Technical Supplement OCTOBER 2015
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1 Technical Supplement OCTOBER 215
2 Business Council of October Like all first world countries, s population is ageing s population totals 23.9 million people today, and is projected to reach 39.7 million in , based on a growth rate of 1.3 per cent, per year. 1 The most significant predicted change to s demography is the continuation of the population s ageing. The number of ns aged 65 and over is projected to double by 255. Figure 1: s Ageing Population (a) Share of population aged over 65, 212 (b) Proportion of n population aged and 85+, now and est per cent Aged Aged United Kingdom Source: The Commonwealth Fund, International Profiles of Health Source: Care Systems, The 214 Commonwealth Fund, International Profiles of Health Care Systems 214 & Commonwealth Treasury, Intergenerational Report 215 s population is diverse, with different demands on the health system The n population is composed of a diverse mix of people, living in a wide array of different geographic, financial, and cultural circumstances. Approximately 3 per cent of s population is Indigenous. Figure 2: Population characteristics (a) Proportion of the population living in a major city, regional or remote area (b) Mean weekly household income, by income groups 2% $2,37 Lives in a major city Lives in a regional area Lives in a remote area 27% $615 $843 $1,119 $375 7% Source: ABS. Regional population growth, Bottom 2% 2nd lowest 2% Middle 2% 2nd highest 2% Source: ABS, Cat No.6523, 4 September 215 Top 2% Source: ABS, Regional population growth , ABS Cat. No & ABS, ABS cat. no Canberra: ABS. Household Income and Income Distribution , Cat no.6523., 4 September Commonwealth Treasury, Intergenerational Report 215.
3 Business Council of October performs strongly on life expectancy at birth and healthy life expectancy ns rank second of eight comparable populations for life expectancy at birth, and second on health-adjusted life expectancy. Figure 3: Life expectancy (a) Life expectancy at birth, 213 (b) Healthy life expectancy, years 73 years Source: World Health Organisation, World Health Statistics 215 performs well on mortality rates for several common, fatal diseases Heart disease and cancers are two of the most common killers of ns. ranks third lowest for heart disease mortality and third lowest for cancer mortality. Figure 4: Disease mortality rates (a) Heart disease mortality, 211 (b) Cancer mortality, 211 Rate per 51k to Rate 5 per 1k to % % 18 54% % % 25 2% 39 32% % % 49% 62% 5% % 217 2% % % Source: OECD, Health at a Glance 213 Living with ill health is increasingly common in and around the world Prevalence rates for several chronic and age-related conditions are rising in. ranks fourth of seven nations for prevalence of diabetes. The rate of
4 Business Council of October self-reported diabetes more than doubled (1.5 per cent to 4.2 per cent) between and Figure 5: Diabetes prevalence (a) Prevalence of diabetes, 211 (b) Self-reported diabetes rate 6.8% 5.5% 8.7% 1.5% in % in % 8.8% 5.4% 9.6% Source: OECD, Health at a Glance 213 & n Institute of Health & Welfare (AIHW), ranks equal second for highest prevalence rate of dementia. The number of dementia sufferers in is projected to reach 9, by 25. Figure 6: Dementia prevalence (a) Prevalence of dementia, 211 (b) Projected growth in dementia 5.8% 5.7% 5.8% 6.1% 5.4% 5.7% 322k people in 213 9k by % 6.2% Source: OECD, Health at a Glance 213 & AIHW, Dementia in, 212 Population Health Scorecard Drawing this data together, ranks in the top two countries on three of the four indicators. It ranks second on life expectancy and second on health-adjusted life expectancy. The only indicator for which ranks in the bottom half of countries is its obesity rate. On this indicator, ranks seventh ahead of the.
