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Soc Psychiatry Psychiatr Epidemiol (2012) 47:683689 DOI 10.



Economic burden of depression in South Korea

Sung Man Chang Jin-Pyo Hong Maeng Je Cho

Received: 26 April 2010 / Accepted: 10 April 2011 / Published online: 28 April 2011 Springer-Verlag 2011

Abstract Background A recent national survey in South Korea indicated that the 12-month prevalence rate of major depressive disorder was 2.5%. Depressive disorders may lead to disability, premature death, and severe suffering of patients and their families. This study estimates the economic burden of depression in Korea from a societal perspective. Methods Annual direct healthcare costs associated with depression were calculated based on the National Health Insurance database. Annual direct non-healthcare costs were estimated for transport. Annual indirect costs were estimated for the following components of productivity loss due to illness such as morbidity (absenteeism and presenteeism) and premature mortality. Indirect costs were estimated using the large national psychiatric epidemiological surveys in Korea. The human capital approach was used to estimate indirect costs. Result The total cost of depression was estimated to be $4,049 million, of which $152.6 million represents a direct healthcare cost. Total direct non-healthcare costs were estimated to be $15.9 million. Indirect costs were estimated at $3,880.5 million. The morbidity cost was $2,958.9
S. M. Chang Department of Psychiatry, Kyungpook National University Hospital and School of Medicine, Daegu, South Korea J.-P. Hong Department of Psychiatry, Asan Medical Center, Ulsan University College of Medicine, Seoul, South Korea M. J. Cho (&) Department of Psychiatry, Seoul National University Hospital and College of Medicine, 28 Yongon-dong, Chongno-gu, Seoul 110-744, South Korea e-mail:

million and the mortality cost was $921.6 million. The morbidity cost was identied as the largest component of overall cost. Conclusion Depression is a considerable burden on both society and the individual, especially in terms of incapacity to work. The Korean society should increase the public health effort to prevent and detect depression in order to ensure that appropriate treatment is provided. Such actions will lead to a signicant reduction in the total burden resulting from depression. Keywords Cost of illness Depression Economic burden Korea

Introduction Depression is a major public health concerns to society due to its high prevalence combined with debilitating nature. The burden of depression, measured in Disability-Adjusted Life Years (DALYs), ranked fourth globally in 1990 and is projected to rank second after ischemic heart disease by 2020 [1]. Although it is not a major cause of mortality, depression seriously decreases the quality of life for individuals and their families, increases risk for suicide, and often worsens the outcome of other physical health problems [2, 3]. Recently depression has become a major public health problem in South Korea. Since the 1980s, prevalence rates of major depression in Korea appear to be increasing. In 20012002, the estimated annual prevalence rate of major depression among the Korean adults was 1.7% [4]. The most recent national survey, conducted in 20062007 based on DSM-IV, found that the 12-month rate of major depression was 2.5% [5]. In addition, suicide, one possible



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consequence of a depressive disorder, is now the fourth leading cause of death in Korea. The suicide rate of South Koreans was the highest among Organization for Economic Cooperation and Development (OECD) countries in 2007. It has increased sharply in the last decade, doubling from 1997 (13.1/100,000 population) to 2007 (24.8/100,000 population) [6]. Not only does depression place physical and emotional strains on the individual, but it also leaves both patients and society with enormous nancial costs [7]. Depression imposes signicant economic burdens both in terms of medical resources used to treat it and in terms of production losses due to work absenteeism, early retirement, and premature mortality [8]. The negative health outcomes of depression can result in negative economic consequences for society. To decrease these economic burdens, policymakers and health professionals must rst know the magnitude of the economic and non-economic consequences of an illness [9]. Yet, the economic costs of depression have not been investigated in Korea. In order to understand the magnitude of the economic impact of depression on our society, we conducted this study to estimate the total cost of depression in Korea, based on national health care claims data together with detailed analyses of large epidemiological survey databases.

