Could Obesity Cost Canadians $95 Billion in 2008?Friday, August 22, 2008
Australia and Canada are both large, highly industrialized and urbanized countries with rather high standards of living and relatively small populations (20 Million in Australia; 33 Million in Canada).
Interestingly, so are their rates of obesity: around 16-18% in adults, around 8-10% in kids.
So what is obesity costing these countries? I do not have the latest figures for Canada, but a report released this week by Access Economics, Australia’s premier economic consulting firm, estimates the total costs of obesity in Australia for 2008 at a staggering $58.2 Billion.
Assuming that the financial burden of obesity in Australia is probably not that different from the cost of obesity in Canada – simply based on the population size, this would translate to around $95 Billion in Canada.
Obviously, there may be some important differences in the health system and other relevant factors between Australia and Canada, so I am wiling to give or take a few Billion here or there.
No matter what, this number is staggeringly different from any estimate of obesity costs that I have heard for Canada. The most common number bounced around is about $3.5 Billion, which comes from an estimate of direct and indirect health care costs of obesity in Canada published in 1997.
While everyone appreciates that that number, given today’s obesity rates is a ridiculously low estimate, the numbers for Canada extrapolated from the Australian data for 2008 are more than 20-fold higher. This is both due to the growth in obesity in the last decade, but also due to the different and expanded methodology used by the Australian economists.
So what numbers did Access Economics come up with for obesity costs in Australia?
– The financial cost of obesity in 2008 was estimated as $8.283 billion. Of this, productivity costs were estimated as $3.6 billion (44%), health system costs were $2.0 billion (24%) and carer costs were $1.9 billion (23%).
– DWL from transfers (taxation revenue forgone, welfare and other government payments) were $727 million (9%) and other indirect costs were $76 million (1%).
– The net cost of lost wellbeing (the dollar value of the burden of disease, netting out financial costs borne by individuals) was valued at a further $49.9 billion, bringing the total cost of obesity in 2008 to $58.2 billion.
– Of the financial costs, 29.4% are borne by individuals, 19.2% by family and friends, 34.3% by Federal Government ($2.8 billion per annum), 5.1% by State Governments, less than 0.1% by employers and 11.8% by the rest of society. However, if the cost of lost wellbeing is included, the individual’s share rises markedly to 90.0% of the total.
I am no financial genius, but $95 Billion sounds like an awful lot of money. Unless the Access Economics fellows are totally off the mark or Canada is substantially more different from Australia than I suspect, this obesity problem is way more expensive than most Canadians (including the Government?) suspect.
As I have blogged before – the real cost of obesity is not in health care – it is in the loss of wellbeing and productivity of our current and future workforce.