THE COSTS OF HEARING IMPAIRMENT IN AUSTRALIA
In 2005, the real financial cost of hearing loss [in
Australia] was 11.75 billion dollars or 1.4% of [Gross Domestic Product].
Access Economics, Listen Hear! The economic impact and cost of hearing
loss in Australia (February 2006), p. 5.
This chapter will examine the costs of hearing loss to Australia. These
include the costs of providing government services, and lost productivity due
to hearing loss.
The financial costs of hearing loss to individuals, such as clinical
costs and the purchase and maintenance of hearing devices, are discussed below
in chapter four.
The total cost of hearing loss for 2005, as calculated by Access
Economics, was $11.75 billion. This figure is broken down at Table 3.1. Line
items are explained in further detail in the following sections of this report.
Table 3.1: Hearing Loss, Financial
Cost Summary, 2005 ($m)
Total health costs plus
hearing aids and implants (direct costs)
Lost earnings (people with
a hearing loss)
Tax foregone (people with a
Value of carers
Education, support and aids
Sub-total, indirect costs
Total financial costs
The committee notes that the greatest cost to Australia of hearing loss
is lost earnings of hearing impaired people, at 56.8 per cent of the total. The
causes of lost productivity due to hearing loss are examined in chapter four of
Access Economics noted that this cost translates to an annual cost of
$578 for every Australian, or $3,314 for each person with hearing loss.
According to Deafness Forum Australia, this figure can be contrasted with
government spending on hearing loss of $62 per person with hearing loss.
The Hearing Care Industry Association (HCIA) claimed that this compares with
$10,904 per person with cancer and $42,064 per person with mental illness.
Hearing loss accounts for only 0.35% of total recurrent health expenditure in
The Department of Health and Ageing (DOHA) gave evidence that hearing
services represents 0.6 per cent of its 2009-10 health budget of $55.3 billion.
DOHA noted that hearing health expenditure growth is consistent with overall
health expenditure growth. Health cost growth is largely driven by an ageing
population, and is tipped to be seven per cent of Gross Domestic Product by
2046-47 (up three points from four per cent in 2006-07).
Direct costs of hearing loss
Access Economics calculated the direct costs of hearing health in 2005
at $674 million (excluding transfer payments).
Direct costs include health system costs and the costs of hearing aids and
implants, and represent both public and private expenditure.
Health system costs
The direct cost of hearing health to health systems in 2005 was $247.5
million. Health system costs include the following elements:
Allied health (including audiology and speech therapy);
Outpatient expenditures (ear examinations, advanced assessment of ear
disease, and minor procedures such as ear wax removal);
Medical specialist care;
Inpatient costs (corrective surgeries, clinical costs of implant
Aged care homes; and
Diagnostic imaging and pathology.
Table 3.2 shows the cost of each of these elements of health system expenditure
on hearing loss from highest to lowest.
Table 3.2: Hearing Loss, Cost to
Health Systems, 2005
Health system cost item
Cost in 2005
Proportion of total cost (%)
Medical specialist care
Aged care homes
Diagnostic imaging and
Hearing aids and cochlear implants
The cost to health systems of providing hearing aids and cochlear
implants in 2005 was $376.7 million. This represented the largest single cost
of hearing health to health systems.
Hearing aids and related
Access Economics has calculated the cost to the Office of Hearing
Services (OHS) of providing hearing services as $243 million. These services
include more than just the provision of hearing aids. They include hearing
tests and audiological interventions.
As noted in Listen Hear! the majority of vouchers provided under the voucher
program are used for hearing aids (in 2004-05, of 192,149 vouchers issued
161,849, or 84.2 per cent, were used for hearing aids).