database, major depression was categorized according to International Classication of Diseases 10th edition codes (ICD-10). Costs were calculated as ICD-10 codes F32-F33 (major depressive episode and recurrent major depressive disorder) according to inpatient care, outpatient care and pharmacy cost. We aggregated the healthcare costs of National Health Insurance and Medical Aid. Direct non-healthcare cost - transport costs were estimated by multiplying the number of total visits to outpatient clinics by the mean return fare per visit of $5.50 [13]. The healthcare component of the Korean Consumer Price Index (CPI) was used to adjust costs to 2005 values. Indirect costs A prevalence-based approach was used to measure the burden of depression among adults aged over 18 years in South Korea in 2005. We analyzed a prevalence rate of depression by age and gender using the Korean Epidemiologic Catchment Area Study Replication (KECA-R) which was applied to 2005 population data for Korea. Productivity losses caused by depression can be divided into those associated with morbidity and those associated with premature mortality. Therefore, excess indirect annual costs resulting from depression were estimated separately for two distinct components of productivity loss: lost or reduced productivity at the workplace and premature mortality from suicide. Indirect costs due to depression were estimated following a human capital approach, which assumes productivity to be valued at individuals market earnings. The KECA study and KECA-R study We use two large national sample surveys, Korean Epidemiologic Catchment Area Study (KECA) and Korean Epidemiologic Catchment Area Study Replication (KECA-R). The KECA study was designed to estimate the prevalence and correlates of psychiatric disorders among the Korean adults in 2001 [4], and it provided derivative data. The KECA study administered the validated Korean version of Composite International Diagnostic Interview 2.1 (K-CIDI 2.1) to each subject. The target population included all eligible residents ages 1864 years in Korea. A stratied, multistage, cluster sampling design was adopted. In total, from 7,867 selected Korean households, 6,275 face-to-face interviews were completed by one person per household (response rate, 79.8%) chosen at random. The KECA study is detailed elsewhere [4]. We obtained more detailed analyses on the work days lost from the KECA data. The Korean Epidemiologic Catchment Area Study Replication (KECA-R) was conducted from July 2006 to

Methods We included the following cost components as basic quantities of interest as recommended by Luppa et al. [10]: direct healthcare and non-healthcare costs, morbidity and mortality costs. Direct healthcare costs included outpatient costs, inpatient costs, and pharmaceutical costs. Direct nonhealthcare costs included transport costs. Indirect costs include productivity loss due to absenteeism and presenteeism (morbidity costs) and life-years lost due to premature death (mortality costs). Direct costs National health statistics data were used to measure the direct cost of depression among adults over the age of 18 years in Korea in 2005. Direct medical costs were obtained using data from National Health Insurance database [11]. The Korean Medical Security system consists of National Health Insurance and Medical Aid. The majority of South Koreans are beneciaries of National Health Insurance (98.4% of total population), and those with the lowest income level are provided with Medical Aid with no cost to them. A more detailed description of the South Korean National Health Insurance Program has been presented elsewhere [12]. In the National Health Insurance


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April 2007. The basic principles of the survey design for KECA-R were the same as those of KECA. Subjects were selected by using a stratied, multistage, cluster sample design like KECA, which was based on the 2005 population census. From the nally selected 7,968 individuals aged 1864 years, a total of 6,510 face-to-face interviews (response rate 81.7%) were completed using the K-CIDI 2.1. [5]. In accordance with National Health Insurance data based on the ICD-10 code, diagnosis of major depression was made according to the complete list of diagnostic criteria for ICD-10. We obtained 12-month prevalence rates for ICD-10 major depression (F32-F33) from the KECA-R data. Morbidity costs

population. Expected lost future earnings due to premature mortality among people with depression were adjusted to 2005 values using a 3% discount rate. A review of the literature suggested that the prevalence rate of depression among suicide victims ranged from 50 to 70% [10]. Therefore, 60% was used to calculate the number of suicides that were attributable to depression. Only people with depression under 65 years of age were included in this analysis; although this gure is lower than the recognized retirement age in Korea, it was intentionally adopted in order to ensure that these results were conservative. The actual average retirement age was 68.2 for men and 66.9 for women in 2004 [17].

