This section reviews the study results on asthma prevalence, each of the medical and indirect cost elements, the financial costs of the disease, costs by bearer, and finally the impact on cost of disease severity and control. The discussion centres on an explanation of the magnitude and sources of the cost burden of asthma.

5.1 PREVALENCE OF ASTHMA

Numerous studies of the prevalence of asthma in Australia have been undertaken, yet it remains difficult to state with confidence exactly how many people suffer from the disease. Figure Two shows that considerable variations in the rate of asthma prevalence are reported in the literature.

Some variation in reported prevalence rates is attributable to differing approaches to measuring the prevalence rates, differences in the age groups studied, and discrepancies in settings in which the studies have been conducted. Another important explanation for the apparent inconsistencies lies in the problem of defining asthma, particularly in agreeing on how much variability in air flow obstruction constitutes asthma, as well as differentiating asthma from other conditions involving some degree of reversible airways obstruction (Woolcock et al, 1983).

The ABS 1989/90 National Health Survey suggested that around 9% of all Australians have reported asthma as either a recent or long-term condition in the last 12 months. This equates to over 1.4 million people across all age groups being diagnosed asthmatics. The 9% prevalence figure has been used as a basis for arriving at the total cost for those items where data is available on a "per asthmatic" basis.

The diagnosis of asthma in adults is slightly lower at a prevalence of 7% or around one million Australians aged 12 and over. Clinical opinion and asthma medication sales data are consistent with this figure. Childhood asthma, however, has a much higher prevalence with diagnosed asthma being variously reported between 10% and 20% of all children. This means that between 300,000 and 600,000 Australian children are affected by this chronic disease.

5.2 TOTAL COST OF ASTHMA IN AUSTRALIA

The total cost of asthma in Australia is in the $585 to $720 million range each year. Depending on the cost estimate, between 45% and 55% of the total is due to lost productivity and the remainder is due to medical related costs. Weiss et al (1992) found a similar ratio between medical related and productivity costs for asthma in America.

Each of the contributing cost elements will be discussed in the relevant medical related or indirect cost sections.

5.2.1 MEDICAL RELATED COSTS

5.2.1.1 Pharmaceutical

The total value of asthma medication and appliances used for treatment of the disease in 1991 is calculated at over $120 million. This pharmaceutical figure is derived from the annual total at price to chemist (June 1991) published by IMS Australia Pty Ltd and excludes hospital prescribed medications² and nebuliser costs. Pharmaceutical costs refer primarily to the prescription of asthma products, but where these products are available without a prescription from the pharmacy (eg. Ventolin and Respolin) their sales have been included. Medications used to treat other respiratory conditions such as chronic obstructive pulmonary disease, bronchitis and acute respiratory conditions in adults have been excluded on the basis of Australian Medical Index data. (See Appendix One for a more detailed analysis of therapeutic group costs).

5.2.1.2 Medical Consultations

Asthmatics sought close to 3.8 million GP and specialist consultations in 1991 at an average weighted cost of around $26 per consultation. The majority of these asthma related consultations were provided by GPs. The total cost to the community for these medical consultations is estimated at $98 million. (See Appendix One for calculation details). The total excludes hospital outpatient and emergency room consultations for asthma as these are routinely identified in hospital utilisation and costing statistics.

5.2.1.3 Hospital

The annual cost of hospitalising asthmatics has been conservatively estimated at $58 million in 1991. This figure is based on the Australian Institute of Health's hospitalisation statistics of 155,000 asthma related bed days. The average hospital bed day cost of $379 was obtained by weighting the average public and private hospital bed day³ costs, $388 and $303 respectively, by the 8:1 ratio of public to private hospital usage for asthma. (See Appendix One for details). This average hospital cost includes outpatient, emergency and pharmaceutical costs (public hospital only) as well as all general hospital operating costs. The average hospital bed day cost used in this analysis appears to be in line with other estimates. For example, the current NSW Department of Health average in-patient cost for all hospitals is $350.

5.2.1.4 Indirect Medical

In general, asthmatics have a lower level of overall health than non asthmatics. Asthma has the potential to exacerbate other illnesses⁴ and therefore tends to increase the demands that are placed on the medical profession and health services. For example, the complication of asthma in addition to any one of a number of common ailments, particularly respiratory tract infections, typically requires earlier and prolonged antibiotic treatment and may lead to periods of hospitalisation not required by a non-asthmatic. More expensive medication may also be required initially to control certain conditions such as hypertension because of the presence of asthma. Also severe asthmatics require a longer period in hospital to stabilise their asthma before surgery and may experience more post operative chest complications.

