November 12, 2018

November 12, 2018 | Risk Pulse

The Cost of Care Part 1 of 3 – The Cost of Cancer

In analysing common methodologies used across the life insurance advice sector, we were able to identify a missing link that could help advice be more tailored and personalised. The Cost of Care whitepaper is an industry first, bringing together detailed research across the broad spectrum of injury and disease. Across three articles, we will delve into three of the biggest cost burdens facing Australians today – Cancer, Heart and Artery and Mental Health.

The cost of care whitepaper can be downloaded by visiting


Australia – as the saying goes – is a ‘lucky country’. Our standard of living, climate, and health care and social security systems all stand up well to international comparisons. But there is a downside, in the false sense of security that Australians live with in terms of their health, and their capacity to cope financially, in the event of ill health.

The growing cost of healthcare

Ongoing advancements in the diagnosis and treatment of disease have seen life expectancy continue to increase. As we see more people live with – rather than die from – serious health conditions, the cost burden on our healthcare system grows.

In 2015/16 total health expenditure in Australia was $170.4 billion1. While the state and federal government pick up the lion’s share of this burden, individual Australians – and their families and carers – still accounted for around $30 billion of this annual cost2. Interestingly, this is nearly twice the amount funded by private health insurers.

This sum relates to direct expenditure only; it does not account for any indirect costs, such as foregone income by the individual and/or their caregivers.

The out of pocket burden

While Medicare is universal, and can cover hospital, medical and pharmaceutical benefits, more than 11 million Australians choose to ‘supplement’ their healthcare funding with private hospital cover2. Despite this, individuals are often left with a ‘gap’ between the amount covered and the total cost of the medical services.

This gap can arise for several reasons, including where service providers choose to charge more than the ‘notional fee’ for a service, as calculated by health authorities. This gap translates to an out-of-pocket cost, borne by the individual; the quantum of these costs can create a barrier to individuals seeking suitable treatment for their conditions.

An Australian study investigating the effects of healthcare costs on individuals found that 14% of adults didn’t receive the recommended care due to costs; for those living with chronic health conditions, the proportion was higher, at 24%3.

The high cost of cancer

Cancer – it’s an insidious word that strikes a chill in the heart. It’s never associated with good news, despite the improved prognosis now associated with several types of cancer.

Cancer contributes to 19% of the total disease burden in Australia and has a significant social and economic impact on individuals, families and the community. In 2018, it is expected that 138,321 Australians will be diagnosed with cancer, with the most commonly diagnosed cancers being prostate, breast, bowel and melanoma.

One in every three Australian men and one in every four Australian women will be diagnosed with cancer by the age of 75 years.

  • The chance of developing prostate cancer is one in five, with up to 40% of those diagnosed experiencing a recurrence
  • For breast cancer, there is a one in eight chance and recurrence rates range from 3-23%
  • The likelihood an individual will get bowel cancer in their lifetime is one in 13; up to 50% of those will experience recurrence within 2-3 years following their initial diagnosis
  • With the second highest incidence rates in the world, it is estimated that Australians have a one in 16 chance of developing melanoma cancer and approximately 11% will experience recurrence of the disease 25 years after initial treatment.

Although healthcare in Australia is largely publicly funded, out-of-pocket costs associated with cancer diagnosis, treatment and survival can place a huge burden on sufferers and their families. Figure one details the expected average lifetime costs for the 10 most prevalent cancers in Australia.

Figure one: Average lifetime costs by cancer for individuals aged 15 years and older

Cancer type Average lifetime cost
Prostate cancer $36,800
Breast cancer $36,400
Bowel cancer $51,460
Melanoma $20,360
Lung cancer $74,600
Non-Hodgkin lymphoma $87,500
Head, neck & thyroid cancer $95,460
Kidney cancer $63,220
Uterine cancer $46,030


Expert’s view – Dr John Cummins, MBBS, MPH(USA), FRACP

Deaths from cancer account for approximately 1 in 3 adult deaths. As a clinician, common cancers such as melanoma, breast and colon cancer are all too frequent diagnoses. Many cancer deaths and even diagnoses are preventable with healthy lifestyle choices and cost-effective screening.

Survival is increasing, and the medical profession is further understanding who to treat and how to personalise the treatment to cause minimal damage to healthy tissue and maximise chances of survival. So, whereas in the 1970s the average survival post cancer diagnosis was approximately 12 months, current survival rates are around 6 to 10 years and increasing.

However, such interventions come at a cost.

Out of pocket costs for surgery can run into the tens of thousands of dollars and radiotherapy can also be expensive.