5 Business Council of October Table 1: Scorecard Country Life expectancy Health-adjusted life expectancy Obesity rate Daily smoking rate (highest) 1 (highest) 1 (lowest) (lowest) Yet some groups record poorer health outcomes than the broader population Indigenous ns have poorer health outcomes than non-indigenous ns. Life expectancy for Indigenous ns is approximately 1 years shorter than for non- Indigenous ns. In general, people from lower socioeconomic groups also have poorer health. Figure 7(b) confirms that the prevalence of self-reported cardiovascular disease is inversely proportional to socioeconomic status. ns living in regional and remote locations also tend to have poorer health outcomes than those living in major cities. Figure 7: Health inequities (a) Age-standardised death rates by remoteness area, 212 (b) Prevalence of self-reported cardiovascular disease by socioeconomic group, Deaths per 1, population (agestandardised) % 24.8% 22.5% 18.2% 16.8% 4 2 Major cities Inner regional Outer regional Remote Very remote Lowest socioeconomic status Group Highest socioeconomic status Source: AIHW, s Health, 214 & AIHW, Cardiovascular disease, diabetes and chronic kidney disease n facts: Prevalence and incidence. Series no. 2. Cat. no. CDK
6 < Business Council of October Older ns typically use health services more often than others ns use the health system to varying degrees. Given that older people have a higher incidence of disease and illness, it is unsurprising that older people are more likely to use hospital care and pharmaceutical scripts. Figure 8: Service utilisation (a) Hospital use by age (b) Over 65 year olds proportion of population vs proportion of PBS scripts No of people who conclude hospital treatment per 1, population Males Females Population per cent 4 4 PBS scripts 55 per cent Years of age Source: AIHW, Admitted Patient Care , Cat. no. HSE 156, 215; Productivity Commission, An Ageing : Preparing for the Future, 213 Older ns and those with a chronic disease frequently use GP services Figure 9 reveals that older ns and those with a chronic disease are the most frequent users of GP services. Figure 9: GP utilisation (a) GP attendance by age, (b) GP attendance by reported number of long-term conditions, % 2% 4% 6% 8% 1% % 2% 4% 6% 8% 1% Very high (2+ visits) Frequent (12-19 visits) Above average (6-11 visits) Occastional (4-5 visits) Low (1-3 visits) No visits % 2% 4% 6% 8% 1% 6+ yrs yrs -14 yrs % 2% 4% 6% 8% 1% No of long-term health conditions Source: National Health Performance Authority, Healthy Source: National Health Performance Authority, Authority, Healthy Healthy Communities: Frequent GP attenders Communities: and their Frequent use GP of health attenders services and their in use , of 215 health services in , 215. health services in , 215. Communities: Frequent GP attenders and their use of
7 Business Council of October Total health expenditure is growing much faster than GDP and the population In , total spending on health from all sources was estimated at $154.6 billion. Figure 1 shows that total health expenditure has been increasing each year and also as a proportion of GDP. Figure 1 shows that total health expenditure grew at 5 per cent per year on average in real terms over the decade to , which was significantly faster than GDP annual average growth in real terms (2.84 per cent) and annual average population growth (1.6 per cent). Figure 1: Health expenditure (a) Total health expenditure as quantum and as a proportion of GDP, by year (b) Average annual real growth rate from 23-4 to $b % of GDP 1 Total health expenditure 5.% GDP 2.84% Population 1.6% Total Health Expenditure (LHS) Source: AIHW, Health expenditure Health expenditure % of GDP (RHS) Source: n Institute of Health and Welfare, Health Expenditure s estimated health expenditure per capita in 212 is mid-range of the eight comparator countries. s health expenditure per capita grew second fastest of comparable countries between 23 4 and Figure 11: Health expenditure per capita Source: AIHW, Health expenditure (a) Total health expenditure per capita, 212, $US, PPP (b) Annual growth rate in total health expenditure per capita, 23 to Source: AIHW, Health expenditure Source: AIHW, Health expenditure Source: n Institute of Health and Welfare, Health Expenditure
