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Weighing the Costs of Obesity in Malta

March 2017

Weighing the Costs of Obesity in Malta 1 Kevin Valenzia Territory Senior Partner

2 PwC Being the leading professional services Obesity adversely affects the quality Furthermore, obesity poses firm in Malta, at PwC we embrace the of life of individuals. Overweight constraints on the population’s health fundamental principle of doing right and obesity generally translate into a and wellbeing. for our clients, our people and our number of diseases, disorders and/ or This deep-rooted problem is likely society. It is for this reason that we conditions, thereby leaving an impact to become unmanageable should have the health of our stakeholders at on one’s health and possibly leading to the prevalence of obesity continue heart. premature mortality. increasing. This publication aims The healthcare industry is one of the Recognising the implications and at presenting an opportunity to pillars of the country. The obesogenic effects of obesity on society, PwC understand what obesity is costing the environment characterising Malta, has issued this publication, with an country, with a hope to a concerted coupled by our hectic lifestyles, attempt to identifying and estimating effort from different stakeholders to technology, infrastructure and the the direct and indirect costs of obesity. achieving a more active and healthy increase in chronic diseases, all Obesity poses a challenge, in that population. There is therefore a need contribute towards a quarter of it leads to increased spending on for additional efforts and resources to the population being obese. Thus, healthcare, whilst also resulting in be directed towards addressing this addressing the problem of obesity in a number of opportunity costs to reality. Malta is undoubtedly a key national Government, individuals and society priority in 2017. as a whole.

Kevin Valenzia

Weighing the Costs of Obesity in Malta 3 Executive Summary

4 PwC Malta has one of the highest rates of adult and childhood Further costs, such as those from mental illness and reduction obesity worldwide. Obesity tends to lead to a number of of the quality and length of life have been assessed but not non-communicable diseases and leaves lasting impacts on included in the cost estimate, as they are more conceptual in individuals through a lower quality and length of life, as well nature. Although not costed, they are ever more prevalent in as adverse effects on mental wellbeing. Concurrently, obesity the Maltese society. In fact, it is estimated that 29% of the total translates into additional cost burdens on the health system of Maltese adult population has reported depressive symptoms as the country and on society in general. a result of obesity. Premature mortality directly attributable to The Body Mass Index (BMI) is used as a measure of obesity overweight and obesity is estimated at 17% of total deaths in throughout this publication. An individual is classified obese Malta. if s/he has a BMI of 30.00 kg/m2 or higher. Based on self- The effect of obesity is expected to be more widespread in reported data of weight and height, 2015 European Health the future. It is a long-term problem, which is projected to Interview Survey (EHIS) results are used in estimating the generate an additional €5.1 million in costs by 2022, on the impact of obesity on the Maltese adult population. assumption that the 2015 rate of obesity is maintained. This is Over a quarter of the Maltese adult population over 15 years a very conservative estimate, as obesity in Malta is expected to of age is obese. The prevalence of obesity has increased from continue increasing from current levels, implying significantly 23% in 2002 to 25% in 2015. Recently measured rates of BMI higher costs and a serious burden to society. for the adult population aged between 18 and 70 report an In light of its pronounced effects, it is inarguable that obesity even more profound problem, with 34% of the population is a societal challenge, which is expected to result in higher being obese in 2016. These data suggest that Malta has been economic and social costs as obesity rates continue in their moving even farther away from the 2020 target rate of obesity trajectory. Intervention is required on a global level in set at 18%. different facets of life, be it on a personal, family, community A conservative estimate of the obesity-related costs for and national level. For interventions to yield effective results, Malta for 2016 (based on 2015 EHIS results) presents a they need to entice sustained behavioural change among figure of €36.3 million. This is composed of seven direct individuals. Interventions may include educational and and five indirect costs of obesity. Of these, 66% of the costs media campaigns, fiscal incentives provided to individuals, are direct, including the cost of pharmaceuticals, hospital employers and industry, and incentives encouraging wellness care and primary care. Despite the fact that costs are quite activities at the place of work. A number of interventions are evenly distributed between the public and private sectors, already in place through ongoing policies within the health the majority of these costs are borne by the private sector, arena. However, more efforts and resources are required for i.e. individuals and private sector employers. The effects are these policies to be enforced, with an aim to yielding desired even more pronounced when measured rates of BMI are used outcomes. Effective interventions are expected to improve the (34%). It is estimated that costs relating to obesity would health and quality of life of the population, whilst resulting in increase by €20 million. cost savings on health spending. Future research is yet to focus on assessing the cost effectiveness and impact of any new The excess costs emanating from obesity for 2016 (based on obesity-related interventions to be implemented in Malta. 2015 EHIS results) are estimated at c. €97 on a per capita basis. This report shows that the costs of obesity are absorbing 8.1% of annual public recurrent health expenditure or 5.6% of national healthcare expenditure. Furthermore, such costs represent 0.4% of the country’s Gross Domestic Product (GDP).

Weighing the Costs of Obesity in Malta 5 6 PwC Acknowledgements

Weighing the Costs of Obesity in Malta publication represents the efforts and ideas of many individuals within PwC and outside the firm. We would like to express sincere gratitude to all those who have contributed to the development of this publication through their time, knowledge and expertise. Special thanks for providing us with invaluable insight goes to Dr Neville Calleja who also served as a technical reviewer of this publication and Ms Dorothy Gauci from the Directorate for Health Information and Research. Other primary contributors from the Ministry of Health include Dr Charmaine Gauci, Ms Darleen Zerafa, Ms Alison Anastasi, Ms Roberta Fenech, Dr Renzo Degabriele, Dr Paula Vassallo. Other contributors to this publication include Mr Etienne Caruana from the National Statistics Office, Dr Sarah Cuschieri from the University of Malta and Ms Joanna Chetcuti from Advanced Allied Healthcare Professionals.

Weighing the Costs of Obesity in Malta 7 Contents

11 Obesity: Taking stock of Malta’s Position

21 Weighing the Costs of Obesity

26 Direct Costs

31 Indirect Costs

35 Health and Wellbeing Costs

38 Conclusion

42 Appendix A - Methodology

49 Appendix B - Definitions

51 Appendix C - Bibliography

8 PwC List of Abbreviations

BMI Body Mass Index CPSU Central Procurement and Supplies Unit DALY(s) Disability Adjusted Life Year (s) DHIR Directorate for Health Information and Research EHIS European Health Interview Survey GDP Gross Domestic Product GP General Practitioner NSO National Statistics Office OECD Organisation for Economic Co-operation and Development SSC(s) Social Security Contribution(s) WHO World Health Organisation

Weighing the Costs of Obesity in Malta 9 Obesity: Taking stock of Malta’s position

10 PwC Obesity: Taking stock of Malta’s position

The rise in obesity and overweight levels has increasingly become more pertinent across the globe over the past few decades [1-2]. In fact, the World Health Organisation (WHO) [1] reports that obesity rates in 2014 were almost double those in 1980. The global obesity epidemic is even more relevant in Malta as the country has one of the highest levels of childhood and adult obesity worldwide [3-5]. Further to being a causal factor of a number of non-communicable diseases, including type 2 diabetes, cardiovascular diseases and several types of cancer [2, 6-7], obesity is creating a higher expenditure burden on both individual members of society, as well as on Government [3, 8]. Against this backdrop, this report focuses on the costs emanating from adult obesity in Malta.

Defining obesity Obesity is defined by the WHO[9] as the “disease in which excess body fat has accumulated to such an extent that health may be adversely affected”. Typically, the Body Mass Index (BMI) (being an index of weight-for-height) is used to measure population- level obesity, this in turn enabling the categorisation of individuals depending on their BMI levels. Table 1 delineates the classification system for adults according to BMI levels, compiled by the WHO[9] . Included are also the risks of comorbidities, these varying with BMI classification.

Table 1: The BMI Classification System for Adults

Classification BMI (kg/m2) Risk of Comorbidities

Low (but risk of other clinical Underweight < 18.50 problems increased) Normal range 18.50 – 24.99 Average

Overweight: ≥ 25.00

Pre-obese 25.00 – 29.99 Increased

Obese Class I 30.00 – 34.99 Moderate

Obese Class II 35.00 – 39.99 Severe

Obese Class III ≥ 40.00 Very Severe

The Prevalence of Obesity in Malta on the prevalence of obesity within a for active living, characterise Malta’s Obesity has been found to be the result population [10]. For instance, families obesogenic environment, which in turn of a chronic energy imbalance, involving with lower socio-economic status impinges on the greater tendency for the physical activity patterns, as well as have a propensity to consume more population to be obese [14]. dietary intake [10]. Obesity is mainly energy-dense foods than their higher driven by the food consumed. Recently, income counterparts. High education increased processed, cheap and energy- and income have been found to lead to Obesity rates in dense foods have started being produced healthier food intake [12]. Such factors as a response to people’s preferences, and dynamics have largely shaped the 2014 are almost status and hectic lifestyles. Persuasive obesity epidemic across the globe over double those in marketing has tended to become more the past few decades [13]. successful in increasing the demand Although the scope of this publication is 1980 [11] for such types of food . Furthermore, not intended to cover childhood obesity, the environments within a country, these problems seem to start at a very together with socio-economic factors, young age. The energy-dense food cultural norms, transport systems and supply available in Malta, coupled by recreation spaces also have a bearing the small-scale infrastructure available

