emphasis on health


inequalities. The first signal of this renewed commitment

came soon after the Labour government was elected. In 1997 it

commissioned an independent review of health inequalities with a

view to identifying priority areas for future policy development.

The review was published as the Acheson Report (Department of

Health, 1998a). In addition, the government released a consulta-

tion paper, Our Healthier Nation, which expressed the following

key objectives (Department of Health, 1998b):

(i) to improve the health of the population as a whole by

increasing the length of people’s lives and the number of

years people spend free from illness;

(ii) to improve the health of the worst off in society and to nar-

row the health gap.

The government’s plans to establish Health Action Zones in

order to target health inequalities in England were detailed in

Our Healthier Nation. A description of the Health Action

Zones, as detailed in Our Healthier Nation, is given in Box 1.

Health Action Zones bring together all those who contribute

towards health in a local area, including health and social care

agencies, with the objective of developing and implementing

locally-defined strategies for improving health.

The government’s interest in reducing health inequalities has

also led it to review the capitation formulae that are used to allo-

cate Department of Health funds to the approximately one hun-

dred health authorities in England. The current formulae are

based on the principle of equal access to health care for equal

need. However, it is well documented that health inequalities

may actually widen under this equity principle (e.g., Culyer,

1995a; Culyer and Wagstaff, 1992): for example, relatively well

informed and educated people may be more adept than their less

well educated counterparts at taking advantage of the opportu-

nities to access health care. The government is currently consult-



ing about the possibility of introducing new allocation formulae

that better contribute to reducing avoidable health inequalities.

This monograph looks at health inequalities in the UK from

a health economics perspective. Chapter 2 contains some evi-

dence on health inequalities in the UK, and Chapter 3 briefly

outlines the main arguments that have been put forward to

explain the differences in health across social class. A normative

justification for reducing health inequality is given in Chapter

4. Chapter 5 takes a closer look at whether inequalities in health

across all types of groups are inequitable, and Chapter 6 dis-

cusses definitions of equity in health. Chapter 7 gives a critical

appraisal of the Acheson Report. Chapter 8 looks at one way in

which health economists may contribute towards taking the

health inequalities debate forward. Chapter 9 concludes.

Box 1 Health Action Zones
Health Action Zones (HAZs) bring together a partnership of health organisations, including primary care, with Local Authorities, community groups, the voluntary sector and local businesses (Department of Health, 1998b). They are supposed to deliver measurable and sustainable improvements in the health of the public and in the outcomes and quality of services by achieving better integrated treatment and care.
They try to harness the energy and innovativeness of local people and organisations by creating alliances to achieve change. Local partners are encouraged to provide specific ideas and mechanisms. Organisations and groups are expected to work in partnership with HAZs delivering support and ‘investment’ against agreed milestones.
HAZ status is long term, spanning a period of five to seven years, and should provide added impetus to the task of tackling ill health and reducing inequalities in health.


The creation of the UK National Health Service (NHS) in


1948 was an attempt to give everyone access to reasonable

minimum standards of health care regardless of their ability to

pay. In the decades that followed, it became increasingly appar-

ent that although the health status of the relatively poor had

improved over time, health differentials across the social classes

had remained significant. Indeed, there is now abundant evi-

dence of health-related inequalities across various different

groups, defined by gender, race, geographical location, lifestyle,

income or social class. Much of this evidence was reviewed in

the Acheson Report (Department of Health, 1998a) and the

earlier Black Report (Department of Health and Social Security,

1980) and will not be repeated wholesale here.

Health inequalities defined by social class have formed the

main focus of attention in the literature. The Acheson Report

confirmed that although there has been a general health

improvement for people within all social classes since the 1970s,

there is evidence to suggest that health inequalities, particularly

between social classes I and V, are significant and have general-

ly been increasing. The social classes are defined as:

I: Professional

II: Managerial and technical

III(N): Skilled (non-manual)

III(M): Skilled (manual)

IV: Partly skilled

V: Unskilled

It is important to note the changes in the percentage of the

population in each social class over time. For example, between

1931 and 1971 there was a 178% increase in the number of

males aged 15-64 in social class I in England and Wales, and a

35% decrease in the number of males aged 15-64 in social class

V (Illsley and Le Grand, 1987). Therefore a simple comparison

of health indicators between people in social classes I and V

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Why Care About Health Inequality?