DOHA noted the rise in real costs (i.e. adjusted for inflation) of OHS
programs over the past decade. The voucher program (which provides hearing
services and devices to eligible recipients via a voucher – see chapter five
for more details) costs have risen by 75 per cent since 2000-01 (from $154.1 million
to $268.9 million in 2008-09), and the Community Service Obligation (CSO)
program costs rose by 23 per cent over the same period (from $36.2 million to
The annual cost of cochlear implant technology in 2005 was estimated at
This figure does not include the clinical cost of the implants, which was
captured under recurrent health costs above. This cost will grow as a
proportion of hearing health costs as the technology improves, and the
eligibility conditions for implantees widens.
The Sydney Cochlear Implant Centre estimated that whilst there are 6,000
implantees today, as many as 84,000 more people might benefit from a cochlear
Indirect costs of hearing loss
As noted in Listen Hear!:
Hearing loss can have an impact on a person’s capacity to
work. If employment rates are lower for people with hearing loss, this loss in
productivity represents a real cost to the economy.
Lost earnings due to hearing loss has been inferred from employment data
about hearing impaired people, which was controlled for other variables such as
gender, age and other disability.
It has also been shown that people with a hearing impairment are less likely to
earn a high income than people with normal hearing.
Access Economics estimated the cost of lost earnings due to hearing loss in
2005 as $6.67 billion.
There are two aspects to the impact of hearing loss on taxation revenue
for the government. Lower workforce participation, absenteeism and premature
death mean that the people affected are contributing less income tax revenue.
Lower income levels among the hearing impaired mean lower capacity to consume
goods and services than people with normal hearing. Reduced consumption of
goods and services means reduced consumption tax contributions.
Access Economics calculated that the cost of tax foregone in 2005, based
on the premises set out above, was $2 billion. Of this, $1.33 billion (67 per
cent) represents lost income tax revenue and $0.67 billion (33 per cent) is
lost consumption tax.
Value of carers
The cost of carers in this context represents the financial impact of
'informal care'. Listen Hear! provides a description of what this care
may look like:
Informal care, in a hearing loss context, can encompass
repeating what has just been said for a person, buying a train ticket for them,
making telephone calls, taking notes in a meeting at work or in a classroom, or
assisting with communication at a medical appointment. Such care is usually
provided by a family member or close friend. By example, the reader may recall
the scene in Four Weddings and a Funeral where the lead [character] Charles
(Hugh Grant) was required to interpret in sign language for his brother at a
For the purpose of its report, Access Economics chose to estimate the
cost of informal care for people with hearing loss by placing a value on the
cost of buying a similar amount and type of services from the formal care
Whilst acknowledging that their methodology may underestimate the 'true
cost' of informal care for people with a hearing loss, Access Economics
estimated the cost of informal care in 2005 at $3.17 billion.
Welfare payments are transfer costs, as opposed to 'real' costs.
The cost of welfare payments from hearing loss was based on the number
of people in receipt of welfare payments who are thought to be not working due
to hearing loss. Access Economics estimated the cost of welfare payments due to
hearing loss in 2005 at $1,328.3 million.
Education support and aids
There are several cost components to this item, which are explained
below. In total they were estimated to cost $191 million in 2005.
Early intervention services
Early intervention describes the hearing impairment services available
for children less than five years of age. These include newborn hearing
screening, early intervention programs for children diagnosed with hearing
loss, and pre-school preparation and education programs.
Access Economics estimated the total cost of these services in 2005 at
$20.8 million. The committee notes that universal newborn hearing screening is
being implemented during 2010, and therefore early intervention costs are
likely to increase as a result of increased diagnoses. This issue is discussed in
Primary and secondary education
The services provided for education can include a range of things, such
as additional teaching and teacher aid staff, interpreters, and the cost of
fitting out classrooms as well as other specialised teaching and support
Drawing on international economic models, and in the absence of reliable
data about hearing impaired students in Australian schools, Access Economics
estimated that the 'extra' cost of educating children with hearing loss in 2005
was $117.2 million.
Post school education services
People with a hearing loss undertaking study after compulsory schooling
also often require additional support. This often takes the form of note-takers
or interpreters who can assist the person with a hearing loss access lectures
and other oral delivery methods.