Weighing the Costs of Obesity in Malta 11 Additionally, research shows that aside North America and Malta) that self- Furthermore, results from the recent genetic defects, lifestyle choices and reported data on weight and height study by Cuschieri et al. (2016) [22], non-genetic influences (which are may be biased, with data on weight based on measured BMI data, also in turn shaped by the environment) being underestimated and data on confirm this trend. [19 - 20] partially account for the apparent height being overestimated , this The most recent estimates of obesity hereditary predisposition towards owing to social desirability and the rates in Malta for the adult population [15] obesity and associated disease . fact that individuals may be unaware aged 15 years and older are shown in Self-reported data related to health and or insufficiently aware of their weight Figure 1. It is alarming that the majority weight have been collected in Malta problem. There is a similar trend in of the population (60%) is either pre- through three main surveys, these being Malta as confirmed through a pilot obese (35%) or obese (25%). On the [21] the 2002 National Health Interview study carried out in 2010 , with the other hand, only 38% and 2% of the [16] Survey , the 2008 European Health discrepancy in self-reported measures population surveyed comprise lean and [17] Interview Survey (EHIS) and the of weight and height being more underweight individuals, respectively. 2015 EHIS [18]. There is international pronounced in the female population. evidence (in Italy, The Netherlands,

Figure 1: Rates of BMI Categories of the Adult Population (2015)

Underweight Normal weight Pre-Obese Obese 2% 38% 35% 25%

In comparison with the remaining 27 European Union countries, Malta reports the highest rates of obesity, followed by Latvia and Hungary [23 - 25]. As outlined in Figure 2 overleaf, 70% of the obese population have a BMI ranging between 30.00 kg/m2 and 34.99 kg/m2, 21% fall within the Obese Class II category and 9% are categorised as severely obese (BMI ≥ 40.00 kg/m2). According to the latest local study [22] reporting measured rates of BMI, almost 70% of the Maltese adult population aged 18 to 70 years is either overweight or obese, with the former representing 36% and the latter representing 34% of the population.

12 PwC Figure 2: Percentage of Obese Population, by Class of Obesity (2015)

Obesity Class I Obesity Class II Obesity Class III 70% 21% 9%

Based on the 2015 EHIS, women are less likely to be obese than males in all categories except for Obesity Class III, as is evident in Figure 3. In Malta, only obese women within the third obese class follow the global trend. Globally, women tend to have higher rates of obesity than men across all categories [26]. To a certain extent, this could be partially attributed to the fact that data used is based on self-reported measures. However, an analysis of measured rates of BMI locally also reflects a similar trend, whereby men have higher rates of both overweight and obesity prevalence than women [22]. This confirms the situation in the Southern European region, where there is evidence that men report the highest rates of overweight and obesity [27].

Figure 3: Percentage of Obese Population, by Class of Obesity and by Gender (2015)

Obesity Class I Obesity Class II Obesity Class III

70% 22% 8%

69% 21% 10%

Weighing the Costs of Obesity in Malta 13 Obesity has increasingly become more pertinent among the older age groups, with the highest rates being recorded among individuals aged 55 to 74 as shown in Figure 4. Cuschieri et al. (2016) also report similar trends in their study [22].

Figure 4: Percentage of Obese Population by Age (2015)

10% 20% 26% 28% 35% 34% 28% 15-24 25-34 35-44 45-54 55-64 65-74 75+

Malta leads trends when it comes to childhood obesity [20, 28 - 29], as is evident from the recent Health Behaviour in School-Aged Children study [4]. From this study, it emerges that 32% and 38% of Maltese 11-year-olds are obese or overweight, respectively. Although the scope of this report ventures beyond childhood obesity, it is worth recalling that obese children tend to become obese adults [4], further aggravating the problem.

14 PwC Analysing Trends An analysis of the trend over the years indicates that the percentage of obese individuals has increased from 23% in 2002 to 25% in 2015. The pre-obese category failed to register improvements as the percentage of pre-obese individuals remained steady at 34% between 2002 and 2015.

Figure 5: Increase in the Percentage of Obese Individuals between 2002 and 2015

2002 2015

23.1% 25.3%

In line with global trends [26], females registered lower percentages than males in the pre-obese category, as can be observed through Figure 6 overleaf. However, both genders have experienced an increase in the percentage of obese individuals. Obese males reached a high of 27.1% in 2015, having increased from 25.0% in 2002, while the proportion of obese females increased from 21.3% in 2002 to 23.5% in 2015. In terms of overweight, males registered some improvement, with the percentage increasing from 40.5% in 2002 to 44.7% in 2008, but declining to a low of 38.1% in 2015. Conversely, the percentage of pre-obese females has increased from 28.7% in 2002 to 30.6% in 2015.

Weighing the Costs of Obesity in Malta 15 Figure 6: Percentage of Pre-obese and Obese Males and Females (2002, 2008, 2015)

Male 45%

Male 41% Male 38%

Female 31% Female Female 29% 28% Male Male 27% Male Female 25% 24% 24% Female Female 21% 21%

2002 2008 2015 Pre Obese Obese Pre Obese Obese Pre Obese Obese

Further trends emerge upon analysing the percentage of obese males and females within each obesity class level over the years. Obese males have tended to move from Obese Class I to Class II and III, as illustrated in Table 2. As regards females, there has been no movement through the years in the Obese Class III category, but there tended to be a shift away from Class II to Class I, resulting in an improvement.

Table 2: Percentage of Obese Males & Females by Class of Obesity (2002, 2008, 2015)

2002 2008 2015

Males Females Males Females Males Females

Obese Class: I 76% 66% 74% 64% 74% 69% II 19% 24% 20% 26% 22% 21%

III 5% 10% 6% 10% 8% 10%

16 PwC BMI categories can be analysed further by age. Data presented reveals that the likelihood of being overweight and obese increases with age, and generally, has been on the rise over time, in line with trends occurring within Organisation for Economic Co-operation and Development (OECD) countries and countries within the WHO European region [13, 23]. The older an individual is, the more likely it is for him/ her to develop weight problems [23]. Table 3 indicates that whereas out of the population surveyed aged 15 to 24, only 22.6% and 10.4% are pre-obese and obese respectively, the same figures rise to 40.6% and 33.7% for those individuals between 65 and 74 years of age [18]. A striking difference is evident in the obesity levels registered over time within the age groups of 35 to 44 and 55 to 74. For instance, whereas in 2002, 29.7% of the 55-64 age group were obese, this percentage has increased to 35.2% in 2015.

Table 3: Percentage of Pre-Obese and Obese Individuals broken down by Age Group Pre - Obese Obese 2002 2008 2015 2002 2008 2015

Age Group % % % % % %

15 - 24 22.1 23.2 22.6 11.5 8.2 10.4 25 - 34 31.6 29.6 32.4 16.0 21.4 19.8 35 - 44 36.5 37.7 36.5 22.1 19.7 26.1 45 - 54 38.2 43.7 36.4 30.4 24.1 28.4

55 - 64 38.0 41.3 38.5 29.7 30.0 35.2

65 - 74 39.5 41.4 40.6 27.0 30.9 33.7

75+ 37.3 38.9 37.3 28.4 25.6 27.9

These trends are of concern in light of leading to premature mortality [32]. At households and society in general the number of conditions and diseases the same time, comorbidities have wider [35]. The effects seem to be even more being associated with overweight and indirect effects, not only on the health widespread the longer the duration of obesity. Increased BMI levels lead to and mental wellbeing of the individual obesity [36]. There is in fact evidence that a heightened risk of developing type [33], but also on private and national health and mortality risks are positively 2 diabetes, hypertension, coronary expenditure [32, 34]. related to the number of years someone [32] artery disease and stroke, cancers, It has been estimated that the cost of is obese . By way of example, the osteoarthritis and dyslipidaemia, non-communicable diseases and their longer the duration of obesity, the more among other diseases. Moreover, associated risk factors generally range one is likely to develop chronic diseases being overweight or obese lends to from 1% to 7% of a country’s Gross such as type 2 diabetes, cardiovascular [37 - 38] negative respiratory effects, whilst Domestic Product (GDP) [35]. Other disease and cancer . also having adverse impacts on the noteworthy consequences of obesity [30] reproductive functions . Such diseases may include greater fiscal pressures, and disorders can be experienced additional costs to employers, lower concurrently, thereby becoming known tax revenues, increased disabilities, [31] as comorbidities . In turn, these demand for more effective treatments comorbidities negatively affect the and fewer opportunities for individuals, health-related quality of life, whilst also

Weighing the Costs of Obesity in Malta 17

Halting Obesity Rates – The WHO The Maltese Government is a signatory Malta’s position has worsened over Target to this global action plan. To this effect, the years, as indicated in Figure 7. Diabetes and non-communicable targets were set in 2010 through ‘A The percentage of obese individuals diseases, including cardiovascular Strategy for the Prevention and Control of increased from 22.4% in 2008 to 25.3% disease, pose the greatest health threats Non-communicable Disease in Malta’, in in 2015, making the achievement of to the human race globally. It is for this order to reduce the prevalence of obesity the 18% target even more challenging, reason that the WHO has developed a in the Maltese population over the age of especially also in light of the measured Global Action Plan for the prevention 15 years from 22% to 18% [41]. rate of obesity standing at 34%. Thus, and control of non-communicable more needs to be done at a national and Prior to setting this target, Malta had diseases, with the main aim of achieving inter-sectoral level to address the obesity set targets for 2005 in the publication a 25% reduction in premature mortality problem in Malta. entitled, ‘Health Vision 2000’. Targets from non-communicable diseases by differed by gender and also by age (≤35 2025 [39]. One of the voluntary global years and >35 years). In 2008, Malta targets outlined in this action plan is did not meet the obesity target level set to halt the rise in diabetes and obesity. A target was set in 2005 [41]. The Global Action Plan highlights that in 2010 to reduce countries following the plan must select specific indicators, these being the most the prevalence of appropriate in their national context. obesity in Malta Having said that, most countries have agreed on halting the rates of obesity from 22% to 18% prevalence, with the year 2010 being the basis year [40]. by 2020

