• the annual financial cost of cardiovascular disease in Australia is $14.2 billion, or 1.7 per cent of GDP, including lost productivity costs of $3.6 billion;
• the estimated cost of diabetes each year is around $21 billion including lost productivity, health and carer costs, taxation revenue foregone and welfare and other payments; and
• the annual productivity loss from obesity-related illness is approximately $1.7 billion.
According to research conducted by the Australian Health Management Group, for people aged less than 45 years, those with five or more modifiable risk factors for chronic disease, such as smoking or a lack of exercise, cost the fund 2.39 times as much as a person who is ‘low’ risk. But providing care for someone over 65 with no or few health risks costs only 2.22 times as much.
In other words, the data suggests health status is as important a factor in determining the cost to the health system as age.
The cost of treating chronic disease also rises steeply if it is not managed well. According to one estimate, the cost of treating uncomplicated diabetes is $4,000 per person per year, but this rises to $10,000 for people whose eyes, heart or circulation are affected.
Many of these costs to our health system and the personal cost to Australians could be reduced or in some cases avoided altogether if chronic disease were prevented or better managed. For example, a five percent reduction in smoking prevalence would save the Pharmaceutical Benefits Scheme more than $1 billion over the long term.
Importantly there is also international evidence which suggests that reducing major risks to health can also reduce social inequities. This is because many risk factors for chronic disease (such as smoking and obesity) occur most commonly in the poor and disadvantaged, who typically have fewer resources at their disposal to reduce risk factors.
The current health system is very good at providing acute and episodic care when people are sick, but it is not well equipped to meet the future challenge of the growing chronic disease burden.
In fact the Commonwealth Fund, a US-based health policy think tank, recently reported that Australia rates poorly – fifth out of six industrialised countries surveyed – on preventative care and chronic disease care.
The Australian Institute of Health and Welfare has also found that almost one in ten hospital admissions could have been avoided with better preventative care or disease management. A staggering 552,000 Australians were taken to hospital in just one year for conditions, many of them chronic, preventable conditions that could have been avoided or better managed in the community.
The Productivity Commission has estimated that with modest investments in health promotion and prevention, as many as 175,000 additional people could be in the workforce by 2030. This represents an increase of around 0.6 of a percentage point in the workforce participation rate – a substantial increase at a time of significant skills shortages around the country.
But these kind of results cannot be achieved if precious health resources are wasted on cost-shifting and duplication: as the 2004