The cost of care – part 1 – the cost of cancer


Life insurance is a vital part of the ecosystem that helps protect the financial, emotional and physical wellbeing of Australians.

In analysing common methodologies used across the life insurance advice sector, we were able to identify a missing link that could help advice be more tailored and personalised. The Cost of Care whitepaper is an industry first, bringing together detailed research across the broad spectrum of injury and disease. Across three articles, we will delve into three of the biggest cost burdens facing Australians today – Cancer, Mental Health and Heart and Artery.

Australia – as the saying goes – is a ‘lucky country’. Our standard of living, climate, and health care and social security systems all stand up well to international comparisons. But there is a downside, in the false sense of security that Australians live with in terms of their health, and their capacity to cope financially, in the event of ill health.

The growing cost of healthcare

Ongoing advancements in the diagnosis and treatment of disease have seen life expectancy continue to increase. As we see more people live with – rather than die from – serious health conditions, the cost burden on our healthcare system grows.

In 2015/16 total health expenditure in Australia was $170.4 billion[1]. While the state and federal government pick up the lion’s share of this burden, individual Australians – and their families and carers – still accounted for around $30 billion of this annual cost[2]. Interestingly, this is nearly twice the amount funded by private health insurers.

This sum relates to direct expenditure only; it does not account for any indirect costs, such as foregone income by the individual and/or their caregivers.

The out of pocket burden

While Medicare is universal, and can cover hospital, medical and pharmaceutical benefits, more than 11 million Australians choose to ‘supplement’ their healthcare funding with private hospital cover[2]. Despite this, individuals are often left with a ‘gap’ between the amount covered and the total cost of the medical services.

This gap can arise for several reasons, including where service providers choose to charge more than the ‘notional fee’ for a service, as calculated by health authorities. This gap translates to an out-of-pocket cost, borne by the individual; the quantum of these costs can create a barrier to individuals seeking suitable treatment for their conditions.

An Australian study investigating the effects of healthcare costs on individuals found that 14% of adults didn’t receive the recommended care due to costs; for those living with chronic health conditions, the proportion was higher, at 24%[3].

The high cost of cancer

Cancer contributes to 19% of the total disease burden in Australia and has a significant social and economic impact on individuals, families and the community. In 2018, it is expected that 138,321 Australians will be diagnosed with cancer, with the most commonly diagnosed cancers being prostate, breast, bowel and melanoma.

One in every three Australian men and one in every four Australian women will be diagnosed with cancer by the age of 75 years.

  • The chance of developing prostate cancer is one in five, with up to 40% of those diagnosed experiencing a recurrence
  • For breast cancer, there is a one in eight chance and recurrence rates range from 3-23%
  • The likelihood an individual will get bowel cancer in their lifetime is one in 13; up to 50% of those will experience recurrence within 2-3 years following their initial diagnosis
  • With the second highest incidence rates in the world, it is estimated that Australians have a one in 16 chance of developing melanoma cancer and approximately 11% will experience recurrence of the disease 25 years after initial treatment.

Although healthcare in Australia is largely publicly funded, out-of-pocket costs associated with cancer diagnosis, treatment and survival can place a huge burden on sufferers and their families. Figure one details the expected average lifetime costs for the 10 most prevalent cancers in Australia.



Expert’s view – Dr John Cummins, MBBS, MPH(USA), FRACP

Deaths from cancer account for approximately 1 in 3 adult deaths. As a clinician, common cancers such as melanoma, breast and colon cancer are all too frequent diagnoses. Many cancer deaths and even diagnoses are preventable with healthy lifestyle choices and cost-effective screening.

Survival is increasing, and the medical profession is further understanding who to treat and how to personalise the treatment to cause minimal damage to healthy tissue and maximise chances of survival. So, whereas in the 1970s the average survival post cancer diagnosis was approximately 12 months, current survival rates are around 6 to 10 years and increasing.

However, such interventions come at a cost.

Out of pocket costs for surgery can run into the tens of thousands of dollars and radiotherapy can also be expensive.

Annual PBS expenditure on anticancer drugs rose from $65 million in 1999–2000 to $466 million in 2011–2012. The average price paid by the PBS per anticancer drug prescription, adjusted for inflation, increased 133% from $337 to $786. Some have argued that the price of new anticancer drugs is increasing rapidly because of the increasing cost of drug development, with estimates ranging from $500 million to $2 billion per new drug approved.

Patients wanting to use new anticancer drugs that are not reimbursed currently face bills of about $5000 per month. Physicians will increasingly find themselves in the difficult position of having to discuss with patients whether the financial toxicity of these new drugs is warranted by their benefits.

Approximately one in three Australians with cancer perceive the financial burden of prescribed medicines for cancer treatment or recovery to be moderate, heavy or extreme[4]. Although healthcare in Australia is largely publicly funded, there are still significant out-of-pocket costs associated with cancer diagnosis, treatment and survival. These can include:

  • GP and specialist gap payments
  • Scans or tests outside of the public system
  • Over the counter medications for pain relief and other purposes
  • Complementary medicines or therapies
  • Medical devices
  • Travel
  • Accommodation
  • Personal care (e.g. managing ulcers during radiotherapy).

The average lifetime cost of cancer for individuals aged 15-64 is $126,280. People who live outside major cities have 17 times the odds of reporting locational or financial barriers to care compared to those living in metropolitan areas[4].

The financial burden of cancer extends beyond the patient, with 72% of cancer carers reporting a negative financial impact of caring and more than half of carers who work full time need to take leave or reduce working hours[4].