Figure 7: Malta’s Position in terms of the 2020 Obesity Target

2016 34.0% 2015 25.3%

2008 22.4%

2020 18.0%

18 PwC In light of Malta’s position in terms of obesity, the Government has implemented a number of policies with an aim to address this reality. The crux of the policies is the ‘A Healthy Weight for Life: A National Strategy for Malta’ [42] to be implemented between 2012 and 2020. This policy centres on obesity and how this can be reduced through healthy choices and healthy eating. One of the priorities of action in this strategy has been reinforced through the ‘National Breastfeeding Policy and Action Plan 2015 – 2020’ [43] which seeks to instigate a supportive environment whilst nurturing a culture that facilitates one’s choice for breastfeeding. The Healthy Lifestyle Promotion and Care of Non-Communicable Diseases Act [44], Act III of 2016, Chapter 550 of the Laws of Malta, was enacted in 2016 with the aim of fostering an inter-ministerial lifelong approach supporting physical education and healthy eating, as well as with the intention of reducing the incidence of non-communicable diseases throughout all age groups. Complementing the WHO’s Global Action Plan [39], the Steering Committee, supported by the Parliamentary Working Group on Diabetes, has set out a national strategy for diabetes through ‘Diabetes: A National Public Health Priority 2016 – 2020’ [45] since obesity tends to lead to an increased risk of developing type 2 diabetes [2, 6- 7, 30, 37-38]. Furthermore, the Government, through the Ministry for Education and Employment, also devised a ‘Whole School Approach to a Healthy Lifestyle: Healthy Eating and Physical Activity Strategy’ in 2015 [46], accompanying this with a specific policy of action on the subject[47] . This is important since schools are in a position to offer a number of opportunities to promote healthy food nutrition among children, while potentially acting as a point of reference between parents and the community [47].

WeighingWeighing the the Costs Costs of of Obesity Obesity in in Malta Malta 19 19 Weighing the Costs of Obesity

20 PwC Weighing the Costs of Obesity

Obesity has a number of wide-ranging implications on society, not only through the direct and indirect costs it generates, but also by affecting the health and quality of life of individuals. Costs associated with obesity are borne by multiple stakeholders including Government, the obese population, employers and society at large. This study focuses on a mixture of twelve direct and indirect costs related to obesity (as set out in Figure 8) and attaches a monetary value to each of these costs. An estimate is made of the costs associated with obesity beyond those incurred normally, that is the excess costs incurred by the obese over the normal weight segment of the population. This follows on an adaptation of a model (through peer analysis) already applied by PwC in Australia [48].

Figure 8: Selected Costs of Obesity

Primary

Care

Specialist

Care Absenteeism

Presenteeism Cost of Allied Healthcare Professionals Government Subsidies Direct Indirect Costs Costs Forgone Hospital Care Earnings

Forgone Taxes

Pharmaceutical Care

Weight Loss

Interventions Public Inventions Public

Costs having the highest causal association to obesity and for which quality research is available have been selected for inclusion in this costing exercise. The list of costs included is not exhaustive, since several other obesity-related costs exist; however, these either cannot be reliably measured owing to insufficient information available, or they are inherently non-quantifiable. Examples of other obesity-related costs include financial, health and wellbeing costs, such as depression, discrimination and lower educational attainment. It is important to note that the estimates of costs presented in this report underestimate the true picture of obesity-related costs.

Weighing the Costs of Obesity in Malta 21 Direct and Indirect Costs The total cost of obesity in Malta (based on 2015 EHIS [18] results) for the year 2016 has been estimated at €36.3 million. The modelling underlying this report estimates that €23.8 million represent the total direct costs and €12.5 million comprise indirect costs. A summary of the different costs incorporated within the model, also analysed into public and private expenditure, is presented in Table 4. Public expenditure on obesity represents that portion of obesity-related costs incurred by Government. Private expenditure represents out-of-pocket expenses incurred by obese individuals primarily because of their weight problem, as well as the obesity-related costs borne by employers within the private sector.

Table 4: Additional Costs arising from Obesity in 2016 for Adults aged 15 years and over (based on 2015 EHIS results) Public Sector Private Sector National Costs Cost Categories Cost Type € million € million € million Direct Costs Primary Care 1.3 1.8 3.1

Specialist Care 2.7 0.2 2.9

Hospital Care 3.1 1.4 4.5 Cost of Allied Healthcare 0.2 0.1 0.3 Professionals Pharmaceutical Care 4.0 6.7 10.7

Weight Loss Interventions 0.4 1.5 1.9

Public Interventions 0.4 N/A 0.4

Subtotal (Direct Costs) 12.1 11.7 23.8

Indirect Costs Absenteeism 1.8 4.7 6.5

Presenteeism 0.9 2.3 3.2

Government Subsidies 0.9 N/A 0.9

Forgone Earnings N/A 1.4 1.4

Forgone Taxes 0.5 N/A 0.5

Subtotal (Indirect 4.1 8.4 12.5 Costs)

Total 16.2 20.1 36.3

Figure 9 and Figure 10 overleaf are a visual representation of the apportionment of direct and indirect costs (respectively) between the public and the private sector.

22 PwC Figure 9: Direct Costs of Obesity Analysed by Sector (2016)

Public Sector 100% Private Sector 93%

79% 75% 69% 63% 58%

42% 37%

31% 25% 21%

7%

Primary Specialist Hospital Cost of Allied Pharmaceutical Weight Loss Public Care Care Care Healthcare Care Interventions Interventions Professionals

Figure 10: Indirect Costs of Obesity Analysed by Sector (2016)

Public Sector 100% 100% 100% Private Sector

72% 72%

28% 28%

Absenteeism Presenteeism Government Forgone Forgone Taxes Subsidies Earnings

Weighing the Costs of Obesity in Malta 23 A high-level analysis of the total bill in the ‘A Healthy Weight for Life: A The remaining sections of this report will of obesity-related costs in Malta has National Strategy for Malta 2012 – 2020’ delve into further detail with regards also been made in light of the recent publication [42], inflated to 2016 prices to the selected direct and indirect examined BMI data in the study using an inflation rate of 2% per annum. costs. This is then followed by a brief conducted by Cuschieri et al. (2016) [22]. The figures outlined in Cuschieri et al.’s outline of health and wellbeing costs. This resulted in €20 million additional (2016) study [49] is based on a sample An explanation as to the methodology costs. On this basis, the re-estimated of direct costs that also includes the and technical detail used in arriving total cost of obesity in Malta for the year overweight population. at the results of the direct and indirect 2016 would be €56.4 million, instead of There is evidence that per capita cost estimates is included within the €36.3 million, assuming that the same healthcare expenditures tend to increase appendices section. estimated differences between an obese proportionately with the increase in BMI and a normal weight individual for the levels [8]. In fact, research shows that the various factors discussed throughout the largest increase in costs occurs for obese The excess cost per publication emerge. individuals within the Obese Class II and The most substantial increases in costs Class III categories [50 - 51]. capita in Malta occur with respect to indirect costs. For Based on the estimates outlined in this stemming from instance, the cost of absenteeism rises by publication, the excess cost per capita 124%, whilst forgone earnings increase in Malta stemming from obesity for obesity is €97 from €1.4 million to c. €3.0 million when individuals over 15 years of age is €97. measured BMI rates are used. On the ‘Conceptual’ Costs involving Health other hand, the most profound effects and Wellbeing within direct costs seem to arise from the The total cost figure shown in Table 4 on cost of allied healthcare professionals, page 22 is underestimated to the extent which increases by €0.3 million, and that there are more ‘conceptual costs’ specialist care, which experience a 92% borne by obese individuals in the form increase in costs. of health and wellbeing impacts. These A more recent paper issued by Cuschieri costs are reported separately from the Direct Costs et al. (2016) [49] quotes a figure of €23.7 direct and indirect costs as they are of million for overweight and obesity in a different nature. Conceptual costs are Malta, this comprising hospital costs and based on the obesity impact on quality the cost of visits to general practitioners and length of life, including depression (GPs) and specialists. This estimate is and discrimination. based on the 2008 costings published

24 PwC Direct Costs

Weighing the Costs of Obesity in Malta 25 Direct Costs

Costs directly relating to obesity are generally made up of both medical costs incurred in treating obese individuals and related comorbidities, as well as public expenditure incurred with the aim of reducing obesity levels. A sample of formulae explaining each component of the direct costs estimates are outlined in Appendix A.

