Economic Burden of Illness in Canada, 1998

Policy Research Division
Strategic Policy Directorate
Public Health Agency of Canada

Economic Burden of Illness in Canada, 1998
102 Pages - 2,384 KB in PDF Format

Economic Burden of Illness in Canada, 1998
Errata (as of January 17, 2003)
1 Page - 218 KB in PDF Format

Table of Contents

Introduction

Health Canada first published the Economic Burden of Illness in Canada (EBIC) in 1991 and again in 1997. The overwhelming response to these original reports and continued requests for more detailed cost-of-illness information indicated the need for an up-to-date revision that would provide even more detail than the first two reports.

The primary goal of this report is to supply objective and comparable information on the magnitude of the economic burden or cost of illness and injury in Canada based on standard reporting units and methods. These estimates, along with other health indicators, provide an important piece of the evidence required for health policy and planning.

The Economic Burden of Illness in Canada, 1998 (EBIC 1998) and a complementary web-based application (EBIC On-line) offer a comprehensive overview of how the principal direct and indirect costs of illness were distributed in Canada. The methods used in this report allow us to determine the “opportunity cost”¹ to society of illness or injury by translating illness, injury, and premature death into direct and indirect costs.^(1-3) In others words, these estimates are an approximation of what society could gain if the illnesses and injuries associated with these costs were estimated.

Direct costs are defined as the value of goods and services for which payment was made and resources used in treatment, care, and rehabilitation related to illness or injury.^(1,4-6) The five direct cost components in this report are organized and measured in terms of hospital care expenditures; drug expenditures; physician care expenditures; expenditures for care in other institutions; and additional direct health expenditures (including other professionals, capital, public health, prepayment administration, health research, etc.). Other direct costs borne by patients or other payers (such as costs for transportation to health providers, special diets and clothing) are not included.

Indirect costs are defined as the value of economic output lost because of illness, injury-related work disability, or premature death.^(1,3,4,6) The three indirect cost components in this report are measured in terms of the value of years of life lost due to premature death (mortality costs), and the value of activity days lost due to short-term and long-term disability (morbidity costs due to long-and short-term disability). Other indirect costs, including the value of time lost from work and leisure activities by family members or friends who care for the patient, are not included in this report.

With the exception of mortality costs, a prevalence-based approach⁽¹⁾ was used to estimate all direct and indirect costs that accrued to existing (or prevalent) cases of illness, injury, or disability in 1998.^(1,4,5,7,8) This approach makes the best use of the survey and administrative data that are available for calculating core direct and indirect costs and, in turn, for distributing these costs across primary diagnostic categories. A limitation of this approach is that the data do not always allow for an assessment of the impact of co-morbid conditions.

For mortality costs, an incidence-based human capital approach most commonly used in cost-of-illness studies was used.^(4,9) Mortality cost estimates are based on the discounted value of current and future costs of premature deaths occurring in 1998, rather than a prevalence-based approach in which estimates would be based on the 1998 dollar value of premature deaths that occurred prior to 1998. While it would have been preferable to use a prevalence-based approach for all cost components, this approach is used here for several reasons: the availability of reliable statistics, the relative simplicity of calculations compared with other methods, and consistency across studies using the same approach.^(5,10,11) The limitations of this approach, which include the possibility of over-estimating mortality costs and under-valuing psychosocial consequences,^(1,5,12) are discussed further in the mortality cost chapter and EBIC 1993.⁽¹³⁾

As noted above, direct and indirect costs are allocated to principal diagnostic categories, by sex and age group. Diagnostic categories included in this report are birth defects; blood diseases; cancer; cardiovascular diseases; digestive diseases; endocrine and related diseases; genitourinary diseases; ill-defined conditions; infectious and parasitic diseases; injuries; mental disorders; musculoskeletal diseases; nervous system and sense organ diseases; perinatal conditions; pregnancy; respiratory diseases; skin and related diseases; and well-patient care (Appendix 1). Also included are distributions of these costs by sex and the following four age groups: children (0-14 years), individuals aged 15-34 years, individuals aged 35-64 years, and seniors (65 years and over).

The Economic Burden of Illness in Canada, 1998 generally has the same layout as previous EBIC reports. It begins with a summary of results, which includes a presentation of total, direct, and indirect costs by cost component, diagnostic category, sex, age group, and province/territory. This is followed by detailed chapters on the eight direct and indirect cost components. Chapters for each cost component provide a description of the methods used and explain how data, assumptions, and methodological limitations affect the interpretation of results.2 Each chapter includes results on the total cost of illness by cost component, and most (with the exception of Expenditures for Care in Other Institutions and most of Additional Direct Health Expenditures) present total costs by diagnostic category, sex, age group, and province/territory (including a portion of health research expenditures). Several chapters (hospitals, drug expenditures, mortality, long- and short-term morbidity) also present total costs by diagnostic subcategory, sex, and age group.

