Guaranteed Annual Income Reduces Health Care Costs

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Policy Briefs

Guaranteed Annual Income Reduces Health Care Costs

A new study published by Canadian Public Policy reveals that guaranteed annual income could significantly reduce health care costs by improving population health.

Researchers from the University of Manitoba studied Manitoba health administration data from 1974-79, when a Canadian guaranteed annual income field experiment (MINCOME) took place. During this experiment, every family in the rural town of Dauphin, Manitoba, was eligible for income supplements.

Data showed that with guaranteed annual income, hospitalization rates in Dauphin declined by 8.5 per cent relative to similar Manitoba communities without income supplements. In particular, there was a relative decrease in hospitalization for accidents, injuries, and mental health problems.

Dauphin’s rate of physician visits for mental health diagnoses also declined relative to the comparison group.

Lead researcher Evelyn L. Forget suggests that income insecurity correlates with poor health. Workplace accidents and injuries occur more often if people continue to work in dangerous jobs when they are ill or fatigued. People may also experience more stress, anxiety, and depression if they cannot make ends meet.

A guaranteed annual income policy has the potential to improve population health and decrease health care utilization, which would allow considerable health system savings for Canada. However, Forget notes that we should be cautious in generalizing health care savings, as we no longer use hospitals in the same way we did in the 1970s.

The study also found that guaranteed annual income increased the likelihood that grade 11 Dauphin students would continue to grade 12, and that it had no positive effect on divorce rates, fertility rates, or improved birth outcomes, as similar American income experiments have previously shown.

The study used data from Manitoba Population Health Research Data Repository and the Manitoba Department of Education.

A PCLC Policy Brief, The Town with No Poverty: Health Effects of Guaranteed Annual Income, summarizes the study.

For more information, please contact Evelyn Forget.

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