Primary Care Primary care generally refers to one’s Generally, the mean number of GP visits Applying each resultant difference main source of regular medical care. increases with rising BMI levels, as to the cost per visit and then to the In this study, primary care refers to evidenced in Table 5. This data supports extrapolated population within each general practitioner (GP) visits. A direct the literature, in that increasing levels of BMI group results in the total excess cost comparison of the number of visits in BMI are directly related to the frequency per BMI group over the normal weight four weeks to a public and a private GP of visits to a GP [51], which in turn class. for obese and normal weight individuals contribute towards increased GP costs. has been possible through an analysis For example, in a peer report, it has of two particular questions within the been estimated that obese individuals 2015 EHIS [18]. A detailed explanation have between 19% to 37% higher GP of a sample of the formulae applied costs than lean individuals, with costs in calculating direct costs is set out in varying by obesity class level [52]. Appendix A.

Table 5: Mean number of visits to public GP and private GP

Mean number of visits BMI Category Public GP Private GP Normal weight 0.122 0.318

Overweight 0.141 0.326

Obese Class:

I 0.168 0.400 II 0.192 0.390 III 0.226 0.586

The total estimated annual GP costs for 2016 amount to €3.1 million, comprising c. €1.3 million in public GP costs and €1.8 million in private GP costs. Higher public GP costs result from Obesity Class I since this is the largest obesity category. In the case of private GP costs, the lowest costs are borne by Obese Class II as both the mean difference in GP visits, as well as the proportion of obese individuals within this BMI group are lower than those for Obese Class I.

26 PwC Specialist Care A similar methodology to the estimation In the case of private consultations, The total annual additional cost of of primary cost is applied in calculating differences emerge only with respect to specialist consultations due to obesity specialist care costs relating to obesity. Obese Class III. Table 6 summarises the amount to €2.9 million, of which In terms of the number of visits to public mean number of visits by BMI category the Government covers €2.7 million. specialists, differences emerge between analysed by visits to public and private The fact that only 8% of the obese obese individuals and normal weight specialists. population reverts to private specialists individuals across all obese classes. implies that most consultations are in effect funded by Government.

Table 6: Mean number of visits to public specialist and private specialist Mean number of visits BMI Category Public Specialist Private GP Normal weight 0.061 0.094

Overweight 0.084 0.095

Obese Class:

I 0.107 0.094 II 0.096 0.094 III 0.246 0.147

Based on the data outlined above, obese Care provided by Allied Healthcare This has also been confirmed in the individuals have higher referrals to Professionals study by Colagiuri et al. (2010) [53] medical specialists. Similarly, findings The 2015 EHIS [18] indicates differences and that conducted by PwC [48]. The from an Australian study [53] and a study between the occurrence of visits to frequency of visits to allied healthcare conducted by PwC [48] estimate that dietitians and podiatrists by obese professionals has not been captured obese individuals suffer between 24% versus the normal weight population. in the EHIS. For this reason, proxies to 57% higher specialist visit costs than Results partially confirm a study by from the PwC peer report [48] have been lean individuals. Valenti (2008) [54], which reveals that applied. On this basis, the additional obese and overweight individuals costs due to obesity emanating from generate most referrals to allied care provided by allied healthcare healthcare professionals, namely to professionals in Malta are estimated at c. nutritionists and dietitians. €0.3 million, of which the Government covers about 75%.

Weighing the Costs of Obesity in Malta 27 Hospital Care Essentially, higher costs are generally weight individuals has been extracted Literature from Australia and the United experienced with rising BMI rates. from the 2015 EHIS [18] - Table 7 presents States reveals that obesity leads to Hospital stays for obese patients are the mean number of inpatient nights increased healthcare costs, including generally longer than in the case of and day patient stays in a year for each hospital costs [55 - 56] which tend to normal weight individuals [57], as is also BMI category, respectively. emanate from a higher average length of the case in Malta. The difference in stay in hospitals, especially in the case of the mean number of inpatient and day medically treated obese patients [57]. patient stays between obese and normal

Table 7: Mean number of inpatient stays and day patient stays in a year

Mean number of nights/ days in 12 months BMI Category Inpatient stays (nights) Day patient stays (days) Normal weight 0.481 0.217

Overweight 0.578 0.217

Obese 0.619 0.283

The cost of hospital care is divided Although these costs have not been A difference has been noted in into the cost of inpatient stays and day included in the financial model pharmaceutical intake between obese patient stays, both excluding the cost underlying this study, due to insufficient and normal weight individuals through of pharmaceuticals consumed and/or information, they are worth mentioning the 2015 EHIS [18]. In 2016, Government’s dispensed. The total estimated excess given that treatment to severely obese additional spend on pharmaceuticals hospital care costs due to obesity amount patients would necessitate the use of due to obesity has been estimated at €4.0 to €4.5 million in 2016, of which €3.1 specialised equipment. million, with the highest total spend million is attributable to the Government Pharmaceutical Care being on individuals within Obese Class and the remaining €1.4 million to the Average pharmaceutical care costs per II. private sector. The apportionment is year are higher for obese individuals than The average out-of-pocket spend on in accordance with the national health non-obese individuals. The annual cost pharmaceuticals by the obese population expenditure analysis in the WHO Global of pharmaceutical consumption due to is estimated at €6.7 million. High- [58] Health Expenditure Database , where obesity is estimated at €10.7 million, of level estimates (on the basis of the 69% of the total expenditure is attributed which 37% is financed by Government. 2008 Household Budgetary Survey to Government and the rest to the private These figures confirm the evidence that [53]) indicate that individuals fund the sector. Inpatient costs, whether private obese individuals contribute towards majority of pharmaceuticals purchased or public, contribute around €3.5 million higher expenditure on prescription in Malta, out-of-pocket. Compared to the total excess cost, whereas €1.0 drugs [53, 55]. In fact, it is estimated that with other European countries, public million are attributable to day patient obese individuals spend between 23% expenditure on healthcare in Malta as a costs. to 54% more on pharmaceuticals than proportion of total health expenditure In addition, hospitals may incur lean individuals, the percentages varying seems to be on the low side [64]. additional expenditure by investing in depending on obesity class level [52]. specialised equipment for the morbidly In estimating the cost of pharmaceuticals obese, such as pressure mattresses, purchased by Government, the reinforced beds, specialised wheelchairs, percentage excess consumed by the specific ambulances designed to obese over the normal weight population transport severely obese individuals and is calculated for each obesity-related the cost of additional staff members comorbidity. required to assist such individuals [59 - 62].

28 PwC Nevertheless, it is important to recall Bariatric surgery has become Public Interventions that Government benefits from increasingly popular worldwide, Public obesity interventions comprise certain economies when purchasing this proving the most effective public campaigns and strategies pharmaceuticals, in contrast with evidence-based method for reducing intended to raise awareness relating to the private sector. In other countries, and sustaining weight loss, whilst the importance of a healthy diet and the mix between public and private ameliorating or reducing obesity- physical activity. It is estimated that expenditure on pharmaceuticals differs, related comorbidities, such as type 2 the cost of public obesity interventions at times, with private insurers also diabetes [68 - 72]. Bariatric surgery is a in 2016 is c. €0.4 million, with €0.08 funding a proportion of expenditure procedure which is generally carried million relating to the Obesity Strategy on pharmaceuticals [48, 64]. High-level out on the morbidly obese, these being Intervention, and the rest relating to the estimates for the excess pharmaceutical patients with a BMI over 40.00 kg/m2, apportionment of obesity-related costs costs due to obesity per capita indicate or those with a BMI over 35.00 kg/m2 within other votes. that Malta fares fairly in comparison and having one or more obesity-related The cost of public interventions with other countries, with around comorbidity [73 - 74]. Over the years, there therefore, does not only comprise the €25 per capita and €28 per capita has been an exponential increase in the cost of raising awareness about obesity being spent in Malta and Australia, number of bariatric surgeries carried and its intended consequences, but respectively [52, 65] . out globally [75], with the total number also the cost of providing training to [76] Weight Loss Interventions reaching c. 500,000 in 2013 . This professionals working in the field so as The cost of weight loss interventions is procedure started to be performed in to enhance their skills, as well as the cost estimated at €1.9 million, this including Malta in 2014. In 2015, a total of 11 of services being offered to the obese. the cost of bariatric surgery, as well as bariatric surgeries were carried out at an the expenditure by the obese population estimated total cost of c. €0.1 million. and Government within the weight loss Dar Kenn Għal Saħħtek and Lifestyle Government industry. Clinics represent other services financed contributes by Government intended to assist Expenditure on the weight loss industry inter alia obese individuals. Dar Kenn includes gym memberships, sports actively towards Għal Saħħtek is namely a residential equipment, low-calorie foods and and semi-residential facility, whereas addressing the beverages, weight loss supplements, Lifestyle Clinics are located within the and the cost of nutritional support for problem of obesity community. Both of these set-ups are weight loss [48]. Given the difficulty in intended to provide treatment and in Malta, with obtaining such data for Malta, the excess assistance to obese people and other average spend per overweight or obese 93% of the cost individuals suffering from eating individual on the weight loss industry in disorders. Experts working within these Australia (estimated through the PwC of specialist care, set-ups have indicated that Government peer report [48]) has been converted to contribution amounts to c. €0.4 million. 69% of hospital Malta prices using the purchasing power parity factor [66-67] and applied as a proxy care costs and in the underlying financial model. On this basis, the estimated excess cost by 75% of the cost of individuals on the weight loss industry is allied healthcare €1.5 million. professionals being funded by Government

Weighing the Costs of Obesity in Malta 29 Indirect Costs

30 PwC Indirect Costs

The indirect, or hidden, costs of obesity include productivity losses through absenteeism and presenteeism, and the cost of Government transfers in the form of invalidity pensions and forgone taxes. A detailed explanation of a sample of the formulae applied in calculating indirect costs is set out in Appendix A.

