Macro- and micro-economic costs of cardiovascular disease Marc Suhrcke University of East Anglia (Norwich, UK) and Centre for Diet and Physical Activity Research (Cambridge, UK) IoM 13-04 04-2009
Outline 1) What do we mean by economic costs? 2) Microeconomic costs 3) Macroeconomic costs 4) Conclusions 5) Background material
What do we mean by economic costs? 1) Health care costs ( direct( costs )? 2) Productivity costs ( indirect( costs )? a) Microeconomic b) Macroeconomic 3) Welfare costs? 4) External costs (and other market failures)?
Healthcare costs of cardiovascular disease (EU15, 2002) 450 400 350 300 250 200 150 100 50 0 20 18 Cost per capita ( ) Cost in % of health exp. 16 14 12 10 8 6 4 2 0 Germany UK Sweden Netherlands Luxembourg Austria Finland Denmark Italy Belgium France Greece Ireland Spain Portugal Source: Petersen et al (2005)
Does good health lower health care costs? Life expectancy at age 20 Healthy living 64.4 Obese 59.9 Smokers 57.4 Expected remaining lifetime health care costs p.c. At age 20 281,000 250,000 220,000 Source: van Baal et al 2008
Microeconomic costs
Microeconomic costs / consequences we looked at n Labour market outcomes n Consumption smoothing n Income & wealth n others Systematic review of 53 (72) articles, published from 1995-2007 (Suhrcke/Rocco 2008)
Heavy US bias, very few LMICs Country US UK Australia Canada Finland Spain Denmark, Ireland, Pakistan, Cote d'ivoire, Ghana, Brazil, China, Bulgaria, Germany, Netherlands, EU-9, France Number of studies with focus on that country (or group of countries) 29 7 4 4 3 2 1 each Source: Suhrcke/Rocco 2008
Change in probability of labour market participation in response to limited ADL (2001) Armenia Belarus Georgia Kazakhstan Kyrgyzstan Moldova Russia Ukraine Marginal effects (%) -16.3-25.1-6.9-30.4-18.8-22.3-23.0-16.7 Note: coefficients significant at 5%-level Source: Suhrcke/Rocco/McKee 2007
Selected results from Latin American micro studies, based on IV estimates:
Evidence from China n The impact of adult health on household income Rural sample: individuals in excellent health earn Yuan 191,- more per annum than those in poor health (Liu et al 2008) n The impact of adult health shocks Worsening of health by one unit leads to: n income reduction by 6.2% n reduction in hours worked by 5% n Out-of-pocket medical expenditures increase by 9% (Lindelow & Wagstaff 2005)
10 9 9.7 8.4 Ratio of expenditures on tobacco vs. education in Bangladesh, 1995-96 8 7 6.9 6 5 4.9 4.2 4 3 3.2 2 1.7 1.2 0.9 0.8 0.6 0.7 0.6 0.4 0.7 0.8 0.7 0.7 1 0 1 (poorest) 2 3 4 Source: Efroymson et al 2001 5 6 7 8 9 10 11 12 13 Household expenditure group 14 15 16 17 18 (richest)
Macroeconomic costs
Abegunde et al, 2007 Lancet n CHD,, stroke, diabetes n Counterfactual (1): no chronic disease death n Counterfactual (2): business as usual
Growth regression approach applied to CVD n Core issues: data and causality! n Two attempts: 1) Suhrcke/Urban (2006): dynamic panel analysis 1960-2000 2) Rocco/Suhrcke (2009): cross-section section analysis 1970-2000, instrumental variable approach
1) Suhrcke/Urban 2006: dynamic panel analysis n 26 high-income income countries n 1960-2000 in 5-year 5 intervals n Dependent variable: per capita income n Explanatory variables: Initial income per capita Secondary schooling Openness of the economy Health proxy: cardiovascular disease mortality rate at working age
A A ten percent increase in CVD mortality rate among the working age population decreases the per capita income growth rate by about one percentage point. Source: Suhrcke/Urban 2006
