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«THE ECONOMIC IMPACT AND COST OF HEARING LOSS IN AUSTRALIA A report by Access Economics Pty Ltd February 2006 Listen Hear! The economic impact and ...»

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LISTEN HEAR!

THE ECONOMIC IMPACT AND COST

OF HEARING LOSS IN AUSTRALIA

A report by Access Economics Pty Ltd

February 2006

Listen Hear! The economic impact and cost of

Listen Hear! The economic impact and cost

of hearing loss in Australia

hearing loss in Australia

TABLE OF CONTENTS

ACKNOWLEDGEMENTS

Glossary of common abbreviations

EXECUTIVE SUMMARY

1. STUDY CONTEXT

1.1 The need for this study

1.2 Structure of this study

2. BACKGROUND

2.1 The hearing sense

2.2 Severity of hearing loss

2.3 Causes of hearing loss

2.3.1 Conductive and sensorineural hearing loss

2.3.2 Hearing loss in children and adults

2.3.3 Noise induced hearing loss (NIHL)

2.4 Cultural perspectives, disability and handicap

2.4.1 Cultural perspectives

2.4.2 Limits to social participation

2.5 Better ear, worse ear

2.5.1 Hearing loss and comorbidities

2.5.2 Health utilisation and disability

3. PREVALENCE OF HEARING LOSS AND HEARING DISABILITY

3.1 Data Sources

3.2 Prevalence in children

3.3 Prevalence in adults

3.3.1 Prevalence of adult hearing loss in the worse ear

3.3.2 Prevalence of adult hearing disability in the better ear

3.4 Summary of prevalence in 2005

3.4.1 Prevalence of hearing loss

3.4.2 Comparison with national health priorities

3.5 Estimates of the deaf community

3.6 Prevalence projections

3.6.1 Projections for children

3.6.2 Projections for adults

3.6.3 Total projections

4. HEALTH SYSTEM COSTS

4.1 Methodology

4.2 Types of health system costs

4.3 Health system expenditure comparisons

4.4 Hearing aids and cochlear implants

4.4.2 Cochlear implants

4.4.3 Economic efficacy of hearing devices

While every effort has been made to ensure the accuracy of this document, the uncertain nature of economic data, forecasting and analysis means that Access Economics Pty Limited is unable to make any warranties in relation to the information contained herein. Access Economics Pty Limited, its employees and agents disclaim liability for any loss or damage which may arise as a consequence of any person relying on the information contained in this document.

Listen Hear! The economic impact and cost Listen Hear! The economic impact and cost of hearing loss in Australia of hearing loss in Australia

5. OTHER FINANCIAL COSTS

5.1 Productivity losses

5.1.1 Employment impacts

5.1.2 Absenteeism

5.1.3 Taxation revenue impacts

5.2 Education and support services

5.2.1 Early intervention services

5.2.2 Primary and secondary education services

5.2.3 Post school education services

5.2.4 Other services for people with hearing losses

5.3 Communication aids and devices

5.3.1 Communication devices

5.3.2 Telecommunications

5.4 Carers

5.5 Transfer costs

5.5.1 Welfare and income support

5.5.2 Summary of deadweight losses

5.6 Summary of financial costs

6. BURDEN OF DISEASE

6.1 Valuing life and health

6.1.1 DALYs and QALYs

6.1.2 Discount rates

6.2 Estimating the burden of disease from hearing loss

6.2.1 Years of life lost due to disability

6.2.2 Net value of healthy life lost

6.2.3 Comparisons with other conditions

7. FURTHER RESEARCH

7.1 Epidemiology of hearing loss

7.2 Prevention of hearing loss

7.2.1 Noise exposures

7.2.2 Other causes of hearing loss

7.3 Accessing and using hearing aids

7.4 Health effects of hearing loss

7.5 Biomolecular and genetic approaches to hearing loss

7.6 Caring

7.7 Productivity of people with hearing loss

7.8 Hearing loss in the Aboriginal population

REFERENCES

ABOUT THE STUDY SPONSORS

Cooperative Research Centre for Cochlear Implant and Hearing Aid Innovation

Victorian Deaf Society

Listen Hear! The economic impact and cost of Listen Hear! The economic impact and cost of hearing loss in Australia hearing loss in Australia

–  –  –

While every effort has been made to ensure the accuracy of this document, the uncertain nature of economic data, forecasting and analysis means that Access Economics Pty Limited is unable to make any warranties in relation to the information contained herein. Access Economics Pty Limited, its employees and agents disclaim liability for any loss or damage which may arise as a consequence of any person relying on the information contained in this document.

Listen Hear! The economic impact and cost Listen Hear! The economic impact and cost of hearing loss in Australia of hearing loss in Australia

–  –  –

ACKNOWLEDGEMENTS





Access Economics acknowledges with appreciation the comments, prior research and

expert input from:

John Berryman Royal Institute for Deaf and Blind Children, North Rocks Ken Black and Saul Flaxman Australian Bureau of Statistics Helen Burbidge, Peta Miller and Sue Barker Office of the Australian Safety and Compensation Council Centre Link Frontdoor Data Service Jay Chambers Centre for Special Education Finance (USA)

–  –  –

Catherine Chittleborough SA Health Commission Associate Professor Robert Cowan Cooperative Research Centre for Cochlear Implant and Hearing Aid Innovation Dr Harvey Dillon, Margaret Dewbury and Warwick Williams National Acoustic Laboratory Department of Education, Victoria Andrew Dowling, Linda Bowden, Geoff Muir, Mark Kelly and Peter Cipollone NSW Department of Education and Training John Goss and Nick Mann Australian Institute for Health and Welfare Margaret Haenke and Tracey Annear Deafness Resources Australia Vivienne Ireland Australian Communication and Media Authority Peter Kelly Commonwealth Department of Education, Science and Training

–  –  –

Mr John Paton Victorian Deaf Society Michelle Roder Wesley Mission Georgina Sanderson Cochlear Ltd Alex Varley Australian Caption Centre Stuart Varney National Centre for Vocational Educational Research Jenny Williams Commonwealth Department of Health and Ageing Sharon Westcott Sydney Cochlear Implant Clinic David Wilson University of Adelaide

–  –  –

EXECUTIVE SUMMARY

Study context 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.

Costs 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.



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