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The costs of chronic disease

In many developing countries, economic growth is leading to a fall in infectious diseases and abject poverty – but this growth will be undermined by increasing costs of chronic care unless action is taken.

EconomicsThe costs of chronic diseases are not confined to the direct costs of operations and drug treatments. There are also significant indirect costs, including lower economic productivity as workers become sick and disabled, premature retirement, and the costs of various coping mechanisms – selling household assets or taking children out of school to care for an ill family member. The costs of chronic disease – to individuals and families, to communities, employers and economies – are rising rapidly.

(Click here >> for more information on OxHA's work on the economics of chronic disease prevention.)

The developed world

The CDC estimate that in the United States the direct and indirect costs of smoking are more than $75 billion, and those of diabetes over $130 billion, each year. In developed countries, the rising cost of care is borne both by the public sector – displacing spending on other publicly funded projects – and the private sector, through rising insurance premiums for individuals and employers. In 2005, General Motors’ US employee health-care costs will reach $5.6 billion, and McKinsey estimates that by 2008, Fortune 500 companies’ health-care costs will be greater than their total net profits.

The developing world

The costs of chronic disease also fall heavily on less affluent societies. It is the poorest in society who are hardest hit by disability or death of a family member, especially where there is no social-security safety net – and in developing countries, chronic conditions manifest themselves at an earlier age than in the developed world, i.e. more victims are of working age. Costs of chronic disease can be crippling – where costs cannot be met by the state and employers, a greater proportion of the expense falls directly on individuals, and savings can be very rapidly eroded.

In many developing countries, the fall in infectious diseases has promoted economic growth and led to a reduction in abject poverty – but this economic growth will be undermined by increasing costs of chronic disease unless action is taken.

Reducing costs: the case for prevention

The cost of chronic diseases and their risk factors ranges from 0.02% to 5.87% of countries’ GDP worldwide. Prevention programmes reduce this cost: encouraging healthy behaviour can take the form of public policy across whole societies – such as banning smoking from public places – or can be based in communities, schools or workplaces. The CAPCoD project finalists are all examples of community-based projects, and company ‘wellness’ programmes are being put in place by  many major corporations – PepsiCo, for example, estimates that its programme is already seeing a return of $3 for each $1 spent.