Chronic diseases and lost productivity: costs to individuals, the government and the society The Treasury Wellington 5 April 2017 Faculty of Pharmacy Dr Rupendra Shrestha Senior Research Fellow Faculty of Pharmacy The University of Sydney Faculty of Pharmacy Faculty of Pharmacy University of Sydney University of Sydney
Collaborators • Prof Deborah Schofield, University of Sydney • Assoc Prof Megan Passey, University of Sydney • Prof Simon Kelly, University of Canberra • Richard Percival, University of Canberra • Prof Robert Tanton, University of Canberra • Dr Emily Callander, University of Sydney • Dr Michelle Cunich, University of Sydney • Prof Theo Vos, University of Queensland • Dr Lennert Veerman, University of Queensland Faculty of Pharmacy 2 University of Sydney
Population pyramid, Australia Source: ABS (2008) Population Projections, Australia. Cat. No. 3222.0 Faculty of Pharmacy 3 University of Sydney
Demographic change Australian Population projections (%) Source: ABS (2008) Population Projections, Australia. Cat. No. 3222.0 Faculty of Pharmacy 4 University of Sydney
Economic implications 40% 35% • Shrinking working age population % of aged to working-age 30% • Aged-to-working age ratio increase 25% 20% • Increase dependency ratio 15% 10% 5% 0% 2010 2020 2030 2040 2050 Year Source: Intergenerational Report 2010 2010: About 5 people of working age ~ one person of pension age (aged over 65) 2050: About 2.7 people of working age ~ one person of pension age (aged over 65) Faculty of Pharmacy 5 University of Sydney
Projections of Australian Government spending by category 6 5 Percent of GDP 4 3 2 1 0 Health Aged care Age and Other income Education Defence Service support Pensions 2014-15 2054-55 Source: Intergenerational Report 2015 Faculty of Pharmacy 6 University of Sydney
Sustainability of health spending • How much money will be available for health spending • How much pressure will health spending place on the future budget balance • Sustainability of future health spending • Places the future of health funding in the context of the future economy and budget balance Faculty of Pharmacy 7 University of Sydney
Ripple effects Health is a social investment Faculty of Pharmacy 8 University of Sydney
Direct costs of OA Hunter et al. Nat Rev Rheumatol 2014, 10:437-441 Faculty of Pharmacy 9 University of Sydney
Indirect costs of OA Hunter et al. Nat Rev Rheumatol 2014, 10:437-441 Faculty of Pharmacy 10 University of Sydney
Health and labour force priorities Health as a driver for labour force participation • Poor health excludes people from the labour force • 58% of men and 26% of women who retire from full-time work early (before the age of 55 years) do so because of ill health. • Improving health to increase labour force participation Faculty of Pharmacy 11 University of Sydney
Impact of chronic disease on labour force participation Faculty of Pharmacy 12 University of Sydney
Faculty of Pharmacy 13 University of Sydney
Faculty of Pharmacy 14 University of Sydney
Total impact • The total number of Australians aged 45 to 64 not working due to a health condition was estimated to be 663,000 ( 14% ) in 2003 • This lost workforce reduced Australia’s GDP by around $12 billion per annum. Faculty of Pharmacy 15 University of Sydney
Costs of lost productivity • What are the impacts on personal incomes ? • How much tax is lost ? • How much extra social security payments are paid ? • What are the impacts on savings and lifetime living standards ? • What are the impacts on poverty ? • What impacts would interventions to treat chronic conditions have ? Faculty of Pharmacy 16 University of Sydney
Health&WealthMOD Faculty of Pharmacy 17 University of Sydney
Health&WealthMOD • Health&WealthMOD - Australian microsimulation model of health, income, savings, tax and government benefits. - Development of this economic model was funded by an ARC Linkage Project Grant with Pfizer Australia as an industry partner • It estimates: - lost income and savings, lost tax revenue and payment of benefits to those who have retired early due to illness. - the relative costs of diseases that lead to early retirement. Faculty of Pharmacy 18 University of Sydney
