The economic impact of diabetes through lost labour force participation on individuals and government: evidence from a microsimulation model

Schofield, Deborah, Cunich, Michelle M., Shrestha, Rupendra N., Passey, Megan E., Veernman, Lennert, Callander, Emily J., Kelly, Simon J., and Tanton, Robert (2014) The economic impact of diabetes through lost labour force participation on individuals and government: evidence from a microsimulation model. BMC Public Health, 14. 220. pp. 1-8.

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Abstract

Background

Diabetes is a costly and debilitating disease. The aim of the study is to quantify the individual and national costs of diabetes resulting from people retiring early because of this disease, including lost income; lost income taxation, increased government welfare payments; and reductions in GDP.

Methods

A purpose-built microsimulation model, Health&WealthMOD2030, was used to estimate the economic costs of early retirement due to diabetes. The study included all Australians aged 45–64 years in 2010 based on Australian Bureau of Statistics' Surveys of Disability, Ageing and Carers. A multiple regression model was used to identify significant differences in income, government welfare payments and taxation liabilities between people out of the labour force because of their diabetes and those employed full time with no chronic health condition.

Results

The median annual income of people who retired early because of their diabetes was significantly lower (AU$11 784) compared to those employed full time without a chronic health condition who received almost five times more income. At the national level, there was a loss of AU$384 million in individual earnings by those with diabetes, an extra AU$4 million spent in government welfare payments, a loss of AU$56 million in taxation revenue, and a loss of AU$1 324 million in GDP in 2010: all attributable to diabetes through its impact on labour force participation. Sensitivity analysis was used to assess the impact of different diabetes prevalence rates on estimates of lost income, lost income taxation, increased government welfare payments, and reduced GDP.

Conclusions

Individuals bear the cost of lost income in addition to the burden of the disease. The Government endures the impacts of lost productivity and income taxation revenue, as well as spending more in welfare payments. These national costs are in addition to the Government's direct healthcare costs.

Item ID: 41187
Item Type: Article (Research - C1)
ISSN: 1471-2458
Keywords: diabetes; labour force particpation; income; tax; welfare payments
Additional Information:

© 2014 Schofield et al.; licensee BioMed Central Ltd. This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited.

Funders: National Health and Medical Research Council (NHMRC), Australian Research Council (ARC), Pfizer Australia
Projects and Grants: NHMRC APP1052742, ARC grant LP100100158
Date Deposited: 11 Nov 2015 00:12
FoR Codes: 14 ECONOMICS > 1402 Applied Economics > 140208 Health Economics @ 100%
SEO Codes: 91 ECONOMIC FRAMEWORK > 9102 Microeconomics > 910209 Preference, Behaviour and Welfare @ 50%
92 HEALTH > 9204 Public Health (excl. Specific Population Health) > 920408 Health Status (e.g. Indicators of Well-Being) @ 50%
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