Results Depression morbidity increases both absenteeism (missed work days due to depression) and presenteeism (reduced productivity while at work due to depression) at workplace [14]. The age- and gender-specic employment rates among people with depression were estimated from KECA-R. Employees with depression have lost productivity resulting from disability due to illness. The number of work days lost (absenteeism) were assessed in the KECA by means of the work loss day questions of the WHO Disablement Assessment Scale version 2 (WHODAS-II) [15]. The mean work loss day among employees with depression was 2.0 days/month (male = 2.6/month vs. female = 1.8/month). With respect to presenteeism, the data from the KECA and KECA-R studies did not contain lost hours due to depression during work days. Therefore, we reviewed other published Korean literature, which estimated the productivity weight of depression patients in the workplace. One recent study reported that 14.7% of the time spent at work while suffering from a depression episode resulted in lost productivity [16]. Based on this productivity decrease, lost productivity resulting from presenteeism was calculated. The resultant productivity loss due to absenteeism and presenteeism along with depression was estimated using age and gender specic average monthly wages [17] applied to the prevalence distribution of depression sufferers with a job. Mortality costs Mortality costs were dened as the product of the number of deaths due to depression and average expected future earnings. The present value of lost earnings due to premature mortality was calculated from deaths attributable to depression and annual earnings; data for these calculations were obtained from the National Mortality Statistics [6] and the Korean Ministry of Labor [17]. The cost of suicides was based on the lost value for production in the working
1824 2534 3544 4554 5564 Total

The 1-year prevalence rate of ICD-10 major depression in the Korean population, age 1864 years, in 2005 was 2.63% (Table 1). The estimated number of cases is 885.7 thousands (male: 309.5 thousands, female: 576.2 thousands) in Korea in 2005. Table 1 shows 1-year prevalence rates of major depression in 2005 by gender and age group. Direct costs The components of direct costs of treating depression that are borne by the National Health Insurance and Medical Aid were estimated to be $152.6 million (Table 2). The total number of patients treated with depression was about 430,000. These totals comprised outpatient care, inpatient care, and pharmacy. The cost of each component and its respective proportion of the total direct cost are also indicated in Table 2. The outpatient care cost of major depression ($104.3 million) contributed 68.3% to the direct health care costs of depression. The Percent of out-ofpocket spending out of total health expenditures due to depression was 26.7% ($40.7 million). The direct health

Table 1 Prevalence rate of ICD-10 major depression among Korean adults Age (years) Annual prevalence, N (% SE) Male 63,100 (1.78 0.78) 65,400 (1.67 0.53) 59,000 (1.42 0.55) 82,000 (2.42 0.73) 40,000 (1.97 0.68) 309,500 (1.82 0.35) Female 139,800 (4.34 1.16) 125,100 (3.25 0.78) 95,200 (2.33 0.41) 130,000 (3.87 0.64) 86,100 (4.02 0.85) 576,200 (3.41 0.40)

Source: Korean Epidemiologic Catchment Area Study Replication (KECA-R)


686 Table 2 Direct cost of major depression in Korea Direct cost Direct healthcare cost Outpatient care Inpatient care Pharmacy Direct non-healthcare cost Transport cost Per-patient cost

Soc Psychiatry Psychiatr Epidemiol (2012) 47:683689 Table 4 Premature mortality due to depression and mortality cost by age and gender Age (years) Death associated with depression, N 104.3 33.9 14.4 15.9 273 $/year 68.3 22.2 9.4 1824 2534 3544 4554 5564 Total

$ million

Cost, $ milliona Male 78.8 183.4 225.7 207.3 50.2 745.4 Female 43.2 63.6 45.4 19.6 4.4 176.2