8 Business Council of October A mix of factors drive growth in health expenditure These factors include population growth, population ageing, income growth and new technologies. Figure 12 depicts the Productivity Commission s estimates of the share of growth in real health expenditure from each of these drivers over the decade to Figure 12: Impact of drivers of health spending, to % of growth in real health expenditure Technology GDP growth Population growth Age adjustment Source: Productivity Commission, Impacts of Advances in Medical Technology in, 25 A predicted fiscal deficit across all governments calls for redesign With no policy change, and assuming demand continues at projected rates, it is estimated that the combined annual fiscal deficit across all levels of government could reach 5% of GDP by 25, or around $8 billion in today s terms. Figure 13: Projected fiscal balance of all governments Source: Deloitte Access Economics, An Intergenerational Report for the States, incorporated within the BCA submission to the 211 Tax Forum, October 211
9 Business Council of October Figure 14 shows that health is predicted to be the largest driver of fiscal pressures. Figure 14: Projected change to government expenditures (a) Projected change to Commonwealth expenditure to 26, as % of GDP (b) Projected change to State & Territory expenditure to 26, % of GDP Total of below 4.4 Total of below 1.4 Health care 2.9 Health care 1.4 Aged pension 1 Education -.3 Aged care 1.8 Disability.3 Education -.2 Other -1 Source: Productivity Commission, An Ageing, 213 Source: Productivity Commission, An Ageing, 213 Source: Productivity Commission, An Ageing : Preparing for the Future, 213 Health spending has been a significant driver of spending growth for governments Health constituted approximately 17 per cent of combined government expenditure in This increased to 19 per cent in , as illustrated in Figure 15. Figure 15: Government expenses in 22-3 and (nominal) 6 Government expenses $b (nominal) All other Health $423b 81% $222b 83% $47b, 17% $12b 19% Source: Parliamentary Budget Office, National Fiscal trends, 215
10 Business Council of October Figure 16 shows that the recent growth rate in health spending exceeds the growth rate of most other sectors. Figure 16: Real annual average growth in government expenses, 22-3 to Housing and community Health General public services Other Public safety Education Transport Social security and welfare Industry Recreation and culture Defence Total real annual average growth in spending area 22-3 to Source: Parliamentary Budget Office, National Fiscal trends, 215 % Growth at or below inflation Expenditure growth has not been limited to governments The share from the Commonwealth Government and other non-government sources (e.g. payments by compulsory motor vehicle third-party and workers compensation insurers) has fallen since At the same time, it has risen from state and territory governments, individuals (via out-of-pocket expenses), and private health insurers. Figure 17: Share of health expenditure (a) Share of health expenditure by source, (b) Change in share since Commonwealth PPT States and Territories Health insurance funds Individuals Other Source: AIHW, Health Expenditure Source: AIHW, Health Expenditure
11 Business Council of October s government expenditure on health ranks as the second lowest share of total health expenditure (68 per cent) ahead of the (49 per cent). Figure 18 shows that out-of-pocket expenses by individuals in account for 2 per cent of overall costs, which ranks as the highest of all eight countries. Figure 18: Proportion of total health expenditure by funding source, 211 (or nearest year) 1 % % United Kingdom Source: OECD Health at a Glance, Other Private Insurance Private out-of-pocket Social security General government Source: OECD, Health at a Glance 213 Health expenditure is growing across all parts of the system, but hospitals have the largest base The largest cost components of the health system are hospitals ($59 billion), primary care ($55 billion) and secondary care ($16 billion). All components of the health system have been growing faster than GDP. Figure 19: Average annual growth rate from 23-4 to , by key component Total health expenditure 5. Hospitals 4.8 Services Unreferred medical services 3.7 Referred medical services 4.9 Benefit paid pharmaceuticals 4.1 Products All other medications 9.8 Aids and appliances 6.3 Source: AIHW, Health expenditure Source: AIHW, Health Expenditure
12 Business Council of October s primary care funding model is predominantly fee-for-service Figure 2 shows that the composition of primary care funding delivered by governments in the eight comparator countries differs significantly. Figure 2: Composition of primary care funding, by country 1 1 % 1 % New Zealand 8 United Kingdom Fee for service Payment for outcomes Capitation United States Source: McKinsey and Company, How can improve its healthcare its primary health care system to better deal with chronic disease?, Background paper prepared for the Primary Health Care Advisory Group, 215 s funding model is built almost entirely on fee-for service, similar to and. Other countries have a much more mixed model, with the having the strongest focus on capitation.
