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People with chronic illness or disability face catastrophic costs, experts warn


16 January 2012

Australians with a chronic illness or disability face serious levels of economic hardship, according to an article in the January issue of the Medical Journal of Australia.

Professor Stephen Leeder and Associate Lecturer Beverley Essue, both from the University of Sydney, co-authored the article with Dr Stephen Jan, senior health economist at the George Institute for Global Health.

They write that the economic burden results from the out-of-pocket costs of treatment, the costs of self-management such as home modifications and transport, and the loss of income for patients and carers.

The authors wrote that poverty and poor health are part of a cycle, such that poor health leads to poverty, which then leads to poor health.

In Australia, out-of-pocket costs of treatment are high compared with other developed countries. A survey of 11 high-income countries found that Australia's out-of-pocket medical costs were the third highest, with 21 percent of respondents having spent more than US$1000 on treatment in the previous year.

Additionally, of 28,665 Australians who became bankrupt in 2009, 11 percent cited ill health or absence of health insurance as the primary reason.

"The available evidence indicates that the out-of-pocket costs of treatment and self-management and loss of income from chronic illness and disability are associated with economic hardship, catastrophic health care spending and non-compliance with medical treatment", the authors wrote.

The proposed National Disability Insurance Scheme is a significant reform that may help address this problem in the long term. In the short term, targeted interventions such as income support and subsidies can provide some relief to those at risk of illness- and disability-related economic hardship.

"Australian policy makers measure the economic effects of long-term illness and disability almost exclusively in terms of budget spending, which gives little indication of direct impact on people," Dr Jan said.

"Without policy reform and tightly-focused support measures, the economic hardship on the most vulnerable in our society will continue to fall through the cracks," Dr Jan said.

Dr Jan said financial stress was most keenly felt by retirees and people working in low-paying jobs, and the prospect of losing income support and concessions can create a welfare trap.

"There is emerging evidence that serious levels of economic hardship associated with chronic illness and disability affect 'health behaviour' and creates a cycle where poor health increases financial stress, which exacerbates poor health," he said.

"If you're struggling to pay rent or make mortgage repayments, you may be more likely to stop using medications or see your doctor less regularly, which may make your condition worse and leave you even more economically vulnerable."

The Medical Journal of Australia is a publication of the Australian Medical Association. A senior health economist today called for a mix of policy reform and targeted support to relieve the burden of 'catastrophic' health care spending incurred by chronically-ill and disabled Australians and their families.

'Falling through the cracks: the hidden economic burden of chronic illness and disability on Australian households', by Dr Stephen Jan, Beverley Essue and Professor Stephen Leeder, Director of the Menzies Centre for Health Policy, University of Sydney, was published today in the Medical Journal of Australia.


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Media enquiries: Kath Kenny, 0478 303 173, 02 9351 1584, kath.kenny@sydney.edu.au