Absenteeism comorbidities, obesity may explain the more hours than lean individuals. Absenteeism refers to the time one increased likelihood of absenteeism. In As shown in Table 8, there is a direct spends away from work due to illness. fact, there is evidence that increasing relationship between the BMI of Absenteeism tends to lead to increased rates of obesity lead to increased risk of obese individuals and the average costs through lost productivity and sick leave [78 - 79]. Furthermore, there is number of hours of sick leave taken increased payments for sick leave [8]. also an association between obesity and in a year. Individuals within Obese Generally, the presence of a number long-term sick leave [80 - 81]. Class III are absent from work due to of health conditions and the risk of Through the 2015 EHIS [18], it is evident health problems for more hours than developing further health problems that on average, obese individuals individuals in Class II and Class I, result in higher productivity losses within the working age population and respectively. [77] through absenteeism . Being working for pay or profit are generally associated with a number of related absent from work due to sickness for

Table 8: Average number of hours of absence from work due to personal health problems in the past year Average number of hours of absence from work due to Classification personal health problems in the past year amongst those working for pay or profit Normal weight 26.9

Pre- Obese 25.4

Obese Class: I 30.2 II 58.7 III 74.2

The economic cost of absenteeism is generally borne by the employer through payments for sick leave availed of. Generally, the higher the number of hours taken in terms of sick leave, the more pronounced is the cost of absenteeism. In Malta, the cost of absenteeism in 2016 is estimated at €6.5 million.

Weighing the Costs of Obesity in Malta 31 Presenteeism Five of these conditions, namely: person’s ability to work. Presenteeism refers to those occasions diabetes, heart disease, hypertension, It has been suggested through this whereby employees attend work, but cancer and back, neck or spinal court case that an individual falling as a consequence of their medical problems, are obesity-related within Obese Class III would be in conditions or illness, they may not comorbidities. These percentages have such a limited position to work that it perform to the best of their ability been applied in the absence of similar would amount to disability. In turn, [82]. It is assumed that presenteeism information for Malta. Using such this could have repercussions on is positively associated with obesity estimates along with estimates on the anti-discrimination legislation [88] as since obese individuals tend to suffer extent to which high BMI levels are there is evidence that obesity leads to from a number of obesity-related responsible for the burden of disease prejudicial treatment within the work comorbidities. This follows on the (extracted from the 2015 EHIS [18]), it environment [89]. In addition, it has finding that presenteeism leads to is estimated that 0.31% of total labour been claimed that there is a greater reduced productivity, especially among productivity loss due to presenteeism is likelihood for obese persons to suffer obese workers having a BMI of 35.00 attributable to obesity. This results in a disability and, as a consequence, claim kg/m2 and over [83]. total cost of presenteeism due to obesity disability or invalidity pensions [78]. of €3.2 million in 2016. Although it is generally difficult to There is evidence in literature from classify the level of disability directly Presenteeism the United States and Canada that related to obesity, data from the 2015 presenteeism has harsher consequences EHIS [18] has been used to classify is positively in terms of productivity losses than persons within the working age associated with absenteeism [82, 85 - 86]. These findings are population (that is, between 16 and not supported in Malta, as the costs of 65 years of age) as disabled. Results obesity absenteeism are substantially higher represent those having difficulty in than those of presenteeism. walking 500 metres on flat terrain without a stick or walking aid or The annual percentage labour Government Subsidies assistance, and/ or those having productivity loss due to presenteeism Obesity has recently been formally difficulty in walking up or down twelve in the workplace is based on a study associated to disability through a ruling steps without a stick, other walking undertaken by Econtech in 2007 [84], by the European Union Court of Justice aid or assistance. It is estimated that whereby the cost of productivity losses in 2014. It has been ruled that obesity 160 obese individuals have registered due to presenteeism in the workplace can be classified as a disability if it this disability, thus resulting in an has been estimated, taking into impacts an individual’s professional [87] additional cost of c. €0.9 million to the consideration twelve different medical activity . Essentially, extreme obesity Government through the payment of conditions. This research has been levels can have negative implications invalidity pensions. conducted in Australia. on a person’s mobility and in turn, on a

Government Absenteeism Presenteeism Subsidies

32 PwC Forgone Earnings Based on the average annual net income who could potentially be working had Individuals within the working age per person for 2016 (€13,974 [92]), there they not been obese. An estimate of the population who could be working is a potential forgone earnings cost forgone taxes suffered by Government is had they not been obese suffer an of €1.4 million. The cost of invalidity €0.5 million. opportunity cost in terms of the salary pensions paid by Government to the they could be earning had they been aforementioned obese individuals has working, less the invalidity pension been deducted to avoid double counting. received from Government. Forgone This is likely to be a conservative earnings arise since a morbidly obese estimate because it does not include the individual may not be in a position effects of educational and workplace to work productively due to physical discrimination on the working obese and/ or mental impairment, merely as population’s salary potential. a result of his or her weight. There is Forgone Taxes evidence that obesity, independent of The obese population is generally its related comorbidities, significantly associated with lower employment affects workforce productivity and and labour force participation rates, as [90 - 91] employment . From an analysis of already discussed in the previous sub- [18] 2015 EHIS data , no differences have section. In turn, this imposes a further been noted in employment between economic burden on Government, obese and normal weight individuals. given its inability to collect income For this reason, forgone earnings are tax and Social Security Contributions calculated on that proportion of the (SSC) from those obese individuals not obese population who receive disability currently working for pay or profit, but payments.

Forgone Forgone Taxes and Social Earnings Security Contributions

Weighing the Costs of Obesity in Malta 33 Health and Wellbeing Costs

34 PwC Health and Wellbeing Costs

Obesity negatively impacts an individual’s health and wellbeing. There are direct links to healthcare issues, such as lower quality and length of life, and mental wellness complications.

Disability Adjusted Life Years Through a meta-analysis of international who do not maintain a healthy lifestyle Disability adjusted life years (DALYs), studies, it emerges that excess weight [100]. which refer to the loss of one year is responsible for overall death among Obesity may be causal of a number of healthy life, are used as measures obese individuals 1.22 times more than of diseases and comorbidities, such [97] of the burden of disease capturing normal weight individuals . It has as cardiovascular diseases, diabetes, these effects. DALYs for a disease or also been claimed that moderately obese cancer and respiratory problems. In health condition are calculated as the individuals tend to lose circa three years Malta, circulatory diseases were the summation of the years of life lost of life expectancy, in comparison with leading causes of death in 2014, these [98] (YLL) due to premature mortality in the normal weight individuals . being responsible for 37.6% of deaths. population and the years of life lost due Mortality risks heighten with higher Such diseases were mainly contracted to disability (YLD) for that proportion of levels of BMI. It is estimated that as ischaemic heart disease, heart failure the population living with the particular between 6.5 to 13.7 years of life are and strokes. Diabetes, cholesterol [93] health condition or its consequences . lost by obese individuals having a BMI and smoking are major risk factors In 2010, 3.4 million deaths, 3.9% of ranging from 40.00 kg/m2 to 59.00 of arteriosclerosis, the latter being a years of life lost and 3.8% of DALYs kg/m2. The majority of the excess cardiovascular disease. Neoplasms worldwide were attributable to mortality burden among the morbidly (28.5%), respiratory diseases (9.5%) [94] overweight and obesity . obese is related to the increased and diabetes (4.8%) ranked after Furthermore, a study in the United likelihood of contracting diseases such circulatory diseases as other causes States has forecast that increasing levels as hypertension and diabetes. If the of death [101], as shown in Figure 11. of obesity threaten to reduce the health global obesity trend is to continue, A marked increase in stroke, cancers and life expectancy of future generations increased mortality rates are expected and ischaemic heart diseases is to be in the coming decades [95]. There is in the future [99]. On the other hand, expected if the current obesity trends in evidence that overweight and obesity maintaining a healthy lifestyle by Malta continue, these leading not only are associated with higher all-cause engaging in physical activity, having to reduced health and quality of life, but mortality. High BMI is in fact the reason a healthy BMI, consuming a healthy also to increased healthcare costs [28]. behind one in seven premature deaths diet and not smoking result in a lower in Europe, with the risk of premature disease burden, with individuals living deaths among men being around three a minimum of two additional years in times as much as in women [96]. good health when compared to those

Figure 11: Causes of death among Maltese residents in 2014

Dementia Other causes Neoplasms 4.4% 15.1% 28.5%

Diabetes Respiratory 4.8% conditions Circulatory 9.5% diseases 37.6%

Weighing the Costs of Obesity in Malta 35 Overweight and obesity, coupled by physical inactivity are key risk factors for the WHO European region [102]. In fact, a study published by the WHO in 2009 reveals that 7.8% of the global burden of disease (as a percentage of total DALYs) in the WHO European region is attributable to overweight and obesity [103]. There exist insufficient data at present to be able to arrive at an accurate estimate for Malta. However, following on the methodology adopted by the WHO in this report, we estimate that 17% of total deaths in Malta are attributable to overweight and obesity.