The cost of prevalent cancers

Prostate, breast and bowel are the most prevalent cancers in Australia. Figure two provides a snapshot of the incidence and average lifetime costs of these cancers.



The cost burden of prostate cancer

One if five men will develop prostate cancer by age 85. Results from an Australian study, in which 289 men with prostate cancer reported the cost of their treatment revealed:[15]

  • The average out-of-pocket cost for prostate cancer treatment in newly diagnosed patients was $11,077 in the first year and ranged from $250 to $30,000
  • Spending was largely on specialist fees, hospital services, medical equipment and supplies and medicines
  • One in four men stopped working as a result of their diagnosis and out of those who retired, most had done so 4-5 years earlier than planned.

In all, 70% of men diagnosed with prostate cancer report spending more on cancer treatment than they expected.

The cost burden of breast cancer

Typical out-of-pocket costs incurred in the first five years following a diagnosis of breast cancer total $4,809, with most of these costs incurred during the first 12 to 24 months after diagnosis[9].

Out-of-pocket costs are highly variable, ranging anywhere from $1,510 to $17,200; these costs rise with increased disease severity and age. The median hours worked per week in paid employment across the household decreases by about 50% during breast cancer treatment.



The cost burden of bowel cancer

The number of new cases of bowel cancer has increased significantly over the past four decades – from 6,986 in 1982 to 17,003 (estimated) in 2018[7]. Bowel cancer is the second most common cause of death from cancer in Australia, and its survival rates are much lower than other common cancers such as prostate and breast.

Costs from bowel cancer include those related to medical appointments, tests and treatments. People with suspected bowel cancer may have initial investigations with a GP, followed by more in-depth investigations with a specialist doctor. Treatment for bowel cancer is dependent on a number of factors, including where the cancer is located in the bowel and the stage of the cancer. The 2018–19 Federal Budget provides $35 million over four years to fund the follow-up of people who have received a positive at-home bowel cancer screening test result and have not attended a follow-up appointment with a doctor.

Case study, Tracy 47

When Tracy, a working mum of three, was diagnosed with breast cancer, it turned her life and the lives of her husband and children, upside down. Not only did the family have to contend with the thought of losing a loved one, they also faced financial struggles.

Tracy had countless tests and visits to her specialist and endured an intense and time-consuming course of chemotherapy and radiation treatment.

Initial tests, such as a mammogram and MRI scans set her back around $650 and with each visit to her surgeon Tracy had to pay $200. Then came the bill for her radiation treatment – $2,000. The side effects of chemotherapy meant even more out-of-pocket costs; approximately $400 for headwear as a result of hair loss.

In the first year following her diagnosis, Tracy faced out-of-pocket medical costs close to $7,000.

To manage her gruelling treatment schedule, Tracy had to stop working for nearly 6 months – equating to a loss of income of almost $35,000. This had a significant impact on the family, as Tracy is the primary earner of the household.

Given that Tracy will face a number of tests and possible treatments in the future, she and her husband worry every day about how they will continue to look after Tracy’s health and support their family.


By drawing on aggregate health data, and individual case studies, the research study on which this article is based aims to provide financial advisers and their clients a clearer picture of the direct and indirect cost impacts to them and their families in the event of serious illness; in this case, cancer. It provides an overview of the healthcare, social security and insurance ecosystem, in turn allowing more informed decision making about the most appropriate mechanisms to protect one’s financial wellbeing

Life insurance is a vital part of the ecosystem that helps protect the financial, emotional and physical wellbeing of Australians. But without a better understanding of how each of these systems interact, and a realistic appreciation of the true costs of poor health, we are ill equipped to judge the appropriate types and levels of support to best suit our circumstances, and to navigate a complex network of services and providers.

Download the Zurich Cost of Care Whitepaper. 

Read Part 2 – mental health

Read Part 3 – heart and artery 



[1] Australian Institute of Health and Welfare 2013. Health expenditure Australia 2011–12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW, p. 117
[2] Australian Institute of Health and Welfare 2017. Health expenditure Australia 2015–16. Available from: health-expenditureaustralia-2015-16/contents/ data-visualisations
[3] Essue B et al. Out-of-pocket costs of health care in Australia. Submission to the Senate Standing Committee on Community Affairs. Submission 28.
[4] Paul CL, et al. The impact of loss of income and medicine costs on the financial burden for cancer patients in Australia. The Journal of Community and Supportive Oncology. 2016;14(7) p.307–313
[5] Cancer Australia. Prostate cancer in Australia. Available from: [Accessed April 2018]
[6] Cancer Australia. Breast cancer in Australia. Available from: [Accessed April 2018]
[7] Cancer Australia. Bowel cancer (Colorectal cancer) in Australia. Available from: [Accessed May 2018]
[8] ZERO. The end of prostate cancer. Recurrence. Available from: [Accessed May 2018]
[9] Susan G Komen. Survival and risk of recurrence. Available from: [Accessed May 2018]
[10] Bowel Cancer Australia. Available from:
[11] Cancer Council Australia. Understanding breast cancer: A guide for people with cancer, their families and friends. July 2016
[12] Access Economics. Cost of Cancer in NSW: A report by Access Economics Pty Limited for The Cancer Council NSW, April 2007
[13] Deloitte. Access Economics. Financial impacts of breast cancer in Australia: Breast Cancer Network Australia. November 2016
[14] Gordon L, et al. Financial toxicity: a potential side effect of prostate cancer treatment among Australian men. Eur J Cancer Care, 2017;26(1):p.e12392

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