2) Rocco/Suhrcke 2009 cross-section, IV approach growth = a 0 + a 1 (initial income) + a 21 (CVD mortality) + a 22 (non-cvd mortality)+ a 3 (government consumption) + a 4 (population density) + a 5 (urbanization rate) + a 6 (democracy index) + a 7 (log population) +a 8 (openness) + a 9 (openness x log population) + ε where growth = log(per-capita GDP 2000) log (percapita GDP 1970)
Mean values of several indicators in the sample of countries where CVD mortality data is available and out of the sample Means for countries Means for countries in the sample out of the sample growth 0.59 0.21 log initial 1970 8.72 7.46 log population 9.29 8.76 government expenditure 20.51 22.09 openness 58.52 67.82 civil liberties 2.57 4.72 population density 97.96 48.81 urbanization 61.79 33.84 Source: Rocco/Suhrcke 2009
CVD death rates (working age) and per capita GDP growth 1970-2000 (1) (2) (3) VARIABLES OLS IV (ME + GEO) IV (ME + GEO + CLIM) log initial income -0.348*** -0.352*** -0.349*** log population government consumption openness 0.0714-0.00421 0.00807 0.0740-0.00640 0.00972 0.0756-0.00624 0.00975 Impact of CVD death rate (working age) on per-capita GDP growth 1970-2000 Specification a 21 Std. Err. P>z civil liberties -0.0867*** -0.117** -0.118** population density urbanization log population X openness CVD mortality total mortality 0.000705-0.000156-0.000626 0.000921-0.00226*** 0.000702 0.00347-0.000698-0.00586-0.00112 0.000723 0.00381-0.000697-0.00594-0.00103 OLS -0.0013 0.0011 0.225 IV (ME + GEO) -0.0070 0.0030 0.022 IV (ME + GEO + CLIM) -0.0070 0.0030 0.020 Constant 3.957*** 4.079*** 3.979*** Observations 119 119 119 R-squared 0.442 0.193 0.187 F CVD MR 8.145 10.45 F total MR 11.56 7.631 Hansen J 0.590 0.615 Source: Rocco/Suhrcke 2009
Projected per capita income path, conditional on different CVD scenarios Source: Rocco/Suhrcke 2009
Net present value of alternative CVD mortality reduction strategies per capita real 2030 under status quo per capita real 2030 under scenario1 Net present value of additional growth under scenario 1 % of 2000 per-capita real per capita real 2030 under scenario2 Net present value of additional growth under scenario 2 % of 2000 per-capita real Argentina 19845 20402 4841 43% 21228 12032 106% China 7092 7308 1871 47% 7627 4651 116% Czech Rep. 21259 22755 13021 96% 24979 32360 238% India 5395 5661 2315 87% 6056 5754 218% Tanzania 1450 1477 230 28% 1516 572 70% Ukraine* 6454 7154 6093 122% 8155 14797 296% Source: Rocco/Suhrcke 2009
Conclusions
n Two major issues not covered: welfare costs ( true( economic costs ), Public-policy policy-relevant costs n Economic impact estimate depends on what concept of economic impact and how it is measured n Overall limited existing research on economics of CVD in LMICs
n What evidence exists suggests important microeconomic impact; limited and mixed macro evidence n Data gaps as key bottleneck n What size of the disease burden is avoidable and how?
Background material n Suhrcke et al (2006). Chronic disease: an economic perspective. Oxford Health Alliance: London. n Suhrcke et al. (2008). The economic costs of ill health in the European region. WHO Regional Office for Europe. n Suhrcke/Rocco (2008). Assessing the microeconomic consequences of adult ill health: a review of the evidence. Mimeo. n Suhrcke et al (2007). Health: a vital investment for economic development in Eastern Europe and Central Asia. WHO European Observatory for Health Systems. n Rocco/Suhrcke (2009): The macroeconomic costs of CVD: evidence from six low and middle income countries. Mimeo, IC Health. n Other ongoing work on China, South Asia, Middle East & North Africa.