Access Economics – Economic Impact & Cost of Hearing Loss in Australia
Listen Hear! The Economic Impact and Cost of Hearing Loss in Australia
Report by Access Economics, February 2006
To date there has been no definitive research on the full economic impact of hearing loss in Australia, despite the large proportion of people who have hearing loss and its substantial effects on the capacity to communicate, to work and function effectively in an increasingly communication-intense society, as well as its impacts on quality of life. Access Economics has thus been commissioned by CRC HEAR and the Victorian Deaf Society to quantify those impacts and estimate both the financial costs and the loss of wellbeing from hearing loss in Australia for the year 2005, using a prevalence-based costing approach, accepted international methodology for valuing healthy life and Australian epidemiological data. Such analysis is important to inform policy making and direct scarce health resources to preventive and therapeutic interventions that are most cost effective.
Prevalence of hearing loss
One in six Australians is affected by hearing loss. Prevalence rates for hearing loss are associated with increasing age, rising from less than 1% for people aged younger than 15 years to three in every four people aged over 70 years. With an ageing population, hearing loss is projected to increase to 1 in every 4 Australians by 2050.
The net consequence of hearing loss is a reduced capacity to communicate. The ability to listen and respond to speaking is reduced and for some, the ability to speak is lost or impaired. Reduced communication abilities impact on a person’s life chances through the reduced opportunity to equitably participate in education, to gain competitive skills and employment and to participate in relationships. Adverse health effects are associated with hearing loss.
While interventions such as hearing aids and cochlear implants enhance a person’s ability to communicate, the majority of people with hearing loss (85%) do not have such devices.
In 2005, the real financial cost of hearing loss was $11.75 billion or 1.4% of GDP.
- This figure represents an average cost of $3,314 per person per annum for each of the 3.55 million Australians who have hearing loss or $578 for every Australian.
- Costs are conservatively based on prevalence of a hearing loss in the better ear.
- Costs conservatively do not include costs of otitis media, which can be substantial in some sub-populations, such as Aboriginal children.
- The financial cost does not take into account the net cost of the loss of wellbeing (disease burden) associated with hearing loss, which is a further $11.3 billion.
The largest financial cost component is productivity loss, which accounts for well over half (57%) of all financial costs ($6.7 billion).
- Nearly half the people with hearing loss are of working age (15-64 years), and there are an estimated 158,876 people not employed in 2005 due to hearing loss.
- The productivity cost arises due to lower employment rates for people with hearing loss over 45 years and subsequent losses in earnings.
The cost of informal carers is second at 27% of the total ($3.2 billion).
- Informal carers assist people with hearing loss to communicate in a variety of settings. The costs are calculated on a replacement valuation basis – ie, the amount that would have been required to pay someone to provide the communication assistance. This is calculated at $25.01 per hour for 126.6 million care hours per year, based on 422,765 people for 5.75 hours per week.
Since fewer people with hearing loss are working, as a group they have reduced incomes and, as such, pay less income taxation. With lower income, they also consume less, so the government forfeits both income and consumption tax revenues, worth $1.3 billion in 2005. Moreover, a further $1.3 billion is required by the Government to finance the welfare payments to people with hearing loss. Finally, the Government must find revenue to fund the health and other real services for people with hearing loss. The need to raise all this additional revenue has deadweight losses from administration of the government systems involved as well as from the distortionary impacts on the economy of making the taxation and spending transfers. These deadweight losses associated with hearing loss were estimated to cost $1.0 billion in 2005 (9% of total financial costs).
Direct health system costs are expenditures incurred in the health system for the diagnosis, treatment and management of hearing loss. These costs are estimated at $674 million in 2005, (including hearing aids and cochlear implants) and account for less than 6% of total financial costs.
- The largest health expenditure item is devices spending on hearing aids ($376.7 million encompassing public and private markets, of which $243 million represent the government’s Office of Hearing Services Program) and on cochlear implants ($10 million) per annum.
- Second, $247.5 million is allocated recurrent health system expenditure (just under $70 per person with hearing loss per annum, nationally).
– The majority (53% or $130 million) of the allocated health expenditure is provided by allied health professionals, encompassing services such as audiology and speech pathology (ie, diagnostic and rehabilitation services).
– Other large recurrent health expenditure items include outpatient costs (19% or $46 million), and medical specialists (12% or $33 million).
– Health system research into hearing loss accounted for around 5% of health system expenditure.
– 27% of health expenditure is on children aged less than 14 years, who comprise less than 1% of people with hearing loss, while noting that needs may be higher and impacts greater for children.
– Males dominate health expenditure 61%:39% (male:female), reflecting the higher prevalence of hearing loss among males.
– Less than 5% of the average per capita expenditure on the national health priorities is spent on hearing loss.
- Other health expenditure is unallocated ($40.3 million) on capital items, community health, public health programs and administration.
Education and support services and various non-health communication aids comprise the remaining 1.6% of real financial costs ($191 million in 2005).
Quality of life impacts
The financial costs are paralleled by the loss of wellbeing (or ‘burden of disease’) – the reduced quality of life, loss of leisure, suffering, physical pain and disability. The additional impact of the loss of human wellbeing is measured internationally in terms of DALYs Disability Adjusted Life Years (DALYs).
- 95,005 DALYs are estimated to be lost in 2005 due to hearing loss, worth $11.3 billion in net terms and some 3.8% of the total burden of disease from all causes of disability and premature death.
- In terms of disability weighting (which measures the extent of the loss of a healthy life year, with 0 equal to no loss and 1 equal to total loss):
– mild hearing loss is comparable to mild asthma;
– moderate hearing loss is comparable to chronic pain resulting from a slipped disc;
– severe hearing loss is comparable to having pneumonia on an ongoing basis.
- A conservative approach has been taken in the estimate of DALYs. The estimate is based on hearing loss in the better ear (a truer reflection of disability), does not include hearing loss in the Deaf Community (using the estimate of 10,000 people or less than 1% of people with hearing loss), takes into account the gains from wearing hearing aids and makes the most conservative assumptions regarding prevalence among young adults.
Projections and further work
Projections of hearing loss suggest that hearing loss in the worse ear is expected to more than double by 2050 (a 2.2-fold increase).
- The prevalence of hearing loss overall is projected to increase from 17.4% (one in six) in 2005 to 26.7% (more than one in four) in 2050.
- The prevalence of hearing loss is projected to increase from 21.0% (one in five) in 2005 to 31.5% of all males (nearly one in three, largely as a result of demographic ageing) in 2050.
A significant amount of hearing loss (37%) is due to excessive noise exposure, which is preventable.
Further research is warranted in the following areas:
- epidemiology of hearing loss
- prevention of hearing loss (cost-effective measures), in particular barriers to adoption of personal protection equipment;
- bio-molecular and genetic approaches to hearing loss;
- enhancing access to, and continued use of, hearing aids;
- health effects of hearing loss;
- cost-effective models of enhancing informal care;
- aboriginal hearing health; and
- enhancing productivity of people with hearing loss.