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The health and economic benefits of reducing disease risk
factors
Research Report - July 2009
Prepared for VicHealth by:
DA Cadilhac, A Magnus,
T Cumming, L Sheppard, D Pearce, R Carter
PROJECT CONTRIBUTORS
Project conceptualization and management
Magnus A 1
Cadilhac D A 1,
2, 3
Carter R 1
Literature reviews
Cumming T 2
Cadilhac D A 1,
2, 3
Magnus A 1
Economic model development
Magnus A 1
Cadilhac D A 1,
2, 3
Source data
Burden of Disease
Vos T 4
Data analyses
National Health Survey Data:
Pearce D C 2
Other:
Cadilhac D A 1,
2, 3
Magnus A 1
Sheppard L 1
Compilation and editing
Cadilhac D A 1,
2, 3
Magnus A 1
Carter R 1
Sheppard L 1
Cumming T 2
Affiliations of Investigators and Project Staff
1 Deakin
University
2 National
Stroke Research Institute
3 The
University of Melbourne
4 The
University of Queensland The health and economic benefits of reducing disease
risk factors- Research Report
Advisory committee
Todd Harper, Chief Executive Officer, VicHealth, (Chair)
Dr Jim Hyde, Director, Public Health, Department of Human
Services
Elen Liew, Economic and Financial Policy, Department of Treasury
and Finance
Nadja Diessel, Economic and Financial Policy, Department of
Treasury and Finance
Prof Jeff Richardson, Faculty of Business and Economics, Monash
University
Kellie-Ann Jolly, Director, Active Communities and Healthy
Eating, VicHealth
VicHealth Project Support
Jennifer Alden, Senior Policy Adviser, Research, Strategy and
Policy, VicHealth
Tass Mousaferiadis, Director, Research, Strategy and Policy,
VicHealth (until June 2008)
ACKNOWLEDGEMENTS
We thank the following experts for providing advice on
disease risk factors and data analysis methods: Michael Flood; Melanie Heenan;
Kim Webster; Brian Vandenberg; Jane Potter and Shelley Maher from VicHealth;
Professor Tony Worsley, University of Wollongong; Cate Burns and Caryl Nowson
from Deakin University; Kylie Lindorff from the VicHealth Centre for Tobacco
Control; Professor Robin Room, AERF Centre for Alcohol Social Research, Turning
Point Alcohol and Drug Centre; Professor Theo Vos at the University of
Queensland; as well as several health experts at the National Stroke Research
Institute.
This report has been prepared by staff at Deakin University
and the National Stroke Research Institute.
Funding was provided by VicHealth following a competitive
tender application.
iii The health and economic benefits of reducing disease risk factors-
Research Report
INVESTING IN PREVENTION
"How much is it worth?" This is a frequently asked question in
the context of preventative health and health promotion. It seeks to measure the
monetary benefits of these public health approaches and it rightly influences
major decisions about how we spend our limited budgets.
However well-justified, this query can be challenging to answer
because preventative health’s many benefits can’t always be assessed in mere
dollar terms. Many regard the quality of life that accompanies good health, for
example, as being valuable beyond measure.
But this new report,
The Health and Economic Benefits of Reducing Disease Risk Factors,
tackles this challenge head on. It estimates the ‘health status’, ‘economic’ and
‘financial’ benefits of reducing the prevalence of the six behavioural risk
factors that contribute to chronic diseases affecting millions of Australians.
These major risk factors concern obesity, alcohol, smoking, exercise, diet and
domestic violence.
Importantly, this research maps new territory by developing a
model for estimating the benefits of our home-based work and leisure. These are
areas that have eluded traditional economic analysis but which we increasingly
recognise are important to maintaining our work-life balance.
The findings show that increasing physical activity creates
more household productivity and leisure time than reductions in alcohol
consumption which have a greater influence on workforce productivity.
This report adds to the growing body of evidence that backs
greater investment in preventative health. It provides a wealth of information
that can help us to make informed decisions about which areas deliver the
greatest value when developing policies, funding programs and infrastructure,
and initiating research.
As the report highlights, we are all beneficiaries when it comes
to reducing the prevalence of these six behavioural risk factors. We all have a
stake in using this research to make better choices, as individuals, businesses,
governments and communities.