13 Business Council of October has lower child vaccination rates than comparator countries ranks 8th for vaccination rates of children aged around one against diphtheria, tetanus and pertussis, and ranks 6th for vaccination rates of children against measles. Figure 21: Childhood vaccinations (a) Proportion of children vaccinated against diphtheria, tetanus and pertussis, (b) Proportion of children vaccinated against measles, Source: accessed 19 October 215 Source: OECD.Stat, Source: accessed 19 October has lower rates for selected cancer screening than other countries Secondary prevention seeks to identify and interrupt disease at an early stage. ranks seventh on the proportion of women aged 2-69 receiving screening for cervical cancer, and sixth on the proportion of women aged 5-69 receiving mammography screening. Figure 22: Cancer screening (a) Cervical cancer screening in women aged 2-69, (b) Proportion of women aged 5-69 that received mammography screening, per cent 55. per cent Source: OECD, Health at a Glance, 213 Source: OECD, Health at a Glance Source: OECD, Health at a Glance,
14 Business Council of October Chronic disease is not always treated effectively in the community Effective chronic disease management can mostly be delivered in the community via primary care. However, people with chronic diseases can deteriorate quickly when primary care is ineffective, and may require hospital admission. Figure 23 confirms that a significant proportion of chronic disease care expenditure occurs in hospital settings. Figure 23: Allocated health expenditure on the most expensive six disease groups, by disease group and area of expenditure, Cardiovascular Oral health Mental disorders Musculoskeletal Injuries Neoplasms Disease expenditure ($m) Hospital admitted patient services Out-of hospital medical expenses Prescription pharmaceuticals Optometrical and dental services Source: Source: AIHW, AIHW, s 's Health, Health Community and public health has high rates of admission for both Chronic Obstructive Pulmonary Disease (COPD) and Diabetes. A high-performing system can, to a significant extent, prevent such admissions to hospital. Figure 24: Potentially preventable admissions (a) Chronic Obstructive Pulmonary Disease hospital admissions in adults, 211, age-sex standardised rates per 1K people (b) Diabetes hospital admissions in adults, 211, age-sex standardised rates per 1K people Source: OECD, Health at a Glance 213
15 Business Council of October performs well on care effectiveness for several life threatening illnesses For life threatening illnesses, performs well on urgent care. It has the highest 5- year relative survival rate for breast cancer, and the second lowest case-fatality rate for heart attacks. Figure 25: Acute care (a) Breast cancer 5-year survival rate, 26 to 211 (b) Fatality rate for adults over 45 years within 3 days after being hospitalised for heart attack (rate per 1 admissions) 88% 88% 85% 86% 86% 81% 89% Source: OECD,. Health 2. at a Glance Source: OECD, Health at a Glance 213 United Kingdom Data unavailable 4.8% 4.5% Source: OECD, Health at a Glance % 5.5% 6.8% Age-sex standardised rates per 1 admissions (%) 7.8% 12.2% s elective surgery waiting times are longer than for comparator countries ranks last of the four comparable nations on median waiting times for three common types of elective surgery - cataract surgery, hip replacement and knee replacement. Figure 26: Elective surgery waiting times (a) Median waiting time for cataract surgery (b) Median waiting time for hip replacement (c) Median waiting time for knee replacement 5 1 Median waiting time (days) Median waiting time (days) 1 2 Median waiting time (days) United Kingdom Source: OECD, Health at a Glance 213
16 Business Council of October Out-of-pocket expenses in are high relative to comparator countries Many Medicare-funded health services and all PBS pharmaceuticals require a copayment. In these instances, access depends on peoples ability to pay. Figure 27 compares out-of-pocket expenses as a share of household spending. The 3.2 per cent share in is the highest of the seven countries for which data was available. Figure 27: Out-of-pocket expenses (a) Out of pocket medical spending as a share of household spending, (b) Proportion that experienced access barrier because of cost in past year % 16% 2.4% 13% 2.2% 1.5% 1.5% 1.8% Out-of-pocket medical spending as a share of household consumption (%) 4% 22% 21% Share of population 2.9% 37% Source: