The cost of care – part 3 – the cost of heart and artery
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
Some illnesses can have a significant impact on your clients’ lives. Not only can they stop your client from working, their recovery may require assistance and time, and have negative repercussions for other family members.
Despite this, a key finding of the research study was that Australians see themselves as ‘bulletproof’ and found that – compared to their peers in other developed economies – Australians also have the most faith in the adequacy of social security to protect them in times of need, and unsurprisingly, the lowest interest in purchasing life insurance. Despite this perceived safety net, the direct and indirect costs of serious illness and injury can create a significant out of pocket burden.
In 2016/17 there were over 777,000 hospitalisations due to injury or poisoning. Over 600,000 Australians are living with coronary artery disease; there will be a heart attack every 12 minutes and 96 stoke events each day. It’s estimated that there will be more than 500,000 people living with dementia by 2025 and over one million by 2056.
As discussed in part one, this cost burden is estimated at $30 billion and upwards each year and falls on all of us, as tax payers and as individuals. And as good as our safety nets are, the out of pocket cost impact to those affected by ill health or injury can be crippling. Depending on the condition, direct costs can range from hundreds to many thousands of dollars each year. Often these are compound by the indirect costs – such as foregone income – impacting the sufferers and their carers.
Cardiovascular disease
Cardiovascular disease (CVD), which covers a range of conditions affecting the heart and arteries, such as heart attack, stroke and high blood pressure, is responsible for one death every 12 minutes in Australia – it’s one of Australia’s largest health problems. Despite medical advancements over the last few decades, it remains one of the biggest burdens on our economy.
Common risk factors like high cholesterol, smoking, obesity and diabetes play an important role in CVD. A 45-year-old man with two or more of these risk factors has a 1 in 2 chance of experiencing a major cardiovascular event by 80 years. For women, the risk is marginally lower at 1 in 3, but the overall trend is the same – more risk factors equal greater risk.
Cost of CVD in Australia
Australian expenditure on CVD is enormous; more is spent on CVD than any other disease group. In 2012-2013, $5 billion was spent on healthcare for people with CVD, which equates to 12% of all healthcare expenditure. CVD is responsible for 84 million prescriptions per year at a cost of $3.3 billion[1].
The indirect costs of CVD are also hefty. Treating CVD often involves large surgical procedures, lengthy recovery periods, loss of independence and loss of income. In addition, many people who experience a cardiovascular event, such as heart attack or stroke, will take time off work, resulting in losses to their employer as well<sup[2].
Even though rates of CVD are decreasing, expenditure is likely to increase in the future due to the ageing population and population growth. Spending on CVD is estimated to increase to $8.3 billion by the year 2033[3].
Expert’s view, Dr John Cummins, MBBS, MPH(USA), FRACP
Cardiovascular diseases are diseases of arteries incorporating a blockage or alternatively a bursting of an artery leading to a haemorrhage. The tissue supplied by said artery hence is deprived of oxygen and dies off – in the heart, i.e. coronary arteries, this is a ‘heart attack’; in the brain, a ‘stroke’; in the lower limbs this leads to gangrene and likely amputation.
Cardiovascular disease is responsible for approximately 40% of all deaths and can strike at any age although, like most diseases, the prevalence is higher with advancing age.
What I see, as a clinician, is therefore a disease that is extremely common and often comes ‘out of the blue’ for the individual. In fact, approximately 46% of women and 62% of men affected will have no warning. A stroke will often cause residual and permanent disability which can significantly impair one’s ability to earn income (as executive functioning in the brain in terms of decision making, regulating emotions and memory may be affected as well as use of limbs and thus mobility).
As we achieve significant technological advances within medicine, we are using increasingly sophisticated and expensive technology to assess arterial disease before symptoms occur such that we can intervene for example with (lifelong) medications or address physical concerns such as blockages (by stenting or bypass ) to avoid a heart attack, stroke, etc. All of this has a cost and, given that much of medicine occurs outside of a hospital setting, there are often significant costs to the patient that are not reimbursed by private health insurers (which generally only fund hospital-based interventions). This is one of the greatest misconceptions that I see – consumers do not understand that their health fund will only fund (an often small) part of a hospital-only procedure for medical interventions.
As technology increases (in an exponential fashion it seems) and radically transforms our health outcomes, the consumer increasingly will be funding his or her own healthcare. Whilst some costs will be funded by the public healthcare purse, much of it, at least initially, will need to be paid for privately by ‘early adopters.’
Ongoing costs
Costs to the individual also stack up with an average individual out-of-pocket spend of $2,520 in the first year following a stroke. Other CVD events, such as heart attack are associated with extensive surgical procedures and lengthy recovery periods (meaning time in hospital and time away from work). Getting to the hospital in the first place is an expense, with the ambulance fee averaging $874.
The cost of serious illnesses can also arise in the years following the event, sometimes in the form of disability and restriction in daily living. For example, in 2009 it was estimated that over a third of people with stroke had a resulting disability[12]. Furthermore, a national survey found that 81% of stroke survivors reported significant levels of unmet need in the community after discharge from hospital.
Strokes have a significant impact on carers; 58% of primary carers of people with stroke and disability spend 40 hours or more per week in their caring role:
- 21% report a decrease in income due to their caring role
- 24% incur extra expenses due to their caring role
- 31% have difficulty meeting everyday living costs.
The study also considers, in detail, a range of other diseases and the lifetime cost of each, a sample of which is included in figure three.
The impact on carers
Many serious illnesses, particularly those that cause a physical or neurological disability, place a financial burden on carers.
There are approximately 1.2 million people in Australia caring for someone with dementia. Most people with dementia live in the community (as opposed to aged care or assisted living facilities) and 46% receive informal assistance, for example from a family member or close friend24. Have your clients considered the financial impact of caring for a parent or spouse with dementia?
Parkinson’s disease can affect individuals’ capacity to work; many people with Parkinson’s disease spend more days absent from work and retire early. In addition, carers may work less in order to care for their loved one with Parkinson’s[27].
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. Given that many Australians adopt a ‘she’ll be right mate’ attitude, are your clients financially prepared for the cost burden of experiencing, or caring for someone experiencing, illness or injury?
Download the Zurich Cost of Care Whitepaper.
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