Todd Harper
Chief Executive Officer
Victorian Health Promotion Foundation
iv The health and economic benefits of reducing disease risk factors-
Research Report
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ACRONYMS AND DEFINITIONS
Glossary of abbreviations
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|
Acronym |
Meaning |
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ABS |
Australian Bureau of Statistics |
|
AIHW |
Australian Institute of Health and Welfare |
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BoD |
Burden of Disease |
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BMI |
Body Mass Index |
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COPD |
Chronic Obstructive Pulmonary Disease |
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CURF |
Confidentialised Unit Record File |
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DALY |
Disability Adjusted Life Years |
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DTF |
Department of Treasury and Finance |
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DCIS |
Disease Costs and Impact Study |
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FCA |
Friction Cost Approach |
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GDP |
Gross Domestic Product |
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HCA |
Human Capital Approach |
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IPV |
Intimate Partner Violence |
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LL |
Lower Limit of a range of values |
|
NHMRC |
National Health and Medical Research Council
|
|
NPV |
Net Present Value |
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NHS |
National Health Survey |
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OECD |
Organization for Economic Cooperation and Development
|
|
PAF |
Population Attributable Risk Fraction |
|
RADL |
Remote Access Data Library |
|
RR |
Relative Risk |
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SEIFA |
Socio-Economic Indexes For Areas |
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UI |
Uncertainty Interval |
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UL |
Upper Limit of a range of values |
|
VicHealth |
Victorian Health Promotion Foundation |
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WHO |
World Health Organization |
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Definition of key terms |
|
Term |
Meaning |
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Arcadian ideal |
Countries comparable to Australia, where the
prevalence of a risk factor is lower. |
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Attributable burden |
The estimated effects on population health, economic
and financial outcomes of a risk factor at current prevalence estimates.
|
|
Avoidable burden |
The estimated net change in population health,
economic and financial parameters (reported savings arising from
mortality, morbidity, absenteeism, participation rates) if feasible
reductions in risk factor prevalence could be achieved |
|
Cost offsets |
These are made up of reductions in the costs of
future health care delivery (for example, hospital admissions, General
Practitioner visits, pharmaceuticals and allied health services) which
can be avoided by reductions in the number of cases of disease. Cost
offsets are the estimated resources consumed in the diagnosis, treatment
and care of preventable events that could become available for other
uses. These can be considered as ‘opportunity costs’. However,
such estimates are only
indicative of financial savings and should be interpreted with caution
because they are not estimates of immediately realisable financial
savings. |
|
Disability Adjusted Life Year |
The Disability Adjusted Life Year is a summary
measure of population health that captures the effects of premature
mortality and morbidity associated with disease and injury. |
|
Discount Rate |
A 3% discount rate was applied to ensure future costs
and benefits were expressed in the net present value. See
Net present value. |
|
Economic benefits |
Measures of economic gain estimated in this project
were decreases in short and long-term absenteeism, decrease in premature
retirements and increases in household production (e.g. shopping,
cleaning and child care) and leisure activities, associated with changes
in disease incidence and deaths, over a time period. |
|
Feasible reduction |
A reduction in risk factor prevalence that is
consistent with the current evidence for that risk factor within
Australia and overseas. |
|
Financial benefits |
The valuation in dollar terms of the estimated
economic benefits. The
potential opportunity cost savings that include a value for health
sector offsets, productivity impacts in terms of household and workforce
participation, taxation, recruitment and training costs and leisure
time. These are not
estimates of immediately realisable cash savings. |
|
Friction Cost Approach |
In the context of productivity, the friction cost
method determines the costs to employers of losing workers due to
illness and conversely the savings to employers from health
improvements, as well as lost individual income during the friction
period. The friction period is the time it takes to recruit and train a
new worker from the ranks of the unemployed to replace the lost worker
who has either died or is unable to work due to illness (Koopmanschap et
al. 1995). |
|
Health gains |
Quantified as the incident (new) cases of disease and
deaths that could be prevented and the potential
Disability Adjusted Life Years
that could be averted (saved), over a time period, from reductions in
the prevalence of a risk factor. |
|
Health sector costs |
The cost associated with: hospital care (admitted and
non-admitted); aged care homes; out-of-hospital medical services;
pharmaceuticals (prescription and over-the-counter drugs); other
professional services (e.g. optometry); dental services; and research.
|
|
Health sector offsets |
These are made up of reductions in the costs of
future health care delivery (for example, hospital admissions, General
Practitioner visits, pharmaceuticals and allied health services) which
can be avoided by reductions in the number of cases of disease. Cost
offsets are the estimated resources consumed in the diagnosis, treatment
and care of preventable events that could become available for other
uses. These can be considered as ‘opportunity costs’. However,
such estimates are only
indicative of financial savings and should be interpreted with caution
because they are not estimates of immediately realisable financial
savings. |
|
Household production |
The non-paid hours of time allocated to household
duties of cooking, shopping, cleaning, maintenance etc. This is often
referred to in the literature as non-market based production, since it
is not traded in the usual way as a marketable item. |
|
Human Capital Approach |
In the context of productivity, the human capital
method is based on estimated output losses from cessation or reduction
of production due to morbidity and mortality; or conversely, from gains
made in human capital (both in terms of workforce participation and
productivity increases) due to investments in health care (Sapsford and
Tzannatos 1993). This is valued as gross employee earnings in the case
of the paid workforce. |
|
Ideal target |
The feasible risk factor prevalence reduction target.