Annual PBS expenditure on anticancer drugs rose from $65 million in 1999–2000 to $466 million in 2011–2012. The average price paid by the PBS per anticancer drug prescription, adjusted for inflation, increased 133% from $337 to $786. Some have argued that the price of new anticancer drugs is increasing rapidly because of the increasing cost of drug development, with estimates ranging from $500 million to $2 billion per new drug approved.

Patients wanting to use new anticancer drugs that are not reimbursed currently face bills of about $5000 per month. Physicians will increasingly find themselves in the difficult position of having to discuss with patients whether the financial toxicity of these new drugs is warranted by their benefits.

Approximately one in three Australians with cancer perceive the financial burden of prescribed medicines for cancer treatment or recovery to be moderate, heavy or extreme[1]. Although healthcare in Australia is largely publicly funded, there are still significant out-of-pocket costs associated with cancer diagnosis, treatment and survival. These can include:

  • GP and specialist gap payments
  • Scans or tests outside of the public system
  • Over the counter medications for pain relief and other purposes
  • Complementary medicines or therapies
  • Medical devices
  • Travel
  • Accommodation
  • Personal care (e.g. managing ulcers during radiotherapy).

The average lifetime cost of cancer for individuals aged 15-64 is $126,280. People who live outside major cities have 17 times the odds of reporting locational or financial barriers to care compared to those living in metropolitan areas4.

The financial burden of cancer extends beyond the patient, with 72% of cancer carers reporting a negative financial impact of caring and more than half of carers who work full time need to take leave or reduce working hours4.

The cost of prevalent cancers

Prostate, breast and bowel are the most prevalent cancers in Australia. Figure two provides a snapshot of the incidence and average lifetime costs of these cancers.

Figure two: Snapshot of Australia’s most prevalent cancers

Estimated number of new cases 2018 17,729 or 48 new cases each day5 18,087 or 49 new cases each day6 17,003 or 46 new cases each day7 - 9,294 men - 7,709 women
Five-year survival rate 95%5 91%6 69%7
Estimated number of deaths 2018 3,500 or 9 deaths per day5 3,128 or 8 deaths per day6 4,129 or 11 deaths per day7
Likelihood 1 in 5 chance by age 855 1 in 8 chance by age 856 1 in 13 chance by age 85 - 1 in 11 men - 1 in 15 women
Recurrence Up to 40%8 Women who have lumpectomy plus radiation therapy -
3-15% within 10 years Women who have a mastectomy without radiation therapy - approx. 23% within 5 years9
30-50% of people will experience recurrence within 2-3 years of initial diagnosis10
Most likely to experience Men aged 35-695 Women aged 40-6911 Individuals over 50 years of age
Average lifetime cost $36,80012 $36,04013 $51,46012

The cost burden of prostate cancer

One if five men will develop prostate cancer by age 85. Results from an Australian study, in which 289 men with prostate cancer reported the cost of their treatment revealed:14

  • The average out-of-pocket cost for prostate cancer treatment in newly diagnosed patients was $11,077 in the first year and ranged from $250 to $30,000
  • Spending was largely on specialist fees, hospital services, medical equipment and supplies and medicines
  • One in four men stopped working as a result of their diagnosis and out of those who retired, most had done so 4-5 years earlier than planned.

In all, 70% of men diagnosed with prostate cancer report spending more on cancer treatment than they expected.

The cost burden of breast cancer

Typical out-of-pocket costs incurred in the first five years following a diagnosis of breast cancer total $4,809, with most of these costs incurred during the first 12 to 24 months after diagnosis9.

Out-of-pocket costs are highly variable, ranging anywhere from $1,510 to $17,200; these costs rise with increased disease severity and age. The median hours worked per week in paid employment across the household decreases by about 50% during breast cancer treatment.

Figure three: Major contributors to out-of-pocket costs for breast cancer

Breast reconstructive surgery $2,957-$9,472
Radiotherapy $1,751-$2,101
Pathology test $3,500-$4,250
Genetic tests $774-$1,251
MRIs $451-$1,554

Source: Susan G Komen, Survival and risk of recurrence.

The cost burden of bowel cancer

The number of new cases of bowel cancer has increased significantly over the past four decades – from 6,986 in 1982 to 17,003 (estimated) in 20187. Bowel cancer is the second most common cause of death from cancer in Australia, and its survival rates are much lower than other common cancers such as prostate and breast.

Costs from bowel cancer include those related to medical appointments, tests and treatments. People with suspected bowel cancer may have initial investigations with a GP, followed by more in-depth investigations with a specialist doctor. Treatment for bowel cancer is dependent on a number of factors, including where the cancer is located in the bowel and the stage of the cancer. The 2018–19 Federal Budget provides $35 million over four years to fund the follow-up of people who have received a positive at-home bowel cancer screening test result and have not attended a follow-up appointment with a doctor.