These indirect medical costs are estimated at around $34 million annually. The indirect cost figure is based on the assumption that increased demands on the health service amount to an extra 12% on top of the direct asthma related health costs that each asthmatic patient incurs. The 12% figure is an average estimate arising from an extensive survey of specialists and GPs in the United Kingdom and there is no reason to believe that it is not also applicable to the Australian population.

5.2.1.5 Allied Health Treatment Costs

Asthmatic patients have the choice of allied therapies such as acupuncture, homoeopathy, physiotherapy or chiropractic services as a substitute for, or in addition to, orthodox medical treatment. The total calculated cost of these services to asthma sufferers for 1991 is estimated conservatively at around $8 million.

The ABS 1989/90 National Health Survey showed that asthmatics had sought 7,500 consultations with non-medical health professionals (excluding pharmacists) in the two week survey period. Multiplying this visitation rate by the annual number of fortnight periods amounts to an annual consultation rate of 195,000 visits. The average fee per allied health consultation visit is estimated from a 1990 survey of the allied therapists' professional associations at $40 (inflation adjusted). The resulting total cost of allied health treatments for asthma is calculated at $8 million. (See Appendix One for calculations).

5.2.1.6 Ambulance

The total ambulance costs for asthmatics is estimated at $5 million per annum. This Australia-wide figure has been generated (on a population basis) from asthma response statistics from the NSW Ambulance Service and average cost per response data (inflation adjusted) from the NSW Public Accounts Committee. (See Appendix One).

5.2.2 INDIRECT COSTS

The indirect costs of asthma refer to the costs incurred by an individual, an individual's family or the community because of the adverse consequences asthma may have on an individual's work and social activities. Only the costs arising from asthma related lost productivity have been quantified. These opportunity costs arising from foregone output can be valued on a time basis at the GDP hourly rate. They include the cost of absenteeism, reduced effectiveness whilst at work and the cost of time taken attending medical appointments. No attempt has been made to place a financial value on the "quality of life" implications of asthma.

Although the economic cost of lost productivity due to asthmatic illness can be valued in total terms, it cannot be assigned a monetary value at the individual level. An employed person may not suffer a direct reduction in income as a result of absenteeism or reduced productivity. The asthmatic's reduced effectiveness may be masked by others or compensated for by the asthmatic at another time. However, the individual's reduced productive output represents a net cost to society that cannot be considered as neutral in economic terms. The total opportunity costs are therefore included in this cost analysis.

5.2.2.1 Absenteeism

The opportunity cost to the Australian economy of asthma related absenteeism from work is between $200 to $230 million per year. This total comprises the cost of absenteeism directly caused by asthma and the cost of employed caregivers having to sacrifice work to stay with a sick asthmatic child.

Absenteeism directly caused by asthma is defined as absenteeism in people of working age (15 to 65 years) who are unfit to attend work because of their asthma. This accounts for around $110 million per year. Absenteeism data from the ABS 1989/90 National Health Survey showed that 20,100 days were lost from work as a result of asthma in the two week survey period. Over a twelve month period this is equivalent to 523,000 lost days. If these absent days are valued at the 1991 Australian daily GDP rate of $213⁵ the total opportunity cost to the Australian economy for direct asthma related absenteeism can be estimated at $110 million per year. (See Appendix Two for calculation details). The estimate appears conservative as the deduced annual asthmatic absenteeism rate is only 0.5 days per year in the ABS survey compared with other estimates of 5 working days per asthmatic per year (Ross, 1989; Mellis et al, 1991).

The total cost of caregiver absenteeism is even higher at around $120 million. The ABS 1989/90 National Health Survey found that 50,800 school days were lost due to asthma in the two week survey. If one assumes that the total school year is only 38 weeks per annum, this equates to a total of 965,000 lost school days from asthma. Given the facts that women are still the main caregivers⁶ and are therefore most likely to stay away from work to care for a sick child, and that 60.1%⁷ of mothers work, the total work days lost is around 580,000. On the basis of the GDP value for a day's lost output of $213, the total cost of caregiver absenteeism is $120 million.

The cost of caregiver absenteeism can be assessed more conservatively at $90 million if one makes provision for the fact that many female caregivers only work part-time. As a result, when a school-aged asthmatic is forced to miss a day of schooling due to illness, this may or may not result in a day of lost employment for the asthmatic's parent or caregiver.

1990 ABS Labour Force statistics show that 52.2% of employed females with dependants work part-time. Further, part-time hours are usually only 40.2% the duration of full-time employment hours. By applying these assumptions to the potential total of caregiver workdays affected by asthma, a lower number of 414,300 days is obtained. With this estimate of workdays lost the total cost to the community is $90 million. (See Appendix Two for calculation details and discussion of assumption).

It should also be recognised that lost time from school due to asthma may have long term costs for an individual in terms of future education and employment opportunities. While these costs are difficult to quantify, they should not be ignored.