Psychological Wellbeing Despite the causality of the relationship Such encounters in the life of an There is evidence of a causal reciprocal being difficult to define, it has been obese person may result in emotional link between obesity and mental health estimated from 2015 EHIS data [18] that or psychological harm, in addition [104]. On the one hand, obesity leads to obese individuals are 1.3 times more to potential lower earnings resulting the increased likelihood of suffering likely to report depressive symptoms from educational and employment mental disorders such as depression, than normal weight individuals. discrimination. However, financial and on the other, mental disorders lead Moreover, around 7% of the total effects of injustice and prejudicial to an increased risk of becoming obese Maltese population aged 15 and over treatment have not been estimated for [105]. Obesity can have consequences on take prescribed medication to treat the purpose of this publication, since an individual’s perceived body image, anxiety and/or depression. they are inherently not quantifiable. self-esteem and weight-related stigma, Injustice and Prejudicial Treatment which in turn lead to the consumption Injustice and prejudice is found in of additional (unhealthy) foods due to several facets of an obese person’s [106 -107] Discrimination a mixture of intense emotions . life, in the form of physical abuse, Furthermore, although medication verbal remarks, public situations, as and stigma can be taken to treat mental disorders, well as through day-to-day physical towards obese weight gain may arise as a side effect, environments and objects, which thereby contributing further to this are not designed in such a way as persons pose [108] vicious cycle . to accommodate obese persons [112]. a number of Increasing BMI levels generally tend Marketing literature may inadvertently to be associated with poorer mental glorify the thinner body, while retail consequences on an health [33]. Obese individuals tend to establishments may offer a limited obese individual’s report higher psychiatric problems, selection of clothes suitable for obese depression levels, body image distress individuals [113]. Discrimination and physical and and binge eating than normal weight stigma towards obese persons pose a psychological individuals [109]. Furthermore, the number of consequences on an obese effects of emotional disorders arising individual’s physical and psychological health from obesity may be more pronounced health [107]. Such consequences may be amongst females and the morbidly even more pronounced amongst women obese population [110]. rather than men [114]. The obesity problem tends to worsen Discrimination may start from a very as obese individuals start losing their young age, since within educational confidence, leading for instance, to settings, youths may be teased by shopping online in order to avoid being their peers [89]. Obesity in children is seen in public [111]. The psychological also associated with poor academic wellbeing impacts the indirect costs performance [115], thus contributing to outlined in the previous section, leading the fact that obese adolescents have to productivity losses, forgone earnings a lower chance of being accepted at and forgone taxes. Although the costs of university [112]. Stigma can also be psychological health and wellbeing have experienced at home, with family not been quantified, it is important to members and friends [116]. Medical note that these costs may have an impact settings may too pose discrimination both at the microeconomic level – on to obese individuals, in that stigma the obese population itself – and at the towards obese patients arises among macroeconomic level – on the economy physicians and medical students as a whole. [116 - 120].

36 PwC Conclusion

Weighing the Costs of Obesity in Malta 37 Where do we stand? The prevalence of obesity in Malta based utilised for the purpose of our estimates. The effects of obesity on the world’s on self-reported data is 25%, increasing Analysing the estimated 2015 EHIS [18] economy are startling. It has been to 34% of the adult population based on data further on a per capita basis, the estimated that obesity poses an almost measured data. Achieving the targets annual excess cost of obesity is projected equivalent burden on the global set in 2010, i.e. reducing obesity to 18%, to peak at €110 per capita in 2022. It economy as smoking and armed conflict, is a daunting task. Even maintaining is worth recalling that even a minimal with the economic costs amounting to c. obesity levels as reported in the 2015 reduction in obesity rates could translate $2.0 trillion, or 2.8% of global GDP [119]. EHIS [18], at least within the medium into substantial savings being made, Obesity ranks among the three principal term is challenging, especially in light both on the total bill of obesity-related human-generated economic burdens of the high rates of childhood obesity [4, costs, as well as on a per capita basis. 20, 28, 120] in most developed countries. The . The latter are of great concern Additional visits to GPs and specialists McKinsey Global Institute has estimated as there are serious implications in the every four weeks are projected to the economic impact of obesity in 2012 long-term, with obesity in children increase by 3% over a six-year period. [4, 120] at $70 billion (or 3% of GDP) in the tending to predict obesity in adults . An increase of 5% in average total United Kingdom and $663 billion (or We have attempted to project the additional inpatient nights and [119] 4.1% of GDP) in the United States . excess cost of obesity by 2022, on the day patient stays is also expected [48] Through a peer PwC analysis, the assumption that the 2015 EHIS level over the next six years. In terms of costs of obesity for 2015 have been of obesity, and the respective age and pharmaceuticals, an additional 690 estimated at AU$8.6 billion (or 2.1% of gender distributions are maintained obese individuals are expected to GDP) in Australia. over the period. The estimated total consume pharmaceuticals to treat In Malta, the costs of obesity for 2016 cost of obesity in 2022 is c. €41.4 anxiety and/or depression by 2022. have been approximated at €36.3 million, an increase of €5.1 million from The effects seem to be even million (€35.8 million in 2015 prices), current levels, over a span of six years. more pronounced in the case of equivalent to 0.4% of GDP. Total Movements reflect namely inflationary pharmaceutical consumption taken healthcare expenditure accounted for increases and an extrapolation of to treat hypertension, cholesterol and 7.3% of GDP in 2015. It is estimated that the obese population from the 2015 diabetes. Obese individuals reporting [18] 5.6% of national health expenditure in EHIS data to Eurostat population depressive symptoms over normal [121] 2015, or 8.1% of annual public recurrent forecasts . In comparison, Cuschieri weight individuals are projected to [49] health expenditure is attributable to et al. (2016) anticipate the costs of increase from 29% to 33%. With the obesity. overweight and obesity (comprising increased prevalence of obesity, a higher The Future Impact hospital costs and the cost of visits to proportion of people are projected Obesity has been on the rise over GPs and specialists) to rise to €46.5 to suffer from disabilities that would time. Should the prevalence of obesity million by 2050. Such costs are based impinge them from participating in the continue to increase, it is estimated that on a projected population within the workforce and/or delivering their work 50% of the world’s adult population age group of 25 to 64, which is different effectively. High-level estimates indicate could be either overweight or obese by from the age group (15 years and over) that almost an additional 90,000 hours 2030 [88]. would be lost from the total productivity generation, in the next six years.

National health expenditure 5.6% Annual public recurrent health expenditure 8.1%

GDP 0.4%

38 PwC A concerted effort In light of this analysis, a concerted Industry may also incentivise physical Active media campaigns could also assist effort from Government, non- activity if the rate of indirect tax on in promoting a healthy diet whilst also governmental organisations, employers, sports equipment and gym membership encouraging physical activity. Use can individuals and society as a whole is is reduced. Other potential interventions also be made of technology, to develop required as a matter of urgency. Obesity include granting subsidies to food apps or games which enable individuals is a societal challenge, which is expected producers or retailers, thus allowing to keep track of their health and to result in higher economic and social the supply of healthy food products at a wellness on a daily basis. costs as obesity rates continue in their lower price. Most of the interventions mentioned trajectory. Intervention is required on a Thorough food labelling, in line with are already outlined in a number global level in different facets of life, be Regulation (EU) No. 1169/2011 [122], of strategies and policies laid out it on a personal, family, community and should make it easier for consumers to by Government. The focal policy [34] national level . Interventions need choose the healthier option of a number document centring on obesity is the to entice sustained behavioural change of food products. Employers may also be ‘A Healthy Weight for Life: A National among individuals in order to yield encouraged to promote physical activity Strategy for Malta’ [42] which started [119] effective results . at the workplace by being provided with being implemented in 2012 until Obesity interventions can target a fiscal incentive for offering wellness 2020. In principal, the strategy sets different sectors of the population. For activities and physical activity classes out, among other priorities of action, instance, a reformulation of the school during break time or after working to encourage the uptake of a healthy curriculum to include more hours of hours. Moreover, healthier food options diet by the Maltese population physical activity and healthy nutrition and fitness facilities can be made more through healthy public policies across in a week should encourage healthier accessible at the workplace and financial Government and to support schools daily habits. Restricting media pressures incentives can be provided to employees and families in preparing nutritious through high-calorie food advertising, who participate in wellness activities meals for children. Other priorities providing nutritional labelling on food [123]. Investing further in educational of action include regulating audio- products, subsidising healthy foods campaigns, promoting healthy eating visual advertising of unhealthy foods or taxing unhealthy foods, as well and engaging in physical activity from (especially adverts directed at children), as restricting promotional activity in a very young age, may be fruitful in the promoting physical activity, setting high-calorie intake foods may help long-term. It would also be helpful to up multidisciplinary clinics with the alter consumer behaviour. Additionally, provide educational background intention of managing excess weight promoting active transport, delivering on the subject to parents, so that the in adults and children, and promoting public health campaigns and promoting behaviour of adopting a healthy lifestyle exclusive breastfeeding during the first weight management and wellness is instilled even within the household. six months of life, whilst encourage programs should also lead to positive Strategies such as the School Fruit and continued breastfeeding in the first action with respect to obesity [119]. Vegetables Scheme [124] which seeks to years of life. The latter priority of In a number of countries, Government promote the consumption of fruit and action has been reinforced through has been a key player in implementing vegetables among school children seem the ‘National Breastfeeding Policy and measures aimed at reducing obesity. to serve their purpose, as around half Action Plan 2015 – 2020’ [43]. This Action Examples of fiscal-induced incentives of the parents surveyed noted that their Plan seeks to instigate a supportive are tax credits for those individuals children are asking to have fruit as part environment whilst nurturing a culture pursuing a sports activity or fitness of their school lunches and meals at that facilitates a mother’s choice for classes at a number of recognised home [125]. breastfeeding, especially in view of institutions. conclusive evidence that children who are breastfed (for longer durations) have a lower likelihood of becoming overweight or obese [126, 127].

