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Australian health & medical research: Improving health and saving costs
http://www.asmr.org.au
Dr Paul Dawson
Immediate Past-President The Australian Society for Medical Research
Outline
http://www.asmr.org.au
1. Background ASMR
2. Economic benefits from investment in health & medical research (HMR)
3. Australia’s projected health and ageing expenditure
4. Australian Health Insurance: extrapolated savings from HMR
• Future private health insurance premiums, incomes and pensions
• Reducing burden of disease – economic savings to PHI sector
5. Investment in Australian HMR: Plan to alleviate future health costs
1. Background - ASMR
http://www.asmr.org.au
Australian Society for Medical Research (ASMR)
• Peak professional body representing Australia’s 24,000 health & medical research (HMR)
workforce
• Established in 1961
• Independent
• Structure
o ASMR Office Sydney (SEO and Admin. Officer)
o Board 11 Directors (President, President-Elect, Treasurer, Secretary)
o State committees (Convenor, Deputy convenor, Treasurer, Secretary)
• Promotes HMR through public, political and scientific advocacy
• Committed to clearly articulated, evidence-based political advocacy
1. Background - ASMR
http://www.asmr.org.au
ASMR submissions to Government
• Annual pre-budget submission
• Additional 62 HMR submissions to Government
• Submissions 2012-13
o McKeon Strategic Review of HMR in Australia
o McKeon Review Consultation paper
o Chubb review on innovation
http://www.asmr.org.au/Submissions.html
1. Background - ASMR
http://www.asmr.org.au
ASMR publications: evidence based advocacy tools
Australian Health & Medical Research workforce
2005 Perceptions in Health and Medical Research Careers: The ASMR Workforce Survey
2009 Planning the HMR Workforce 2009 - 2010
Economic evaluations of investing in Australian HMR
2003 Access Economics Report - Exceptional Returns: The Value of Investing in Health R&D in Australia
2008 Access Economics Report - Exceptional Returns The Value of Investing in Health R&D in Australia II
2011 Deloitte Access Economics Report - Returns on NHMRC funded Research and Development
2012 Deloitte Access Economics Report - Extrapolated Returns on Investment in NHMRC Medical Research
http://www.asmr.org.au/Publications.html
1. Background - ASMR
http://www.asmr.org.au
ASMR publications: evidence based advocacy tools
Australian Health & Medical Research workforce
2005 Perceptions in Health and Medical Research Careers: The ASMR Workforce Survey
2009 Planning the HMR Workforce 2009 - 2010
Economic evaluations of investing in Australian HMR
2003 Access Economics Report - Exceptional Returns: The Value of Investing in Health R&D in Australia
2008 Access Economics Report - Exceptional Returns The Value of Investing in Health R&D in Australia II
2011 Deloitte Access Economics Report - Returns on NHMRC funded Research and Development
2012 Deloitte Access Economics Report - Extrapolated Returns on Investment in NHMRC Medical Research
http://www.asmr.org.au/Publications.html
2. Economic benefits from investment in health & medical research (HMR)
http://www.asmr.org.au
Economic evaluations of investing in Australian HMR
• Australian HMR between 1993 and 2005 is estimated to have returned a net benefit of $29.5 billion
• Every dollar invested in Australian HMR returns on average $2.17 in health benefits
• Annual value to Australians of gains in well being, >$100 billion females, >$270 billion males by 2045.
• Potential impacts of Australian Health and Medical Research achievements, include:
o Gardasil to vaccinate against 70% cervical cancer – benefit cost ratio 2.5 to 1.
o Prevention/delay of vision loss in diabetes by 2025 – savings of $7.6 billion.
o Decreasing Alzheimer’s disease by 5% - savings of $10.3 billion by 2050.
http://www.asmr.org.au/Publications.html
http://www.asmr.org.au
Economic evaluations of NHMRC-funded HMR research
NHMRC funded R&D 2000-2010 (Cardio-vascular disease, cancer, SIDS, asthma, muscular dystrophy)
o 98,426 DALYs averted in Australia between 2040-2050
o Save $966 million in direct/indirect costs to health system
o Gains of $6 billion linked to increased well-being
o Return on investment: 509% CVD, 170% cancer
http://www.asmr.org.au/Publications.html
2. Economic benefits from investment in health & medical research (HMR)
3. Australia’s projected health and ageing expenditure
http://www.asmr.org.au
Australia faces unprecedented health and economic challenges
Dementia – expenditure projected to outstrip that of any other health condition
by the 2060s.
o Delaying the onset of dementia by 5 years through Australian HMR –
estimated savings of $67.5 billion by 2040.