5.2.2.2 Lost Productivity At Work

Given the paucity of good data available to accurately determine the reduced effectiveness at work of an asthmatic due to his or her illness, a range of cost values for the cost of lost productivity has been calculated. The cost estimate for lost productivity lies between $40 and $100 million and is based on the assumption of a 10% to 25% reduction in work activity from asthmatic illness. This assumption does not seem unrealistic if consideration is given to the impact of disease severity on lifestyle and general health.

If the 1991 GDP value of a day's activity is valued at $213, this equates to costs of lost output of between $21 and $53 per day. In the ABS 1989/90 National Health Survey asthma sufferers estimated a total of 195,100 days in which they had experienced reduced activity due to their asthma in the two-week survey period. This is equivalent to over 1.8 million days per annum after adjusting for the number of employed asthmatics⁸ and 230 working days in a year. The total cost of this reduced effectiveness whilst at work, assuming incapacity in the range of 10% and 25%, is around $40 to $100 million. (See Appendix Two for calculation details).

5.2.2.3 Travel Time For Treatment

The total annual cost of lost output due to employed asthmatics attending consultations with health professionals is calculated to be in the range of $20 to $60 million in 1991. This range results from uncertainty regarding the proportion of consultations that take place in working hours.

Australian asthmatics of working age attend some 2.2 million GP, specialist and allied health consultations over the course of a year. The higher cost estimate ($60 million) assumes that all consultations occur in work time, and that the average work time lost per asthma related consultation is one hour. This estimated one hour to travel to and from work as well as attend the consultation appears conservative when compared to the Worthington di Marzio market research survey which showed an average time of 1.5 hours for migraine sufferers pursuing medical consultations (Parry, 1992).

The lower estimate ($20 million) is derived by altering the assumption regarding the proportion of consultations occurring in working hours.As regular specialist practice hours fall between 9am and 5pm and appointments with specialists do not typically coincide with bouts of illness, it can be assumed that all specialist asthma related consultations, about 15% of the total, occur in working hours. If it is further assumed that 25% of all GP and allied health consultations occur in work time, a total of 815,000 consultations will interfere with the work of asthmatics. (See Appendix Two for calculation details). This latter assumption is reasonable given that some GPs do not provide out of hours services and that some GP consultations during work hours will coincide with a day of absenteeism.

5.2.2.4 An Alternative Method For Evaluating Indirect Costs

An alternative to valuing the economic opportunity cost of lost productivity on the basis of GDP is to identify only the recognisable financial costs of reduced work effectiveness. Financial costs here are defined as the costs of lost productivity valued on the basis of the average wage and social security payments. These costs include the lost earnings of asthmatics certified incapable of working and the lost earnings of direct asthma related absenteeism as well as the cost to employers of reduced employee effectiveness, time lost by caregivers of asthmatic children and time lost for employees attending medical consultations.

The cost of interrupted employment as a result of permanent incapacity is assessed in terms of the Department of Social Security payments for asthma. For 1991 a total of $102 million was paid to asthmatics for permanent disability. This figure includes $84 million for invalid pension benefits and another $18 million for short term sickness benefits. It has been argued that social security payments are only transfer payments and, as such, do not constitute a net cost to society. Social security payments are, however, a true cost to the Government and are thus included under this alternative method of evaluation. (See Appendix Three for details of calculations).

Lost earnings from asthma related absenteeism represent close to $85 million. This is due to around $50 million from direct asthma related absenteeism calculated by multiplying the number of days of asthma absenteeism by the 1991 average daily earnings of $100.26⁹. A further $33 million is lost through absenteeism of caregivers with asthmatic children. The monetary value of the work time lost by these caregivers has been assessed at the lower female average daily wage of $78.64¹⁰ given that women are still the main caregivers.

Reduced effectiveness at work costs the community another $18 million. This sum is based on an assumption that around 10% of a person's productive time, the equivalent of $10.03 per day, is lost on an asthma affected work day. Foregone output from work time spent attending consultations is an additional $11 million annually based on the conservative estimate of one hour lost time, valued at $13.37, and a total of 0.8 million consultations in working hours. (See Section 5.2.2.3 for discussion of assumptions).

5.3 TOTAL COST BY BEARER

No single section of the economy has sole responsibility for the total cost burden of asthma. Figure Three provides a breakdown of all the costs of asthma by bearer with indirect costs valued at average weekly earnings. State Governments incur around 20% of the total burden, predominantly for funding the hospitalisation costs of asthmatics and, to a lesser extent, for the reduced productivity of their employees. Federal Government has a greater cost responsibility (over 35% of the total) as it funds the larger costs of asthma related medical consultations and pharmaceuticals. Via the Department of Social Security, the Federal Government also has to meet the cost of invalid and sickness benefits. The other 'silent' losers in financial terms, with close to 25% and 15% each of the cost burden, are the private sector and individual asthmatics and their families. The significant cost impact of asthma on these groups has historically been less well documented and understood.