Model 2003 ABS Survey of Disability, Ageing and Carers Income group, disability, long term conditions, retirement, demographic variables Reweighting STINMOD Synthetic Health&WealthMOD Tax matching Base Population Centrelink payments Personal income and wealth Simulate economic impacts Simulate impact of interventions Personal: Lost earnings e.g. prevention of diabetes Government: Lost tax Centrelink payments Faculty of Pharmacy 19 University of Sydney
Health&WealthMOD Synthetic matching of STINMOD output with the base population of Health&WealthMOD Matching Variables: - Income quintile - Income unit type - Type of government pension/support - Labour force status - Sex - Age group - Hours worked per week - Highest educational qualification - Home ownership Faculty of Pharmacy 20 University of Sydney
Cost of retiring early due to illness in Australia Geometric means of weekly income, transfer payments and tax liability by labour force status for the Australian population aged 45-64 years, 2009 Transfer Income # Tax liability ! Labour force status No in Survey income $ Employed full-time 4,266 (46%) 1,167.0 0.2 166.3 Employed part-time 1,738 (19%) 482.9 0.9 8.9 Not in labour force due to ill 661 (7%) 217.8 74.2 0.0 health # including transfer income $ including family payments ! including Medicare levy Schofield et al. BMC Public Health 2011, 11:418 Faculty of Pharmacy 21 University of Sydney
Cost of retiring early due to illness in Australia National annual impact of persons not in the labour force due to ill health for the Australian population aged 45-64 years, 2009 Transfer Income # Tax liability ! payments $ Not in labour force due to ill 17,989,175,000 1,468,007,000 2,052,384,000 health # including transfer payments $ including family payments ! including Medicare levy Note: Based on the differences between persons not in the labour force due to ill health and the weighted average of persons employed full time and part time. Impact of ill health : Exiting the workforce as a result of ill health is costly to both individuals and governments. The amount of lost income was significant, adding to the hardship experienced due to illness itself. Faculty of Pharmacy 22 University of Sydney
Cost of retiring early due to back pain in Australia National annual impact of persons not in the labour force due to back pain for the Australian population aged 45-64 years, 2009 Transfer Income # Tax liability ! payments $ Not in labour force due to back 4,816,000,000 622,200,000 496,900,000 pain (compared to those with no chronic condition and employed) Not in labour force due to back 4,286,900,000 537,300,000 440,400,000 pain (compared to those with no back pain and employed) # including transfer payments $ including family payments ! including Medicare levy Faculty of Pharmacy 23 University of Sydney
Diabetes and lost wealth Odds ratios of having any wealth by different classes of wealth, Australians 45-64 years old, 2009, adjusted for age, gender and education Income Non-income Labour force status Total wealth producing producing assets $ assets # Employed full-time, no health Ref Ref Ref condition Employed part-time, no health 1.16 0.45 1.59 (0.27 – 4.94) (0.23 – 0.94) (0.99 – 2.56) condition 0.03 0.09 0.20 Not in labour force due to diabetes (0.00 – 0.30) (0.02 – 0.50) (0.06 – 0.71) $ includes cash, superannuation, shares and property investments # includes the value of owner occupied home Schofield et al. Br J Diabetes Vasc Dis 2010, 10: 300-304 Faculty of Pharmacy 24 University of Sydney
Chronic conditions and lost wealth % difference (95% CI) in value of wealth, Australians 45-64 years old, 2009, adjusted for age, gender and education Labour force status Total wealth References Employed full time, no chronic Ref condition Not in labour force due to other -93% Schofield et al. Brit J of Psy (-98 – -71) 2011, 198: 123-128 mental illness -87% Schofield et al. Eur Spine J Not in labour force due to back pain (-90 – -84) 2011, 20: 731-736 -84% Schofield et al. Int J Cardiol Not in labour force due to CVD (-89 – -77) 2011, 146(1): 125-126 Schofield et al. -85% Not in labour force due to arthritis Rheumatology Int 2015, 35: (-88 – -81) 1175-1181 Schofield et al. Br J -90% Not in labour force due to diabetes Diabetes Vasc Dis 2010, 10: (-94 – -81) 300-304 Faculty of Pharmacy 25 University of Sydney
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