Diabetes is Australia’s largest growing chronic disease projected to increase
by 436% in the period 2003-2033.
o Prevention or delay of vision loss associated with diabetes will save $7.6
billion by 2025.
http://www.asmr.org.au/Publications.html
3. Australia’s projected health and ageing expenditure
http://www.asmr.org.au Australian Government, The Treasury 2010.
Australia to 2050: future challenges – The 2010 Intergenerational Report.
Projections of Australian government
spending by category.
3. Australia’s projected health and ageing expenditure
http://www.asmr.org.au Australian Government, The Treasury 2010.
Australia to 2050: future challenges – The 2010 Intergenerational Report.
Projections of Australian government
spending by category.
Projected Australian government
health spending
3. Australia’s projected health and ageing expenditure
http://www.asmr.org.au Australian Government, The Treasury 2010.
Australia to 2050: future challenges – The 2010 Intergenerational Report.
Projections of Australian government
spending by category.
Projected Australian government
health spending
Projected Australian government
aged care spending
3. Australia’s projected health and ageing expenditure
http://www.asmr.org.au
Investment in Australian HMR → alleviate the future health spend.
→ health insurance expenditure ?
ASMR commissioned Deloitte Access Economics to prepare report.
“Australian health insurance: extrapolated savings from health and medical research”
Australia - next 50 years:
• Private health insurance premiums, policy numbers and revenues
• Household income and the aged pension
• Greater investment in HMR – savings to the PHI sector
http://www.asmr.org.au/Publications.html
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in PHI premiums
• 2010-11 data from Private Health Insurance Administration Council website
• Disaggregated by Hospital and general (ancillary) cover
• Number of policies – disaggregate data by single and family policies
• Data from PHI companies to estimate split between singles and families for
premium revenue
http://www.asmr.org.au/Publications.html
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in PHI premiums
• 2010-11 data from Private Health Insurance Administration Council website
• Disaggregated by Hospital and general (ancillary) cover
• Number of policies – disaggregate data by single and family policies
• Data from PHI companies to estimate split between singles and families for
premium revenue
http://www.asmr.org.au/Publications.html
Extrapolate average premium estimates into the future (5.31% increase/year)
• 2061-62 Single hospital and general $27,535
• 2061-62 Family hospital and general $55,070
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in PHI policy numbers and revenues
• Reviewed Private Health Insurance Administration Council data
• Baseline to extrapolate number PHI policies over next 50 years, based on
demographic growth rates
http://www.asmr.org.au/Publications.html
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in PHI policy numbers and revenues
• Reviewed Private Health Insurance Administration Council data
• Baseline to extrapolate number PHI policies over next 50 years, based on
demographic growth rates
http://www.asmr.org.au/Publications.html
Extrapolate overall revenue from PHI:
• number of policies of each type in each year, multiplied by premium costs per policy
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in PHI policy numbers and revenues
• Reviewed Private Health Insurance Administration Council data
• Baseline to extrapolate number PHI policies over next 50 years, based on
demographic growth rates
http://www.asmr.org.au/Publications.html
Extrapolate overall revenue from PHI:
• number of policies of each type in each year, multiplied by premium costs per policy
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in average incomes
• Extrapolate average household income over next 50 years – using historic
rises in average weekly earning from the Australian Bureau of Statistics
http://www.asmr.org.au/Publications.html
Trends in future AWE - Deloitte Access Economics macroeconomic model (3.77% p.a.):
• Average annual income $344,330 by 2061-62.