Expert’s view – Case study, Tracy 47

When Tracy, a working mum of three, was diagnosed with breast cancer, it turned her life and the lives of her husband and children, upside down. Not only did the family have to contend with the thought of losing a loved one, they also faced financial struggles. Tracy had countless tests and visits to her specialist and endured an intense and time-consuming course of chemotherapy and radiation treatment. Initial tests, such as a mammogram and MRI scans set her back around $650 and with each visit to her surgeon Tracy had to pay $200. Then came the bill for her radiation treatment – $2,000. The side effects of chemotherapy meant even more out-of-pocket costs; approximately $400 for headwear as a result of hair loss. In the first year following her diagnosis, Tracy faced out-of-pocket medical costs close to $7,000. To manage her gruelling treatment schedule, Tracy had to stop working for nearly 6 months – equating to a loss of income of almost $35,000. This had a significant impact on the family, as Tracy is the primary earner of the household. Given that Tracy will face a number of tests and possible treatments in the future, she and her husband worry every day about how they will continue to look after Tracy’s health and support their family. 


By drawing on aggregate health data, and individual case studies, the research study on which this article is based aims to provide financial advisers and their clients a clearer picture of the direct and indirect cost impacts to them and their families in the event of serious illness; in this case, cancer. It provides an overview of the healthcare, social security and insurance ecosystem, in turn allowing more informed decision making about the most appropriate mechanisms to protect one’s financial wellbeing.

Life insurance is a vital part of the ecosystem that helps protect the financial, emotional and physical wellbeing of Australians. But without a better understanding of how each of these systems interact, and a realistic appreciation of the true costs of poor health, we are ill equipped to judge the appropriate types and levels of support to best suit our circumstances, and to navigate a complex network of services and providers.

To download the Zurich Cost of Care Whitepaper please visit Your Zurich BDM also has tools and resources available to assist you in bringing this ground breaking research into your practice.


1Australian Institute of Health and Welfare 2013. Health expenditure Australia 2011–12. Health and welfare expenditure series no. 50. Cat. no. HWE 59. Canberra: AIHW, p. 117
2 Australian Institute of Health and Welfare 2017. Health expenditure Australia 2015–16. Available from: health-expenditureaustralia-2015-16/contents/ data-visualisations
3 Essue B et al. Out-of-pocket costs of health care in Australia. Submission to the Senate Standing Committee on Community Affairs. Submission 28.
4Paul CL, et al. The impact of loss of income and medicine costs on the financial burden for cancer patients in Australia. The Journal of Community and Supportive Oncology. 2016;14(7) p.307–313
5Cancer Australia. Prostate cancer in Australia. Available from: [Accessed April 2018]
6Cancer Australia. Breast cancer in Australia. Available from:  [Accessed April 2018]
7Cancer Australia. Bowel cancer (Colorectal cancer) in Australia. Available from: [Accessed May 2018]
8ZERO. The end of prostate cancer. Recurrence. Available from: [Accessed May 2018]
9Susan G Komen. Survival and risk of recurrence. Available from: [Accessed May 2018]
10Bowel Cancer Australia. Available from:
11Cancer Council Australia. Understanding breast cancer: A guide for people with cancer, their families and friends. July 2016
12Access Economics. Cost of Cancer in NSW: A report by Access Economics Pty Limited for The Cancer Council NSW, April 2007
13Deloitte. Access Economics. Financial impacts of breast cancer in Australia: Breast Cancer Network Australia. November 2016
14Gordon L, et al. Financial toxicity: a potential side effect of prostate cancer treatment among Australian men. Eur J Cancer Care, 2017;26(1):p.e12392

November 12, 2018

Helping advisers deliver better outcomes whilst avoiding the distractions

Welcome to the latest edition of Risk Pulse. As we close in on the end of a year that can only be described as tumultuous, it’s worth pausing for a moment and reflecting on some of the learnings from our latest AFA Award Winners. This year’s finalists once again proved to be very impressive and whilst a diverse group in terms of style and offering, they all shared a very strong sense of focus. Every year our industry seems subject to ever increasing change, and every year we see the leading advisers are those who have no fear of legislative change (nor any other change for that matter) because they are supremely confident of their ability to adapt.

November 12, 2018

New 2019 Commission Rates Transition - What You Need to Know

Since 1 January 2018, transitional arrangements have been in force that limit the amount of upfront commission paid for the sale of life insurance. An 88% cap of the first year’s premium was the first stage in broader reforms which were passed through parliament as part of the Life Insurance Remuneration Act in 2017.

November 12, 2018

Agile protection for a flexible workforce is becoming a reality for employers

The business case for an agile social protection system fit for a 21st century labor market.