Weighing the Costs of Obesity in Malta 39 In support of healthy lifestyles and members is encouraged, such that between fiscal incentives on unhealthy the reduction of non-communicable healthy cookery clubs and physical foods and a decrease in DALYs [129]. diseases, ‘The Healthy Lifestyle Promotion activity events can also be organised. Preventative strategies tend to be the and Care of Non-Communicable Furthermore, the Steering Committee, most effective at reducing obesity in the [44] [128] Diseases Act’ was enacted in 2016. supported by the Parliamentary long-term . The legislation seeks to foster an Working Group on Diabetes, has set out Effective interventions are expected inter-ministerial lifelong approach a national strategy for diabetes through to improve the health and quality of supporting physical education and ‘Diabetes: A National Public Health life of the population, whilst resulting healthy eating, and intends to reduce Priority 2016 – 2020’ [45]. As remarked in numerous cost savings on health the incidence of non-communicable in the literature, obesity tends to lead spending. In Malta, future research diseases throughout all age groups. In to an increased risk of developing should focus on assessing the cost view of said legislation, an Advisory type 2 diabetes [2, 6- 7, 30, 37-38], this in effectiveness and impact of any new Council on Healthy Lifestyles has been turn being affected by an unhealthy interventions targeted at reducing the appointed to provide advice on issues diet and physical inactivity (among obese population. Nevertheless, at relating to healthy lifestyles. Roles of the other factors). Thus, the onset of type present, it would be best to focus on the Advisory Council may include advising 2 diabetes can be easily prevented by strategies and policies already in place the Minister on health, physical activity altering one’s behaviour [45]. and to devote more efforts and resources and nutrition, advising the Minister on Previously, Government also tried towards successfully implementing policies, action plans and regulations introducing a BMI screening programme them. Ultimately, their fruition is wholly intended to reduce the occurrence of at state hospitals, whereby patients dependent on adequate and sufficient non-communicable diseases among could have their BMI calculated when resources. the public, and encouraging a lifelong they had a consultant visit. This was approach towards embracing a healthy introduced in view of the fact that lifestyle and physical activity. healthcare professionals may be The Ministry for Education and influential over their patients and the Employment has also devised a ‘Whole broader community [128]. However, this School Approach to a Healthy Lifestyle: proved partially ineffective as there Healthy Eating and Physical Activity were insufficient resources that could [46] Strategy’ in 2015 , coupling this with be utilised to monitor the patients’ diet a specific policy of action on the subject and progress over time. Thus, for any [47] . It is suggested to adopt a life course selected interventions to yield desired approach to develop a sustainable outcomes, it is of utmost importance school environment that supports that they are backed up by the necessary healthy living and to make healthy food resources. options more widely accessible. Schools In other territories, PwC [48] has are also encouraged to develop school estimated that the implementation of a grounds and playing facilities to support number of interventions over a ten- physical activity, and to promote the year period results in a benefit-to-cost consumption of fruit and vegetables, ratio of 1.7. The interventions being whilst increasing their availability. most beneficial have been identified The strategy also intends to enforce as environmental interventions, these standards that require a recommended comprising reformulation of the minimum number of hours in the nutrient content of processed foods, National Curriculum Framework to food labelling and the introduction of be dedicated to physical activity per a tax on unhealthy food. Studies have week. Moreover, collaboration between indicated that there is a high correlation schools, parents and community

40 PwC Appendix A - Methodology

Weighing the Costs of Obesity in Malta 41 Methodology underlying the The model underlying this publication to 64, 65 to 74, and 75 years and Modelling of the Costs of Obesity provides a financial estimate of the over. Where possible, we have tried This publication presents an analysis additional annual cost of adult obesity to distinguish costs between the of the costs of obesity in Malta, by in Malta for 2016. For the purpose of three different classes of obesity, as expanding on the costs presented this publication, an adult is defined as defined in the first section. The sample in the ‘A Healthy Weight for Life: A an individual being 15 years or older. population has been weighted in terms National Strategy for Malta 2012 – 2020’ The prevalence of obesity is based on of age and gender, such that the data is publication [42]. A bottom-up approach 2015 EHIS [18] results. The latter is a statistically representative of the total has been used in the compilation of this comprehensive general health survey Maltese population. This has enabled report and in calculating the direct and based on a random and representative us to extrapolate the survey data to indirect costs of obesity, as well as in sample of the Maltese population aged the Maltese population, resulting in a estimating other costs, where applicable. 15 and over. In total, 4,086 individuals total of 95,951 obese individuals being A bottom-up approach is generally were interviewed in this study. When categorised into the three obese strata as deemed to be more robust than a considering data relating to BMI, 3,430 shown in Figure 12: top-down approach since costs are (83.9%) respondents reported the calculated per obese person and then, necessary information on weight and extrapolated to the total population height, such that a BMI value could be [48]. This method is generally preferred derived. in light of available data, given that it The model is based on data relating captures a wider range of costs than to the following age brackets: 15 to could otherwise be incorporated within 24, 25 to 34, 35 to 44, 45 to 54, 55 a top-down analysis.

Figure 12: The Maltese Obese Population by Class of Obesity

Obesity Class I Obesity Class II Obesity Class III 67,064 20,514 8,373

Where costs have been estimated in relation to data based on the working age population, that proportion of the population aged 16 (inclusive) to 65 (not inclusive) has been considered. The costs of obesity refer to the marginal costs of obesity incurred by obese adults over adults of normal weight. Thus, it is only the difference between the costs incurred by obese and normal weight individuals that is captured within this model, as this ultimately represents the impact of obesity on national expenditure. Cost estimates have been treated consistently by adjusting cost assumptions to reflect nominal and/ or real values to 2016 prices, accordingly. Where an inflation factor was required, the actual inflation rates throughout the years were sourced from the Central Bank of Malta website. In projecting the costs of obesity to 2022 (based on 2015 EHIS results), costs have been assumed to increase at a projected inflation rate of 1.7% in 2017, 1.8% in 2018 (based on forecasts by the Central Bank of Malta[130] ) and at 2% per annum thereafter. The European Central Bank expects countries within the euro area to converge to a rate of inflation, which is lower, but nonetheless close to 2% over the medium term [131].

42 PwC Moreover, in estimating the proportion develop certain assumptions for input We have resorted to certain data from of GDP attributable to obesity-related into the financial model, where raw data the 2015 EHIS [18] results (other than costs in 2022, the projected GDP growth was not available. Experts on the area BMI data) in order to make an estimate rates for 2016 to 2018 have been sourced were consulted when any assumptions of the costs of obesity in Malta based on from the Economic Projections of the needed to be made. BMI rates from the recent local study. Central Bank of Malta for 2016 to 2018 A high-level estimate has also been The survey contains the wealth of data [130] . On the other hand, the forecast made of the additional costs of obesity needed to compile this publication – growth rates for 2019 to 2022 have in 2016 based on BMI rates sourced data that does not feature in Cuschieri et [22] been based on forecasts prepared by the from the recent article by Cuschieri et al.’s (2016) study. In this case, given United States Department of Agriculture al. (2016) [22]. Such estimates have only that BMI data for the obese population [132] Economic Research Service . been prepared with a view to show the in the study is not categorised into In conducting the necessary research, a effect of self-reported measures of BMI different obese classes, we have resorted literature scan has been made to obtain on the cost calculations. They have not to an average of data from the three an understanding of the different costs been merely prepared to act as a direct obese classes as reported in the 2015 of obesity and their respective impacts. comparison of costs based on different EHIS to calculate certain costs, including Literature also helped in formulating rates of BMI. Our analysis reveals that the cost of primary care, specialist certain assumptions in the absence of self-reported measures of BMI are care and hospital care, among others. actual data from the 2015 EHIS [18]. In under-reflective of the true picture of Furthermore, given the time limitation, developing the financial model, the obesity prevalence in Malta, this leading data relating to the working age metrics utilised have been selected on to a highly underestimated total obesity population as extracted from the 2015 the basis of their relative importance cost bill. EHIS (i.e. between 16 and 65 years of age) has also been applied in preparing and the extent to which they could The study by Cuschieri et al. (2016) these estimates. be reliably measured. The literature [22] focuses on that proportion of the scan, coupled by experience regarding Maltese population aged 18 to 70. Thus, We include hereunder, a sample of the the subject matter and a number of the BMI rates reported in the study have formulae used in estimating the direct expert opinions, facilitated the process been extrapolated to the population and indirect costs of obesity. The cost of choosing which cost categories to aged 18 to 70 (based on the latest NSO of pharmaceutical care and that of estimate. Lastly, the costs of obesity in Demographic Review [133]), such that the absenteeism have been selected by way Malta have been estimated through a new age groups comprise the following: of example. Where applicable, each process of financial modelling, after 18 to 24, 25 to 34, 35 to 44, 45 to 54, 55 of the estimated costs has been sub- having collected relevant data on both to 64 and 65 to 70. Results reveal that divided into Government and individual the direct and indirect costs of obesity, a total of 103,911 Maltese individuals contribution. and after drawling on the literature to between the age of 18 and 70 are obese.