Male 256 608 869 1,004 805 3,541

Female 253 407 403 307 253 1,622

Average exchange rate 1 US Dollar = 1,024 Korean Won in 2005

Sources: National Health Insurance database

Average exchange rate 1 US Dollar = 1,024 Korean Won in 2005

care costs of major depression accounted for 0.74% of total national health care expenditure in 2005. Transport cost for visits to clinics contributed $15.9 million to the annual cost of depression. Morbidity cost Excess productivity losses due to absenteeism and presenteeism were calculated and results are presented in Table 3. Total Morbidity cost at the workplace due to depression resulted in $2,958.9 million. Morbidity cost at workplace accounted for over 73.1% of the total cost of depression. The cost due to absenteeism was $1,149.8 million and the cost due to presenteeism at workplace was $1,809.1 million, and this was the largest contributor to total indirect costs. The age 4554 showed the highest costs in both absenteeism and presenteeism. Mortality cost There were 8,605 suicides in 2005, and 5,163 of these are estimated to be related to depression (Table 4). Suicides in people with depression were most frequent in men aged 4554 years. Excess costs due to premature death were estimated at $921.6 million (estimated by applying a 3% discount rate).
Table 3 Morbidity costs (increased unemployment and lost productivity at workplace) among people with depression by age and gender Age (years) Male Absenteeism, $ milliona 1824 2534 3544 4554 Average exchange rate 1 US Dollar = 1,024 Korean Won in 2005

Table 5 Total costs of depression in 2005 Cost components Direct cost Healthcare cost Transport cost Indirect cost Morbidity cost Absenteeism Presenteeism Mortality cost Total cost

$ milliona (%) 168.5 (4.2) 152.6 (3.8) 15.9 (0.4) 3,880.5 (95.8) 2,958.9 (73.1) 1,149.8 (28.4) 1,809.1 (44.7) 921.6 (22.8) 4,049.0 (100)

Average exchange rate 1 US Dollar = 1,024 Korean Won in 2005

Total cost The total cost of depression in Korea in 2005 is estimated at over $4.0 billion. Table 5 presents the direct and indirect cost components in detail.

Discussion This study is the rst attempt to apply the cost-of-illness methodology to estimate the economic consequences of depressive disorders in South Korea. Around 1 in 4

Female Presenteeism, $ milliona 141.9 151.1 56.9 223.4 92.5 665.8 Absenteeism, $ milliona 183.0 144.8 110.9 130.5 55.4 624.6 Presenteeism, $ milliona 334.9 265.1 203.0 238.9 101.4 1143.3

111.9 119.2 44.9 176.2 73.0 525.2

5564 Total


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Koreans suffer from depressive symptoms and severe depression affects one in eleven persons in their lifetime [18]. Both of the nationwide studies, KECA and KECA-R, conducted in Korea showed lower prevalence of major depression than in the West. However, the prevalence rate of major depression is increasing. Over 885,000 Koreans adults experienced major depression in 2005. Recently with a rapid increase of suicide, depression has become a major concern in the Korean public health sector. Quantifying the total economic cost of depression provides an important perspective on the impact of depression on our society. This information could have potential impact on health policy and health care resource-allocation decision making in Korea. The estimated treatment cost of depression, US $152.6 million, represents about 0.74% of total national health care expenditure in South Korea [11]. According to International Monetary Fund (IMF), GDP in 2005 in Korea is $793 billion. The cost of depression corresponds to 0.5% of the total economy of Korea (GDP), which is lower than that (1%) of Europe [19]. The cost to corporate Korea related to lost production at workplace due to depression is 0.4%. The economic burden of depression depends on a number of factors including prevalence rate, service utilization, and severity [10]. Therefore, a lower prevalence rate and lower service utilization rate in Korea may affect the proportion of depression cost versus GDP. In an epidemiological survey in Korea, the service use rate of people with mood disorders was reported as about 33.2% [20]. A number of studies on the economic costs of depression have been conducted in Australia, the UK, and the US. The extent of the economic burden associated with depression depends on the assessment for diagnosis and the method of cost-calculation, but consists of direct and indirect costs. Indirect costs are often not considered in cost-of-illness studies, and moreover few studies estimated mortality costs. Therefore, the results of costs-of-illness studies are variable. However, including morbidity costs and mortality costs, the indirect costs of depression always exceed the direct costs. For example, in the UK, the direct costs of depression (estimated on the basis of 1991 data) were calculated as 417 million, and the indirect costs seven times greater (2.97 billion) [21]; 86% of the costs were indirect costs. In more recent research in the UK, the total cost of adult depression was estimated at over 9 billion, of which only 370 million (4.1% of total cost) represents direct treatment costs [7]. In the US, in the year 2000, 26.1 billion dollars (31%) were direct medical costs, 5.4 billion dollars (7%) were suicide-related mortality costs, and 51.5 billion dollars (62%) were workplace costs [14]. In Australia, 77% of the nancial burden of depression was in lost productivity through the total or partial inability to carry out normal functions, which did not

