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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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In contrast, the majority of the literature as detailed above appears to support a higher estimate for VSL, as presented in Table 6-1, which Access Economics believes is important to consider in disease costing applications and decisions. The US dollar values of the lower bound, midrange and upper bound are shown at left. The ‘average’ estimate is the average of the range excluding the high NOHSC outlier. Equal

weightings are used for each study as the:

Viscusi and Aldy meta-analysis summarises 60 recent studies;

ABS study is Australian; and Yale and Harvard studies are based on the conclusions of eminent researchers in the field after conducting literature analysis.

Where there is no low or high US dollar estimate for a study, the midrange estimate is used to calculate the average. The midrange estimates are converted to Australian dollars at purchasing power parity (as this is less volatile than exchange rates) of USD=0.7281AUD for 2003 as estimated by the OECD.

Access Economics concludes the VSL range in Australia lies between $3.7m and $9.6m21, with a mid-range estimate of $6.5m. These estimates have conservatively not been inflated to 2004 prices, given the uncertainty levels.

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Choosing an appropriate discount rate for present valuations in cost analysis is a subject of some debate, and can vary depending on which future income or cost stream is being considered. There is a substantial body of literature, which often provides conflicting advice, on the appropriate mechanism by which costs should be discounted over time, properly taking into account risks, inflation, positive time preference and expected productivity gains.

21 Calculated from the non-indexed studies themselves. Converting the Access Economics average estimates from USD to AUD at PPP would provide slightly higher estimates - $3.9 million and $10.2m, with the same midrange estimate.

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The absolute minimum option that one can adopt in discounting future income and costs is to set future values in current day dollar terms on the basis of a risk free assessment about the future (that is, assume the future flows are similar to the certain flows attaching to a long term Government bond).

Wages should be assumed to grow in dollar terms according to best estimates for inflation and productivity growth. In selecting discount rates for this project, we have thus settled upon the following as the preferred approach.

Positive time preference: We use the long term nominal bond rate of 5.8% pa (from recent history) as the parameter for this aspect of the discount rate. (If there were no positive time preference, people would be indifferent between having something now or a long way off in the future, so this applies to all flows of goods and services.) Inflation: The Reserve Bank has a clear mandate to pursue a monetary policy that delivers 2 to 3% inflation over the course of the economic cycle. This is a realistic longer run goal and we therefore endorse the assumption of 2.5% pa for this variable. (It is important to allow for inflation in order to derive a real (rather than nominal) rate.) Productivity growth: The Commonwealth Government's Intergenerational report assumed productivity growth of 1.7% in the decade to 2010 and 1.75% thereafter. We suggest 1.75% for the purposes of this analysis.

There are then two different discount rates that should be applied:

to discount income streams of future earnings, the discount rate is:

5.8 - 2.5 - 1.75 = 1.55%.

to discount other future streams (healthy life, health services, legal costs,

accommodation services and so on) the discount rate is:

5.8 – 2.5 = 3.3% While there may be sensible debate about whether health services (or other costs with a high labour component in their costs) should also deduct productivity growth from their discount rate, we argue that these costs grow in real terms over time significantly as a result of other factors such as new technologies and improved quality, and we could reasonably expect this to continue in the future.

Discounting the VSL of $3.7m from Table 6-1 by the discount rate of 3.3% over an average 40 years expected life span (the average from the meta-analysis of wage-risk studies) provides an estimate of the value of a life year of $162,561.

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Burden of disease estimates are conservatively based on hearing loss in the better ear, as noted in Section 2.5.

The disability weights used in this study are based originally on those calculated by the AIHW (Mathers et al, 1999), which are adjusted for co-morbidities in older people (and hence there is a range of weights depending on age). These weights (not adjusted for

hearing aids) are:

0.018 to.020 for mild hearing loss;

0.104 to 0.120 for moderate hearing loss; and

0.324 to 0.370 for severe hearing loss.

However, the burden of disease calculation differs from that of the AIHW in the manner in which it takes account of the use of hearing aids or similar devices to correct hearing loss. The AIHW based its adjustment to prevalence on hearing aid usage reported in Wilson et al (1999) that critically did not report that the hearing aid usage rates of 38% were only for those who already had a hearing aid, which was 15.6% as per the South Australia Health Omnibus Study (1994). This latter figure is consistent with an Australian self report population study of device use (Hogan et al, 2001). Self reports of device use are less controversial than perceptions of impairment as the former have to be dispensed by a practitioner. For this study, re-examination of the data, communications with the South Australian Health Commission and consultation with the AIHW have together resulted in a re-estimation of the burden of disease. In keeping with AIHW, in the DALY calculation, where people used a hearing aid, they were moved down one category of severity in analysis.

In addition, the AIHW argue that prevalence rates in young adults, as per Wilson et al (1990) are overstated. The plausibility of this argument can be seen in moving from the Australian Hearing data with prevalence rates of less than 1% at age 14 to the Wilson rate of 5.7% at 15-50 years. Comparing the Wilson data to Davis’ (1989) UK data shows two things.

There is little difference in the prevalence of impairment in the worse ear – 5.7% and 5.6% respectively at 25 dB.

However, the rates are different for the better ear with Davis reporting, for example, 1.8% at 25 dB for people aged 17-30 years whereas Wilson reports only a grouped report for the cohort 15-50 years.

In calculating DALYs, AIHW used data from the 1993 Survey of Disability, Ageing and Carers to adjust the prevalence rates. Reservations regarding SDAC in relation to reporting prevalence of hearing loss were noted in Section 3.1.