OECD, Health at a Glance 213 and The Commonwealth Fund, International Health Policy Survey 213 s performance on safety in healthcare is not strong on several measures Figure 28 illustrates the rate of foreign body left in during procedure (a sentinel event for which internationally comparable data is available). has the second highest rate of the six nations. Figure 28: Safety events (a) Foreign body left in during procedure in adults, (b) Postoperative pulmonary embolism or deep vein thrombosis in adults, Adjusted rate per 1, hospital discharges 421 Adjusted rate per 1, hospital discharges Source: OECD, Health at 2 a Glance, Source: OECD, Health at 2 a Glance, Source: OECD, Health at a Glance 213
17 Business Council of October Appropriate Care One method of assessing the appropriateness of care is to examine practice variation. A 214 OECD study found that has high age-standardised rates of several procedures relative to other countries (e.g. knee replacement), and a high level of incountry variation relative to other countries for several activities (e.g. hospital medical admissions). Table 2: Findings for from the 214 OECD study of variations in utilisation of several health activities for 13 countries Measure s annual activity level s with-in country variation Standardised rate of activity (per 1K ppl) Rank relative to other countries Degree of variation (co-efficient of variation) Rank relative to other countries internal variation Hospital medical admissions rd highest of rd highest (eq) of 12 Coronary artery bypass graft Percutaneous transluminal coronary angioplasty Admission / surgery after hip fracture 72 3 of of of of of of 1 Knee replacement of of 12 Caesarean section of of 12 Hysterectomy 33 3 of (eq) of 11 Source: OECD, Geographic Variations in Health Care: What Do We Know and What Can Be Done to Improve Health System Performance?, OECD Health Policy Studies, 214
18 Business Council of October Health Services definitions used in this paper The broad categories of health activities, services and products are listed below. Table 3: Main categories and description of health care activities Component Role Public health Primary care Secondary care Hospital services Aids and appliances Pharmaceuticals Other Activities to prevent disease and promote health in the community e.g. sun prevention information campaigns First point of contact for people to manage new health complaints and long-term conditions (excluding hospital emergency care). Includes unreferred medical services e.g. GPs, dental services, community health and other health practitioners such as physiotherapists and optometrists. Medical care provided on referral from primary care by medical practitioners with specialist training. Medical and surgical care provided in hospitals. Includes sub-acute care e.g. rehabilitation, palliative care, non-acute care such as supporting patients with an activity limitation or participation restriction, and pharmaceuticals paid for by hospitals. Medical goods dispensed to ambulatory patients for use more than once for therapeutic purposes e.g. glasses, hearing aids, orthopaedic appliances fitted without surgery. Medicinal drugs used to cure, treat or prevent disease outside hospitals. A wide range of prescription pharmaceuticals are subsidised by the Commonwealth Government. Includes patient transport services, administration and research. Source: AIHW, s Health, 214 BUSINESS COUNCIL OF AUSTRALIA 42/12 Collins Street Melbourne 3 T F Copyright October 215 Business Council of ABN All rights reserved. No part of this publication may be reproduced or used in any way without acknowledgement to the Business Council of. The Business Council of has taken reasonable care in publishing the information contained in this publication but does not guarantee that the information is complete, accurate or current. In particular, the BCA is not responsible for the accuracy of information that has been provided by other parties. The information in this publication is not intended to be used as the basis for making any investment decision and must not be relied upon as investment advice. To the maximum extent permitted by law, the BCA disclaims all liability (including liability in negligence) to any person arising out of use or reliance on the information contained in this publication including for loss or damage which you or anyone else might suffer as a result of that use or reliance. :
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