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Trends in pensions
• Age pension rates derived from Centrelink website for singles and couples
(maximum rates as the age pension is both income and assets tested)
http://www.asmr.org.au/Publications.html
Average of ABS data 2009-2012 (3.0% p.a.):
• 2011-12: Singles $17,914 and Couples $27,009
• 2061-62: Singles $78,533 and Couples $118,404.
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Comparison of PHI premiums, average incomes and pensions
http://www.asmr.org.au/Publications.html
2011-12 2061-62
Family (% pension) 15.3 46.5
Single (% pension) 11.6 35.1
Family (% income) 7.7 16.0
Single (% income) 3.8 8.0
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Scenario analysis
• Increasing investment in Australian Health and Medical Research to
result in a reduction in certain diseases by 5% and 10%.
• Diseases – cardiovascular disease (CVD), cancer, asthma, sudden
infant death syndrome (SIDS) and muscular dystrophy.
• Health system cost impact of this disease reduction is calculated
• Reductions in health insurance costs estimated.
• Epidemiological data on prevalence rates applied to population
projections to 2062, by age and gender
http://www.asmr.org.au/Publications.html
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Prevalence of conditions and estimate of disability adjusted life years (DALYs)
• Prevalence rates applied to population projections to 2062, by age and
gender, obtained from the Deloitte Access Economics demographic model.
http://www.asmr.org.au/Publications.html
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Prevalence of conditions and estimate of disability adjusted life years (DALYs)
• Prevalence rates applied to population projections to 2062, by age and
gender, obtained from the Deloitte Access Economics demographic model.
http://www.asmr.org.au/Publications.html
Health system cost associated with each DALY lost to these specific was
estimated in ASMR’s 2011 Deloitte Access Economics publication:
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Health system cost (2011 prices) associated with each DALYs:
• $22,503 for cardiovascular disease
• $13,602 for cancer
• $15,687 for asthma
• $17,207 for muscular dystrophy
• $66 for SIDS
• Units costs applied to the DALY projections, inflated at 3% p.a., and the
resulting total impost was discounted by 5% and 10% for each scenario.
http://www.asmr.org.au/Publications.html
Health system cost associated with each DALY lost to these specific was
estimated in ASMR’s 2011 Deloitte Access Economics publication:
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Saving to PHI funds in costs
• Assume to have been passed on in proportionately lower premium prices:
http://www.asmr.org.au/Publications.html
Savings per policy
2012-13 2061-62
Single (5% scenario) $39 $321
Single (10% scenario) $77 $642
Family (5% scenario) $77 $642
Family (10% scenario) $155 $1,284
4. Australian Health Insurance: extrapolated savings from HMR
http://www.asmr.org.au
Extrapolating the savings in total PHI expenditures to a single dollar metric
• Discounted back to 2011-12 dollars at 7% p.a., and estimated the net present
value of the extrapolated savings on PHI premiums.
http://www.asmr.org.au/Publications.html
Total extrapolated savings in PHI expenditure (net present value terms) over next 5 decades:
• $21.4 billion (5% senario)
• $42.9 billion (10% scenario)
5. Investment in Australian HMR: Plan to alleviate future health costs
http://www.asmr.org.au http://www.asmr.org.au/Publications.html
ASMR’s plan
• Lift investment into NHMRC from ≈ 0.8% to 1% of the total Australian health expenditure
as soon as possible.
• Subsequently increase investment into NHMRC by 0.2% annually to reach 3% by 2022.
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Health system (base case) NHMRC (scenario) NHMRC (base case)
Deloitte Access Economics 2012. Extrapolated returns on investment in NHMRC medical research.
5. Investment in Australian HMR: Plan to alleviate future health costs
http://www.asmr.org.au
http://www.asmr.org.au/Publications.html
This strategy will:
• Build knowledge for prevention, intervention and innovation.
• Reduce the predicted unsustainable escalation of health spending.
• Safeguard both community and government from economic and health challenges.
Thank you