include the mortality cost [22]. Studies on the economic impact of depression in the Asia Pacic region are limited with relatively few reports in the literature due to a lack of epidemiological and service utilization cost data [23]. The indirect cost has rarely been estimated. We can nd only one recent study in China including the direct and indirect costs, which reported that the proportion of indirect costs of depression in China was 84% [9]. The indirect costs of depression in Korea also exceed the direct cost, and the proportion of direct costs was only 4.2%. This proportion is quite comparable to the UK [7]. Major depressive disorder costs substantial productivity loss to workers and their company. Concerning lost productivity in workplace, costs of presenteeism was 1.6-fold higher than that of absenteeism. Other depression cost-of-illness studies have found costs of presenteeism surpasses absenteeism [24, 25]. Many studies [2629] show that early detection and appropriate treatment results in a potential reduction in productivity loss and suicide rate, and substantial improvement of productivity and quality of life, thus lowering indirect costs. A recent US study [14] suggests that a higher rate of depression treatment probably has contributed to the very stable mortality and morbidity costs associated with depression. Whereas the treatment rate of depression increased by over 50%, its economic burden rose by only 7% in US [14]. This nding implies that treating depression is benecial to reduce the indirect costs. In future, the economic burden of depression in Korea will increase more than now because of expected increase of prevalence and suicidal rate. Since 2007, the Korean Ministry of Health and Welfare has tried to identify people with depression and sought to prevent suicide by administration of various screening tests, counseling, and other means. It is hoped that increased treatment of depressed patients will reduce the negative economic consequences of depression in Korea. Limitations We used the human capital approach. The human capital approach measures the potential productivity loss for a society as the consequence of illness, namely in terms of lost earnings. Most cost-of-illness studies of depression have used the human capital method to value productivity [10]. This approach may lead to overestimating productivity losses. However, from a societal perspective, unemployment benets may not equate to economic losses, because they are simply money transfers from one person to another. The friction cost method is a modication to the human capital approach that allows for the possibility of worker replacement (i.e., productivity will be lost until a substitute worker lls the vacant position). Using friction cost methods, the indirect cost of depression may be lower



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than current results; however, the friction cost method has been criticized for underestimating productivity losses, because it only considers a single friction period [30]. The magnitude of cost estimates is dependent on various key parameters, such as prevalence rates, services utilization rates, cost per unit of services, suicide rates, individual earnings, labor force participation, and discount rates. Any change in these parameters will affect the cost estimates [9]. We reported here costs only for the most severe depression (major depression). This may have lead to an underestimation of the burden, and our study has some limitations. First, the direct healthcare costs are based on estimates from individuals who sought treatment. The use of national health claim data to assess healthcare cost poses some limitations: errors in classication and in coding, undercoding, and scant data about therapeutic interventions, such as psychotherapy or cognitive-behavioral therapy, and the exclusion of over-the-counter or herbal medications. Second, the use of KECA and KECA-R data has the limitations of cross-sectional surveys, e.g., recall bias [4]. Third, the depression suffers are far more vulnerable to job loss as well as absenteeism and presenteeism. The excess unemployment due to depression was not included in our estimation of indirect costs. Our calculation of presenteeism is supported by a secondary source with a more limited research method. If excess unemployment is considered, the cost of depression will be more larger than our estimation. Fourth, the cost of suicide may be underestimated in the calculations. There are studies which have suggested that more than half of patients with depression go undetected (i.e., do not seek help) [31]. Furthermore, mortality data are usually underestimates, because suicide gures may suffer from a bias in recording in an effort to avoid inicting further suffering on the surviving family members [21]. Finally, we did not include as costs distress, pain, and decreased quality of life, and the cost-of-illness study is only one aspect of the illness of depression. Depression also has substantial physical and emotional effects on patients and their family members. These non-economic impacts require further study. Conclusions The cost of depression in Korean represents a substantial burden on both society and the individual. These ndings suggest that our society needs to increase the public health effort to prevent depression and to detect it early in order to ensure appropriate and timely treatment. Such actions may help to lessen the suffering depression imposes upon individuals, and reduce the nancial burden on society.

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