5.4 COST OF ASTHMA BY SEVERITY AND DEGREE OF CONTROL

Australia's 1.4 million diagnosed asthmatics vary in disease severity and symptom control. Any discussion of the cost burden of asthma therefore requires an understanding of the potential impact that disease severity and symptom control have on cost. This impact was assessed for the Australian adult asthmatic population,¹¹ some 994,000 sufferers, in the course of this study.

As various studies have indicated, the more severe the underlying asthma the greater is a patient's need for medical and other services. Very mild asthmatics, though, can also experience an acute exacerbation of their symptoms requiring emergency outpatient treatment or hospitalisation. As a result of differences in the use of support services across the asthma severity spectrum, a severe asthmatic represents a higher cost to the community than a mild asthma sufferer.

The total cost burden of very severe and severe asthma on the community is also higher than mild disease as illustrated in Figure Four. Respiratory specialists and GPs estimate¹² that a minority of adult asthmatics, around 6% of total sufferers, have severe or very severe disease and the majority, close to 80%, have mild or very mild illness. This means that a high proportion of the cost of asthma relates to a minority of adult sufferers. (See Appendix Four for severity classification and cost calculations).

Poor control of asthma, like severe asthma, can lead to a lower quality of life, greater need for medical care and hence increased cost to the community. Poor control is defined here as those adult asthmatics on suboptimal treatment regimens for a given level of disease severity. These people are thought by clinicians to represent around 45% of the diagnosed adult population¹³ and may be receiving inadequate treatment, inappropriate medication or may not be taking their prescribed medication according to the recommended dosage.

Poor disease control can increase an asthmatic's need for healthcare resources. Breathing problems, sleep disturbance and the frequency and severity of exacerbations of asthma rise with poor control. For example, respiratory specialists believe that a poorly controlled very severe asthmatic will require twice as many hospitalisations and for a longer period of time than a well controlled asthmatic with the same inherent disease severity. Demand for GP and specialist follow-up as well as emergency attendances are also believed to be greater in this poorly controlled group.

This suggests that higher healthcare costs for asthma management are therefore the inevitable result of poor asthma control for a given level of inherent disease severity. Patients with inherently severe asthma who are not prescribed or do not follow recommended treatment protocols will as a result have more persistent symptoms, a lower quality of life and incur additional cost. Figure Five illustrates the potential cost differences of a person well controlled and a person poorly controlled for very severe asthma. Costs were allocated by a computer model across the very severe asthma population on the basis of specialists' estimates for the usage of healthcare resources leg. pharmaceuticals, medical consultations and hospitalisations). This allocation was reconciled with actual data to develop a separate medical cost for the well and poorly controlled very severe asthma sufferers. Over time this cost allocation will change as more research on resource consumption for a given level of asthma control and alternative management strategies become available.(See Appendix Four for further details).

From the community perspective, the more asthmatics who have their disease well controlled, the lower the overall cost. This net benefit to society may, however, only be achieved through an increase in some individual medical costs such as pharmaceuticals.

² Inpatient and outpatient medications from all public and most private hospitals.

³ Average hospital costs have been used rather than marginal costs in this analysis. Average hospital costs are likely to have a similar value to marginal hospital costs in Australia given that the majority (~90%) of asthma admissions are to the constrained public hospital system where a vacant bed is unlikely to go unused.

⁴ Anti-asthmatic medications may also give rise to complications eg. osteoporosis, diabetes and peptic ulcers from long-term steroid use.

⁵ Based on the June 1991 Market Price GDP/employed person/year of $48,990 and 230working days.

⁶ 1990 ABS Australian Labour Force statistics show that 52.9% of married females with dependantsare not in the labour force compared with only 5.5% of married males with dependants.

⁷ 1990 ABS labour participation rate for all females with dependants.

⁸ ABS 1989/90 NHS estimate that 56.8% of asthmatics are employed.

⁹ Based on the 1991 ABS estimate of the average weekly earnings for all persons of $501.30 and a five day working week.

¹⁰ Based on the 1991 ABS estimate of the average weekly earnings for females of $393.20 and a five day working week.

¹¹ Adults were defined as those persons greater than I2 years of age. The age cut-off was adopted because of the standard medical convention of defining persons greater than 12 years as adult, on the basis of body mass measures, for prescribing purposes.

¹² Classification of disease severity was based on clinical estimates of the underlying level of disease, patient symptoms, lung function investigations and the extent to which a person's lifestyle is impaired as a result of asthma.

¹³ From an extensive survey of respiratory physicians and GPs.

Content Updated 1992