Instead, this costing has conservatively omitted all those aged between 15-34 years from the prevalence estimates in the calculations.

A final downward adjustment is made to the prevalence estimate for the burden of disease calculation as the Deaf Community do not report hearing loss as

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‘burdensome’ in terms of quality of life impact, so the DALY calculation is made with 10,000 people excluded from the severe category.

There is no estimate for YLL for hearing loss, based on the assumption that no-one dies prematurely from hearing loss.

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Based on the methods outlined above, the total number of people experiencing disability from hearing loss (adjusted for hearing aid use) is estimated by severity as shown in Table 6-2, together with the total estimated YLD and its gross value (calculated by multiplying YLD by $162,561).


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Figure 6-1 illustrates YLD due to hearing loss, which total 95,005 DALYs. Notably the greatest impact commences during the late working age years of 51-60 years, with men in these age groups proportionately having 3.5 times the YLD of women.

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Source: Based on Mathers et al (1999) disability weights, modified, and AE prevalence estimates.

These results reflect the epidemiology underpinning the model and particularly the cumulative impact of excessive noise exposure on men. The estimated gross cost of these DALYS is $15.4 billion.

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Bearing in mind that the wage-risk studies underlying the calculation of the VSL take into account all known personal impacts – suffering and premature death, lost wages/income, out-of-pocket personal health costs and so on – the estimate of $16.4 billion should be treated as a ‘gross’ figure. However, costs specific to hearing loss that are unlikely to have entered into the thinking of people in the source wage/risk studies should not be netted out (eg, publicly financed health spending, care provided voluntarily). The results after netting out are presented in Table 6-3.

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Figure 6-2 compares DALYs lost due to hearing loss relative to other national health priorities and disease groups. Within the original assessment of burden of disease by Mathers et al (1999) adult acquired hearing loss (which is the majority of hearing loss) accounted for about 2% of all DALYs. This proportion of DALYs is similar to that reported in the Global Burden of Disease Study, that the Australian project closely followed. 22 However, as was demonstrated in the preamble to Section 6.2, there was a significant assumption in that modelling, which appears not to be supported by the data. In Figure 6-2 it can be seen that, with the corrected disability weights, the burden of disease from hearing impairment is 3.8%, which is greater than that of three of the National Health Priority Areas – asthma, diabetes and musculoskeletal conditions.

22 http://www.who.int/healthinfo/bodestimates/en/index.html

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Another informative comparison of the burden of disability associated with hearing loss can be gleaned from a comparison of disability weights, which reflects the severity given to differing conditions. This comparison is depicted in Figure 6-3, directly drawing from the AIHW data (without adjustments).

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In Figure 6-3 hearing loss can be evaluated by degrees of severity against other conditions. Mild hearing loss is comparable, for example with mild asthma – a national priority condition. Moderate hearing loss is comparable, for example, with chronic pain arising from a slipped disc as well as a moderate depressive episode – again a condition addressed as a national health priority. Finally severe hearing loss is comparable with pneumonia as well as more advanced diabetes, one resulting in complications. Again, diabetes is a national health priority area. Across the spectrum of hearing impairment then, the impact of this disability, be it mild, moderate or severe, is directly comparable with conditions rated as national health priorities.

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7. FURTHER RESEARCH This study has identified a number of gaps in research pertaining to early intervention and management of hearing loss. Further research into these areas may serve to reduce the impact of hearing loss on the community. Research is needed in the

following areas:

epidemiology of hearing loss prevention of hearing loss enhancing access to, and continued use of, hearing aids health effects of hearing loss caring productivity of people with hearing loss biomolecular and genetic approaches to hearing loss; and aboriginal hearing loss.

7.1 EPIDEMIOLOGY OF HEARING LOSS The epidemiology of hearing loss conducted by the Centre for Population Studies in Epidemiology, within the South Australian Department of Human Services (see Wilson et al. 1992 and 1998) has been the only epidemiological study of hearing loss in Australia. This project built on the foundational work of Davis (1989) in the United Kingdom. In order to monitor progress in the management and prevention of hearing loss there is a need to maintain an accurate and current epidemiology.

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Exposure to excess occupational or recreational noise is a known cause of hearing loss. The mechanism of exposure and injury has been established as a dose-response relationship. Strategies for reducing noise emissions and noise exposures have also been developed and laws are in place that limits noise exposures in the workplace and in the environment. Nonetheless, noise continues to account for 37% of all hearing loss. Research is required to identify barriers to the adoption of noise controls in the design of equipment. Where such controls cannot be achieved, research is required to identify barriers to the adoption of personal protective equipment such as ear muffs.

Broadly based community awareness programs are also required.

Long term population studies are required to establish the effect of recreational noise exposures resulting from personal stereo systems.

The full effects of acoustic shriek on hearing remain unclear and continued research is required in this area.

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Two thirds of hearing loss is not caused by common exposures to noise. This factor is particularly evident in the rapid increase of hearing loss among middle to older age women, whose rate of hearing loss eventually catches that of men by older age. This result is commonly attributed to the ageing process. Effective research into hair cell regrowth may serve as a remedy to the ageing process.

Ototoxic substances have also been identified as a cause of hearing loss. These are substances taken for example in medicines or inhaled through fumes, which damage the hair cells. Most obviously drugs such as aminoglycoside antibiotics and platinumbased chemotherapeutic agents result in hearing loss (Ryback and Whitworth, 2005).

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