Health Policy in Ageing Populations: Economic Modeling of Chronic Disease Policy Options in Australia

With ageing populations, increasing life expectancies and more sedentary lifestyles, today non-communicable chronic diseases are major disabling conditions for people in both developed and developing countries. In Australia chronic diseases, such as heart disease, diabetes, cancer, mental disorders and arthritis, affect around 80% of older persons; are the main causes of disability and premature death; and account for around 70% of total health expenditures. Health expenditures associated with ageing and chronic disease continue to be of concern worldwide to both patients and governments.

In general Australia compares well with other countries in terms of: population ageing; health expenditures versus health outcomes; and the extent to which chronic diseases impact on life expectancies. Its expenditures are close to the average of the OECD’s 34 member countries, and its health outcomes – indicated by life expectancies - are among the best in this country-group. In the past decade, while the value of Australia’s total health expenditure increased, it remained virtually unchanged as a per cent of GDP. So far, Australia’s heath system has delivered top health outcomes at expenditures close to the OECD average. Thus, compared with other developed countries, Australia’s health expenditures represent ‘value for money’ in terms of health outcomes.

However this may not continue in future. For example, rapid rises in child and adult obesity – and the related chronic diseases – are now major health issues which federal and State governments find difficult to constrain. Recent developments - such as breakthroughs in medical technology, continued upward costs of health care, and a general preference for more sedentary lifestyles – suggest that, without major policy and patient-level changes, Australia may not be able to maintain its high OECD ranking in the health field.

In response to above GDP increases in health costs, the ageing of the population, and concerns about the long term sustainability of Australia’s health system, Australian government has announced major health policy reforms. At the federal level some are still at the ‘announcement’ stage, others have already been legislated, and some have been partially implemented. This Chapter documents current situation regarding the already announced health policy reforms.

This chapter starts with the initial proposal for building the HealthAgeingMod model-system. It then follows through the major steps involved in carrying out the initial literature searches; research on how to implement the novel features proposed; assessment of the best way to treat each element of the system; examination of the data and methods to be used; and the building and validation of a complex individual-based and nationally representative chronic disease model-system. It also documents the difficulties and modeling pitfalls encountered and describes how the project evolved from the initial detailed plans, through the building of a prototype, and the final, validated version of HealthAgeingMod.

The outcome is a policy relevant tool in which chronic disease progression models are linked to a population-wide microsimulation projection model. The system accounts for individuals’ demographic, socio-economic and health characteristics, comorbidities, health expenditures, quality of life, work prospects. Its outputs are estimates of the costs and benefits of simulated policy interventions. HealthAgeingMod is a validated personlevel system able to simultaneously account for diabetes and cardiovascular disease (CVD), with the possibility of extensions to other major chronic diseases.

This Chapter describes in detail the elements of HealthAgeingMod: the data sources and methods used, the assumptions underlying the model-system, the variables that needed to be modified, or imputed; the demographic and health characteristics of the Base-year dataset; the method of projecting into the future; and, for the diabetes and CVD sub-models, the data sources used and the incidence equations developed.

To be credible, a model such as HealthAgeingMod needs to be validated against external benchmarks, its limitations need to be identified, and the extent of its generalisability needs to be explained. To the extent possible, credibility should be widely established among, for example, potential users, researchers, medical practitioners, policy developers and health administrators. This Chapter summarises work carried out to establish credibility, in addition to the work that had been reported in a peer reviewed Journal [37].

In this chapter two relatively simple applications of HealthAgeingMod illustrate the type of findings that can be expected from the model-system. The first addresses the question of what the benefits and costs might be of Australia’s obese adults reducing their weight by 10%, through themselves adopting healthier lifestyles. The second is about the likely health and health expenditure impact of the projected ageing of Australia’s population. The aim is to provide readers with an initial idea of the type of issues the model-system can handle, as well as the routine outputs it can produce. A much more complex and policy relevant application is presented in Chapter 8.

In this chapter the policy relevant scenario simulated with HealthAgeingMod concerns the health benefits and costs of an integrated diabetes and cardiovascular disease screening, prevention and management intervention among 40-74 year old Australians. The Scenario was proposed by a group of Australian health policy developers at a time of studies reporting that a significant proportion of Australians were missing out on prevention and recommended treatment. The Scenario reflects Australian practices, costs and medical guidelines.

The screening tests for CVD, diabetes and their risk factors, and high-risk status or diagnosis, is followed by several possible medically identified treatment and prevention paths. Within HealthAgeingMod both single and combined diseases are identified, and account is taken of the non-linear nature of comorbidities.

This policy relevant application compares, over the 2005-2010 period, the outcomes of the scenario simulation with that of the Baseline simulation in terms of extra life years lived and health costs saved. We found that implementing the scenario would result in a net cost to government of around AUD 7,000 per Quality Adjusted Life Years gained. Sensitivity tests indicated a range from AUD 3,000 to AUD 14,000.

Because this range is within what is usually considered to be cost-effective in Australia, an intervention of this kind is worth consideration for public funding.

Health care is a crucial policy issue worldwide and is forecast to continue to be so in future. Why do health care systems in many countries seem to be continuously undergoing reform planning and implementation? Why is the sustainability of Australia’s health system of major concern, and what lessons can be learnt from recent health reform initiatives? In this Chapter we provide an overview of the major health policy areas of concern in the 21st century, including population ageing, health expenditure pressures and emerging major health threats likely to impact on chronic disease prevention and treatment. The focus will be on issues that can be resolved or influenced by individuals, governments, or the medical profession.

In this Chapter we discuss some of the modeling improvements emerging from PART II that could possibly be addressed in the near-future. Next, we note that although for some health threats – e.g., diabetes, antimicrobial resistance, system deficiencies – the best ‘value for money’ solutions have already been identified, so far funds for implementation had not been made available. We investigate why this may have occurred and suggest possible future alternative researcher approaches. Next we ask whether longer term modeling improvements are also needed to address the emerging chronic disease related health threats (Chapter 9). Finally, in view of the rapid changes in access to knowledge via the internet, and the need by decision makers and health professionals for more rapid and more readily accessible ‘evidence-based’ analyses, we ask whether some longer term modeling improvements could lead to webbased versions of the outputs produced by current models.

Overall, it seems uncertain that Australia can in future maintain its top health status internationally. However, we conclude that the ability to identify ‘best value for money’ in health investments will become even more important in future than it had been in previous decades.

This Chapter draws together the findings of PARTs I, II and III, in terms of the usefulness of the decision-making tools discussed in this book to the goal of maintaining Australia’s current top health status internationally as its population ages.