This ideal target was established: by selecting a country comparable to
Australia with a lower risk factor prevalence (Arcadian ideal); or
according to expert opinion, current guidelines and/or relevant
literature. |
|
Net present value |
The value of benefits (income or health benefits),
which are expected to be received in the future, at a specified
reference year (2008 in this analysis), taking the time value of returns
into account (discounted by 3% in this project). |
|
Not in the labour force |
Individuals not currently active in, or looking for,
employment. For example, students / retirees. |
|
Opportunity cost |
Opportunity costs are defined as the value of time or
any other ‘input’ in its highest value alternative use. Therefore,
opportunity costs represent the lost benefit of not selecting the next
best alternative use of the resource inputs. |
|
Population Attributable Risk Fraction |
The proportion by which the incidence rate of a
disease could be reduced over a time period, if the risk factor was to
reach a theoretical minimum, assuming causation between risk factor and
disease. |
|
Preferred conservative estimate |
Estimates calculated using the Friction Cost
Approach, as opposed to the Human Capital Approach, are the preferred
conservative estimates for valuing productivity costs in this study. As
a number of assumptions needed to be made for modelling to occur, the
FCA is preferred as it represents a more conservative estimate of the
production gain likely to follow a reduction in risk behaviour.
|
|
Productivity gains/losses |
Reflect changes in workforce participation and
absenteeism associated with health status |
|
Progressive target |
The mid-point between the current prevalence of a
risk factor and the ideal target prevalence for risk factor reduction.
For example, the current prevalence of tobacco smoking in Australia is
23%, the ideal prevalence target is 15% and therefore, the progressive
target is 19%. |
|
Reference year |
The year used for determination and valuation of
costs, benefits and population health impact. |
|
Replacement costs |
Valued at the average hourly rates for commercially
available domestic services and child care. See
household production.
|
|
Socio-Economic Indexes For Areas |
This suite of indexes ranks geographic areas across
Australia in terms of their socio-economic characteristics (from most
disadvantaged to least disadvantaged) on the basis of several factors
which include education, income and others (Australian Bureau of
Statistics 2008a). |
|
Standard drink |
A standard drink is equal to 10g (12.5ml) of alcohol
(National Health and Medical Research Council 2001). |
|
Threshold analysis |
An analytic method used to provide evidence for
priority setting and policy decisions, including resource allocation and
research priority decisions. It is employed in decision contexts when
some information is available, but other important variables are
missing. |
|
Workforce participants |
People working part-time, full time or looking for
work. |
|
Definitions of risk factors used in this project as per
the 2004-05 National Health Survey (Australian Bureau of Statistics
2006) |
|
Alcohol consumption |
Long term high risk alcohol consumption: Greater than
75ml of alcohol consumed per day for men, and greater than 50ml of
alcohol consumed per day for women. |
|
Long term low risk alcohol consumption: Less than
50ml of alcohol consumed per day for men, and less than 25ml of alcohol
consumed per day for women. |
|
High body mass index |
Obese or overweight: BMI greater than 25, based on
self-reported height and weight. |
|
Normal weight: BMI less than 25, based on
self-reported height and weight (including underweight). |
|
Inadequate fruit and vegetable consumption |
Inadequate fruit and vegetable consumption:
Consumption below the recommended minimum of 2 serves fruit and 5 serves
vegetables daily. |
|
Adequate consumption: Consumption at or above the
recommended minimum of 2 serves fruit and 5 serves vegetables daily.
|
|
Intimate partner violence |
High psychological distress has been used as a proxy
for current exposure to intimate partner violence: High or very high
levels of psychological distress (score 22-50 on the Kessler
Psychological Distress Scale -10). |
|
Moderate psychological distress has been used as a
proxy for past exposure to intimate partner violence: Moderate levels of
psychological distress (score 10-21 on the Kessler Psychological
Distress Scale -10). |
|
Physical inactivity |
Inactive: Sedentary or low activity level.
|
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Active: Moderate to high activity level. |
|
Tobacco smoking |
Current smokers: Persons who smoke tobacco on a
regular or irregular daily basis. |
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Ex-smokers: Persons who no longer smoke on a regular
or irregular basis. |
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