Marginal costs of obesity incurred by the obese 2015 EHIS results over the normal weight form the basis of population are estimated the financial model

Study focuses on Bottom-up approach adult population used in estimating aged 15 and over costs of obesity

Weighing the Costs of Obesity in Malta 43 1. Pharmaceutical Care Government contribution

Excess spend on pharmaceuticals for each Number of obese people obesity class-related comorbidity consuming pharmaceuticals by comorbidity type

Formula Extended formula Source component components (Excess pharmaceutical Excess spend on cost as a percentage of Based on proxies pharmaceuticals for each normal weight by obesity = obtained from PwC obesity class-related class level – 23%, 42% Australia (2015) [48] comorbidity and 54% for Obese Class I, II and III respectively X Cost of pharmaceuticals consumed by normal Central Procurement and weight individual by Supplies Unit (CPSU) comorbidity type X Number of obese people within each obesity class consuming 2015 EHIS [18] pharmaceuticals by comorbidity) - Cost of pharmaceuticals Calculated based on consumed by normal figures obtained from weight individuals by CPSU and 2015 EHIS [18] comorbidity type

Differences in pharmaceutical consumption for a number of comorbidities between obese and normal weight individuals within the surveyed population have been identified. Differences in the medication consumed within the previous two weeks (extracted from the 2015 EHIS [18]) could then be applied to the extrapolated population and to the Government spend on pharmaceuticals by comorbidity. Table 9 delineates the percentage of the population surveyed taking prescribed medication for those comorbidities for which a difference in pharmaceutical consumption by obese and normal weight individuals has been identified.

44 PwC Table 9: Percentage of population surveyed taking prescribed medication for comorbidities outlined Medication consumed in Under- Normal- Pre- Obese Obese Obese the previous weight weight Obese Class I Class II Class III two weeks for: Asthma/ COPD 4.9% 5.1% 8.3% 11.0% 11.1% 11.4% Hypertension 2.4% 10.3% 20.4% 32.7% 34.4% 32.1%

Cholesterol 2.4% 6.9% 16.2% 21.6% 22.1% 13.9% Pain relief 4.9% 7.5% 8.9% 12.7% 19.5% 10.1% Heart disease 1.2% 2.9% 5.3% 7.6% 9.0% 5.1%

Diabetes 2.4% 3.5% 7.8% 12.3% 17.4% 12.7%

Heartburn 2.4% 2.9% 4.2% 6.2% 6.3% 5.1% Anxiety/ 4.9% 3.4% 3.1% 6.5% 12.6% 7.6% Depression Hypothyroidism 3.7% 2.8% 4.9% 5.8% 6.9% 6.3%

Individual contribution

Total out-of-pocket spend on Total Maltese population Proportion of excess pharmaceuticals per person Government pharmaceutical spend on obese population

Formula component Source Estimated based on data from Total spend on pharmaceuticals out-of- Household Budgetary Survey (2008) pocket per person [63]

X NSO (2016), Demographic Review Total Maltese population 2014 [133] X Estimated based on excess Government spend on Proportion of excess Government pharmaceuticals for the obese as pharmaceutical spend on obese a percentage of total Government population spend on medicine, sourced from the 2016 Budget Financial Estimates [134]

Weighing the Costs of Obesity in Malta 45 The excess Government spend on pharmaceuticals due to obesity has been estimated as a proportion of the total Government expenditure allocated to pharmaceutical consumption within Vote 32, this comprising namely medicine, excluding surgical materials. This proportion has been applied to the total Maltese population and to the total out-of-pocket spend on pharmaceuticals per person, in order to estimate the excess individual contribution towards pharmaceuticals emanating from obesity. For the purpose of these estimates, it has been assumed that the same proportion of excess expenditure on pharmaceuticals due to obesity in terms of total expenditure on pharmaceuticals within the public sector is also applicable within the private sector.

2. Absenteeism Employer contribution

Additional hours absent from work for Number of obese persons obese relative to normal weight person Average gross hourly wage working for pay or profit working for pay or profit in a year

Formula component Source Additional hours absent from work for obese person relative to normal weight 2015 EHIS [18] person working for pay or profit in a year X Labour Force Survey 2016 Q2 (NSO) Average gross hourly wage [92]

X Number of obese persons working for pay 2015 EHIS [18] or profit

The average gross hourly wage was estimated on the basis of a 40-hour working week.

46 PwC Limitations and certain costs, which either cannot direct costs of obesity, whilst being We would like to acknowledge a be estimated reliably or for which the summation of the costs of both number of limitations encountered in insufficient data were available, were overweight and obesity. the compilation of this publication. excluded. Given that recently measured The publication has merely sought The study has sought to focus on the BMI data were not available at the time to assess the costs emanating from costs emanating from adult obesity and of writing this publication, the EHIS obesity. Thus, it does not delve into any [16 - 18] therefore, has not sought to assess the data sets have been deemed to interventions that could be introduced financial impact of childhood obesity. comprise the best available results for to address the problem of obesity, The study focuses on obesity, defined BMI in Malta. Furthermore, the 2015 together with their relative impacts. by a BMI of 30.00 kg/m2 or higher, as EHIS [18] contains extensive data beyond distinct from overweight. The analysis Cuschieri et al.’s (2016) [22] study, is based on estimates of the prevalence such data being crucial in estimating This publication of obesity within the three obese class the costs of obesity. In this context, categories of BMI. Reference to the it is advised to analyse results with intends to show the overweight population is only made caution, given that the proportion of the underlying effects to the extent that it adds insight to population being overweight and obese the findings, or where analogous may be underestimated. No financial of the estimated information on the obese population estimate for conceptual costs of health costs of obesity, only is not available. and wellbeing has been made. Thus, the Whilst both international and local costs presented in this publication may without delving literature in relation to the subject have be a somewhat conservative estimate of into any been reviewed, the former constituted the true costs of obesity. the major part of sources consulted, The estimate of the 2016 costs of obesity interventions that due to the lack of Maltese literature based on results by Cuschieri et al. can be introduced focusing on obesity and its related costs. (2016) [22] are not entirely comparable Due to the unavailability of certain data with costs calculated on the basis of to address the within the local arena, at times, we had the 2015 EHIS [18] results. Certain data problem to resort to an application of proxies, or extracted from the 2015 EHIS also similar data from other publications or reflect the population aged 16 to 18. In research material. Certain assumptions view of the limited timeframe between also had to be made in the absence of the date of issue of the article by available information. Literature up to Cuschieri et al. (2016) [22] and the date 19th December 2016 has been consulted of publication of this report, results for for the purpose of this publication. certain data were not re-extrapolated The total bill of obesity-related costs in line with the age groups utilised by for 2016 (based on 2015 EHIS [18] Cuschieri et al. (2016) [22]. Furthermore, results) presented in this report may be the estimate of costs presented in the underestimated to the extent that, rates recent article by Cuschieri et al. (2016) of obesity are based on self-reported [49] are also not comparable, given data (which tend to be underestimated) that they comprise only some of the

Weighing the Costs of Obesity in Malta 47 Appendix B - Definitions

48 PwC Absenteeism: The time one spends away from work due to illness. Adult: A person over 15 years of age. Allied healthcare professionals: A distinct group of health professionals who apply their expertise to diagnose, treat and rehabilitate people of all ages (International Chief Health Professions Officers (ICHPO) definition)[135] . Bariatric surgery: A surgical procedure intended to result in weight loss by restricting the amount of food the stomach can hold, leading to a malabsorption of nutrients, or through a combination of malabsorption and gastric restriction. Bariatric surgery procedures can include the placement of an adjustable gastric band, sleeve gastrectomy, gastric bypass, gastroplasty and gastric bypass by biliopancreatic (duodenal switch) [136]. BMI: An index of weight-for-height, which is used to measure population-level obesity. Comorbidities: A number of diseases or disorders, which are experienced concurrently. DALY: The loss of one year of healthy life, used as a measure of the burden of disease, which captures the effects of multiple comorbidities and premature mortality. Day patient stay: The use of a range of hospital services by a patient who does not remain in hospital overnight, but stays for at least half a day [137]. Disabled (for the purpose of our report): Those having difficulty in walking 500 metres on flat terrain without a stickor walking aid or assistance, and/ or those having difficulty in walking up or down twelve steps without a stick, other walking aid or assistance. GDP: Expenditure-based Gross Domestic Product, being the total final expenditure at purchasers’ prices. Inpatient stay: The use of a range of hospital services by a patient who is admitted to hospital and remains overnight [137]. Invalidity pensions: Contributory pensions granted to those individuals certified as being incapable for suitable full-time or regular part-time employment due to a serious disease, or bodily or mental impairment, subject to meeting certain criteria. National Health Expenditure: The sum of General Government and private sector expenditure on health. Non-communicable diseases: Chronic diseases which are not transferable, but which tend to be of long duration and slow progression. Non-communicable diseases generally include cardiovascular diseases, chronic respiratory diseases, diabetes and cancers [138]. Premature Mortality: Focuses on deaths among the younger age groups of the population. Premature mortality is measured in terms of potential years of life lost (PYLL) before reaching the age of 70 years [139]. Presenteeism: The practice of going to work despite illness, injury or anxiety, often leading to reduced productivity. Public Recurrent Health Expenditure: The sum of Government expenditure on outlays for health maintenance, restoration or enhancement paid for in cash or supplied in kind by government entities, such as the Ministry for Health, other Ministries, parastatal organisations, and social security agencies. It includes transfer payments to households to offset medical care costs and extra-budgetary funds to finance health services and goods.

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