Paul Dawson

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


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


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



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



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



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.



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





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 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







health spending


aged care spending



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




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




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


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



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




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


Extrapolate overall revenue from PHI:

• number of policies of each type in each year, multiplied by premium costs per policy



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


Trends in future AWE - Deloitte Access Economics macroeconomic model (3.77% p.a.):

• Average annual income $344,330 by 2061-62.



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)


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.



Comparison of PHI premiums, average incomes and pensions


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



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




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.




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.


Health system cost associated with each DALY lost to these specific was

estimated in ASMR’s 2011 Deloitte Access Economics publication:



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.


Health system cost associated with each DALY lost to these specific was

estimated in ASMR’s 2011 Deloitte Access Economics publication:



Saving to PHI funds in costs

• Assume to have been passed on in proportionately lower premium prices:


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



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.


Total extrapolated savings in PHI expenditure (net present value terms) over next 5 decades:

• $21.4 billion (5% senario)

• $42.9 billion (10% scenario)


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.




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

Paul Dawson

Business

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