Access Economics estimated the cost of supporting tertiary students with
hearing loss in 2005 at $2.6 million.
Other support services
There are a range of support services available to people with a hearing
impairment in Australia, many of which are discussed in more detail in chapter five.
These services can include interpreter services, captioning, and the services
provided by support and volunteer organisations.
Access Economics estimated the value of these services in 2005 at
The cost of communication devices in this section excludes hearing aids
and cochlear implants, which have been discussed previously. Access Economics
has considered a wide range of communication devices and their costs. Devices
allowed for here include fax machines, specialised phones, telephone relay
services and even pads and pencils.
Access Economics estimated the cost of these devices in 2005 at $13.8
'Deadweight losses' is the last cost item at Table 3.1. A deadweight
loss in this context is the cost of the 'taxation needed to finance the welfare
payments' described above. The deadweight losses in 2005 generated by hearing
loss in Australia was estimated at $1.048 billion.
Other issues of cost
Whilst the Access Economics report provided the most comprehensive
summary of the economic costs of hearing loss in Australia available to the
committee, submissions raised other issues of relevance to cost.
As was noted in chapter two, each year there are around 3,400 successful
workers' compensation claims for occupational noise induced hearing loss
(ONIHL) in Australia. The direct cost of these claims is $41 million in
payments each year, though as was also noted earlier this figure is likely to
The ONIHL issues confronting farm workers were also noted in chapter
two. Based on rural populations and the prevalence of hearing loss among farm
workers, Farmsafe Australia provided the committee with a rough estimate of the
costs of hearing health in rural Australia at $517 million per year.
Deafness Forum of Australia noted in their submission that early
diagnosis, intervention and management of hearing impairment is 'highly cost
effective', as it reduces the need for remedial programs later in life.
New South Wales Health also noted this issue:
Given the predicted increase in hearing loss incidence, the
real financial cost of hearing loss is set to grow. The best protection for
individuals, communities and the economy is to provide timely, appropriate
services and management of hearing losses at the earliest opportunity.
Access Economics found that although children up to the age of 14 years
represent less than one per cent of all people with a hearing loss, 27 per cent
of health expenditure is directed at this age group.
As noted in chapter two, and again in chapter eight with particular
regard to Indigenous people, otitis media is a common condition among children.
With the exception of Indigenous children, as discussed in chapter eight,
otitis media is usually self-limiting, and does not cause permanent damage.
Nevertheless there are still costs associated with treating and managing the
condition, including General Practitioner (GP) consultations and
pharmaceuticals. These costs were estimated by one study to be in the range of
$100 million to $400 million in 2008.
The economic cost of hearing health to Australia is high. In future
years, as our population ages, costs will become higher still.
Many submitters and witnesses discussed the non-financial costs of
hearing loss to Australia. The committee has addressed these concerns
separately in other chapters of this report, particularly in chapter four.
The committee is pleased that Access Economics assigned an economic
value to the role of carers in supporting people with hearing loss. The
committee agrees that the estimate is probably low, for the reasons that Access
Economics noted, however to recognise the value of volunteer and family support
is very important in a field rich with the contributions of volunteers.
The cost to Australia of lost productivity through hearing loss is of
great concern to the committee. This is the largest real cost of hearing loss.
The committee is convinced by the evidence that early intervention and
habilitation of people with a hearing loss will pay society back in the long
term with higher workforce participation and the associated spin-off economic
The committee also believes that all governments should make every
effort to attract, support and retain people with a hearing loss in the
workforce, and has made recommendations which address this in chapter four of
The committee notes the relatively low expenditure by governments on
hearing health compared to other areas of health. The committee believes that
this relatively low expenditure is reflected in the nature and tone of many
submissions to this inquiry around lack of access to hearing health support by
a large section of the Australian community. The committee has made
recommendations in chapter five of this report to expand the eligibility criteria
for Office of Hearing Services support, which may increase the per person
expenditure levels in future years.
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