Following the cost component chapters, a discussion section presents the document's strengths and challenges, an analysis of the economic burden over time and across provinces/territories, and opportunities for future work in this area. Finally, an inclusive reference list and appendices providing additional methodological details and figures can be found at the end of this document.

Building on the experience gained from the two previous versions (EBIC 1993 and EBIC 1986),^(9,13) specific innovations in EBIC 1998 include the following: the addition of many diagnostic subcategories; additional information by age, sex, and province/territory/region; inclusion of costs by diagnostic category for outpatient care in hospitals; better provincial/territorial data on physician care expenditures; better understanding of alternative payment plans for physicians; and more refined data and methods for the calculation of mortality and short- and long-term disability costs (for example: more recent and detailed cost data; estimates of lost production, which account for the proportion of unpaid labour attributable to those who are in the labour force as well as those who are not in the labour force; and disability weights calculated and assigned by diagnostic category rather than by age).

As with previous versions of this report, however, complete systematic national information on the cost of illness is not always readily available. For diagnostic subcategories in particular, differences in coding practices do not allow for standardized and comprehensive reporting. In this document, data are reported as received and concerns noted as caveats. Where data are unavailable and imputation is reasonable, this method is used and duly noted. Also, it is important to recognize that even though more detailed cost data were used for the calculation of indirect costs, these estimates are based on a certain number of assumptions that affect the resulting estimates. In order to capture the effects of these assumptions, some sensitivity analyses were used to illustrate the possible range of indirect cost estimates.

A secondary goal of the report is to identify the gaps in existing information. The challenges associated with disaggregating and synthesizing data from many data sources and 12 provincial/territorial jurisdictions highlight the need to collaboratively identify data gaps and inconsistencies, and to improve data collection and analysis in Canada.

Estimates of the cost of illness in Canada should be considered in the context of the limitations described earlier and within the specific cost component and discussion chapters. We do compare EBIC 1998 and the two previous versions (1986 and 1993) in terms of direct, indirect, and total costs (see Discussion section). In general, we must interpret these comparisons with caution, as the differences may reflect improved data sources and refinements to methods rather than actual changes in the distribution and costs of illness.

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¹ For the purpose of this report, opportunity cost is the value of opportunities forgone because of an intervention, action, or health outcome (i.e. the direct and indirect costs of illness and injury).

² Additional methodological information regarding conventions, definitions, and data sources as well as differences between this version of EBIC and EBIC 1993 are included in Appendix 2.

References

1. Rice DP, Hodgson TA, Kopstein AN (1985). The economic costs of illness: a replication and update. Care Finance Rev, 7:61-80.

2. Rice DP, Kelman S, Miller LS et al(1990). The Economic Costs of Alcohol and Drug Abuse and Mental Illness. Contract 283-87-0007 for US Department of Health and Human Services, Alcohol, Drug Abuse and Mental Health Administration, Institute for Health and Aging. San Francisco: University of California.

3. Kirschstein R (2000). Disease-specific estimates of direct and indirect costs of illness and NIH support: fiscal year 2000 update. Department of Health and Human Services, National Institute of Health, Office of the Director.

4. Hodgson TA, Meiners M (1982). Cost-of-illness methodology; a guide to current practices and procedures. Milbank Q, 60(3):429-62.

5. Hodgson TA (1983). The state of the art of cost-of-illness estimates. Advanced Health Economic Health Service Res, 4:29-64.

6. Canadian Institute for Health Information (2000). National health expenditure trends (NHEX), 1975-2000.

7. Rice DP (1999). The economic impact of schizophrenia. Journal of Clinical Psychiatry, 60(Suppl 1):4-6.

8. Hu T, Sandifer FH (1981). Synthesis of Cost of Illness Methodology. National Center for Health Services Research Contract No 233-79-3010. Washington: Public Services Laboratory, Georgetown University.

9. Wigle DT, Mao Y, Wong T, Lane R (1991). Economic burden of illness in Canada, 1986. Chronic Dis Can, 12(Suppl 3).

10. Behrens C, Henke K-D (1987). Cost of illness studies: no aid to decision making? Health Policy, 10:137-41.

11. Evans RG (1984). Strained Mercy: The Economics of Canadian Health Care. Toronto: Butterworths.

12. Chan B, Coyte P, Heick D (1996). Economic impact of cardiovascular disease in Canada. Can J Cardiol, 12:(10):1000-6.

13. Moore R, Mao Y, Zhang J, Clarke K (1997). Economic burden of illness in Canada, 1993. Ottawa: Canadian Public Health Association.

Economic Burden of Illness in Canada, 1998
102 Pages - 2,384 KB in PDF Format

Economic Burden of Illness in Canada, 1998
Errata (as of January 17, 2003)
1 Page - 218 KB in PDF Format