How Health Care Increases Human Capital

Published: Month 1, Year

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With health care costs rising at an alarming rate, debate often focuses on the value of the services provided. Research by Jonathan Guryan shows how broadening access to health care gives a long-term boost to human capital, both for individuals and for society.

As the cost of providing health care continues to rise, debate invariably centers on the relative value of such expenditures. 
While there are many places to look for answers, research by associate professor of economics Jonathan Guryan illustrates how investing in early access to health care brought about an increase in human capital.

In “Birth Cohort and the Black-White Achievement Gap: The Roles of Access and Health Soon After Birth,” Guryan and coauthors Kenneth Chay and Bhashkar Mazumder examined the test score gap between blacks and whites in the United States and found it narrowed significantly in the 1980s. Although the Civil Rights Act and a number of large social programs were instituted during the 1960s, including Medicaid, Head Start, and school desegregation, the researchers said the forced integration of southern hospitals was responsible for the difference.

While they weren’t able to measure children’s health in the 1960s, Guryan and his colleagues looked at mortality rates of children between birth and 12 months, an age when untreated pneumonia and diarrhea caused death. The number of black children under age 4 who were admitted to hospitals increased significantly in the South after desegregation, they said, and the black infant mortality rate plummeted. Guryan and his colleagues infer that the decrease in black infant mortality rates in the South also indicated that health improved for surviving black children in that region.

They also looked at teenagers’ scores on the National Assessment of Educational Progress test from 1971 to 2004, and results from the Armed Forces Qualifying Test (AFQT) for those who had applied to the U.S. military between 1976 and 1991. Both data sets show a large racial gap for those born in the 1950s and early 1960s. “Beginning with those born in the mid-1960s, however, there are striking across-cohort improvements in black relative test scores that continue up to those born in the early 1970s,” they write. Also, the gap closed more among students in the South than in the North.

“These interventions led to improved postnatal health among blacks born between the early 1960s and early 1970s, which, in turn, led to long-term improvements in the academic and cognitive ‘skills’ of these cohorts as teenagers (aged 17 and 18),” the paper says, noting that neuroscience literature has found the most critical and rapid period of human brain development occurs within the first three years of life; anything that happens to a child’s brain during that time has long-lasting effects.

A Wall Street Journal story on the study calls it intriguing research. “Although the U.S. has changed a lot since the 1960s, there are lessons for the U.S. as it contemplates priorities at a time of recessionary stress on the state and local government budgets and the national restructuring of its massive health care system,” the Journal said. “The consequences of these decisions will reverberate for decades to come, and the quality of the health care children get today will shape their contributions to the economy when they grow up.”— P.H.


Last Updated 3/5/10