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SUMMARY This report presents a plan for a congressionally mandated study of costs of environment-related health effects. It includes a framework for an ongoing study that would improve the data and methodologies available to relate environmental hazards to health problems and the costs of these health problems. However, the commi tree that is presenting thi s plan and related findings also cautions that the broad scope of the congressional charge far exceeds what is feasible in our present state of knowledge and that a more systematic effort that evolves over time is needed to derive consistent information on costs of environment-related health effects. Ways that environmental factors affect human health and well-being have attracted growing attention in recent years, with much illness and disease now believed to be associated with environmental factors. The environment in this context includes all extrinsic factors that affect human health. Modification of environmental conditions should provide a promising opportunity for reducing illness and disease and their associated costs. There also has been increasing concern about costs of illness--medical costs in 1979 were $212 billion, or 9 percent of the Gross National Product . In addition, questions are being raised about the effects on the economy of the almost two dozen environment-related laws enacted in the l97Qs. While estimates of costs associated with attempts to improve the environment abound, data on the health benefits attributable to these improvements are scarce. Recognizing a need for more adequate information, Congress enacted Public Law 95-623, the Health Services Pesearch, Health Statistics, and Health Care Technology Act of 1978. This report responds to Section 7 of the law, which calls for an "ongoing study of the present and projected future health costs of pollution and other environmental conditions resulting from human activity," and the reduction in health costs that would result from changes in these conditions. Thus, the law asks for estimates of the health benefits of an improved environment. It calls also for biennial reports that include recommendations on matters related to the ongoing study. 1

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Because of the law's broad scope, the planning committee considered which aspects of the environment should be studied first. In its broadest context, the environment includes all extrinsic, that is, non-genetic factors that may influence health, including agents in the natural environment, such as sunlight, and factors directly attributable to human activity, such as exposure to synthetic chemicals. Many factors in the environment are beneficial in moderate amounts, such as fluorides in drinking water, but harmful in large amounts. Environmental conditions include activities often classified as "lifestyle" or "voluntary," such as habits of nutrition, alcohol consumption, and smoking, and conditions usually considered "involuntary," such as exposures to noise, chemicals, air pollutants, and radiation. Factors related to the social environment and socioeconomic status also are part of the human environment. The committee recognizes that these many environmental factors interact with each other and with the individual to influence health status. Nonetheless, after extensive discussion of the he's apparent intent, the committee recommends that the ongoing study focus initially on adverse health effects and their costs resulting from involuntary exposures to physical and chemical agents derived from human activity, taking into account other factors when they modify the effects of these physical or chemical agents . For example , studies of respiratory illness among miners should include smoking history. Whenever possible, data related to these other factors should be collected and made available for later analysis. Diseases and illnesses of concern include those mentioned in the law, such as heart disease, respiratory illness, and birth defects, but are not limited to these. Environmental factors can adversely affect many parts of the body, such as the skin, the nervous system, the immune system, and the reproductive system. Conduct of the ongoing study requires information related to sources of environmental hazards, human exposure to these hazards, resulting health effects, and, finally, costs attributable to these health effects. The Institute of Medicine undertook this planning study to faci litate the ongoing study' s proceeding in an orderly and use ful way. The planning study goals, as related to the organization of this report, were to 0 describe the basic information requirements necessary for the ongoing study and for the biennial reports [Chapters 2,3,4] 0 provide a framework for the ongoing study and an assessment of the feasibility of meeting the various requirements of the law "Chapters 3,4,6] 2

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recommend administrative arrangements for carrying out the ongoing study [Chapters 5,6] recommend steps to maximize the usefulness of ache biennial reports ~ Chapters 5, ~ ~ . The committee recognizes the desirability of developing the kind of information and analyses requested in Public Law gS-623. It emphasizes that there are ma jor deficiencies In data bases, me tl~odologi es, admi n ~ s trat ive procedure s, and mos t importan t, theoretical knowledge for relating environmental hazards to health problems and their associated costs. These have precluded earlier straightforward assembly of the information. It is the comm;~ctee' s view that it is useful to attempt to develop the estimates requested in P.L. 95-623--even though much of the information cannot be provided in the near future--because improvements in data and methodologies can advance basic knowledge and lead to more informed deci signs . In the early stages of the ongoing study, it wi 11 become more apparent to what extent the Coals of the ongoing study can be met. There wil1 be substantial uncertainties in any estimates of health effects and costs the ongoing study develops, but the committee concluded that these uncertainties can be reduced and that more informed decision making will thereby result. Recognition of the degree of uncertainty can itself' guide decision making and the collection of new information. The commi ttee has not proposed 8 stec-by-step plan for the ongoing study, but rather a series of phased activities, including case studies, methodological research, and evaluative efforts to develop the required data bases and strategies for ar~alyzing them. flee ongoing study will di ffer from many related studies because it will emphasize the entire spectrum of information and techniques needed to Pet and analyze the data. The framework of required information that provides the basis for the committee 's findings and recommendations i s presented in Chapter 1. Approach for the Ongoing Study s tudy The committee identified several broad goals for the ongoing o Integrating avai fable data . The ongoing study should help generate, coordinate, and integrate environmental and health data for use in identi fair re 1 at i onshi ps among hea 1 th prob 1 ems and thei r environments 1 causes and to enable evaluation of the consequences in terms of health costs . Although this planning study primari ly emphasizes 3

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epidemiologic data, that does not reduce the importance of research on animals and other organisms to discover risk factors in advance of human exposure and to extend the information obtained from human studies. o Coordinating statistical policy The study should encourage various groups, especially in the federal government, to explore the administrative and policy questions that hinder coordination of statistical information. Data integration and linkage among current large data collection activities should be encouraged, consistent with the protection of confidential information and individual privacy. o Developing health cost estimates The ongoing study should lead to improved data and methods for evaluating and expressing health costs in monetary terms, as well as in terms other than dollars, such as number of days ill. o Encouraging research The ongoing study should highlight areas needing further methodological development and research, including basic biological research. O Assuring continuity, funding, and flexibility Because a short-term effort will not be particularly worthwhile towards achieving the goals of the ongoing study, provision for a long-term effort, including adequate funding, is required. Costs of carrying out the ongoing study will depend greatly on the extent to which the recommendations in this report are carried out. After reviewing avai fable information in the early phase of the ongoing study, it should be possible to estimate to some extent costs of working towards filling the most pressing gaps in data and analyses, using criteria listed below for setting priorities. In some cases, it might be deemed not worthwhile to pursue certain activities because the costs of obtaining needed data may be great and the possible benefits relatively small or exceedingly uncertain. Costs associated with the ongoing study will need to be reassessed periodically in response to new conditions and information. The Early Phase of the Ongoing Study The early phase of the ongoing study should have the following four related and intertwined activities, which may continue in modified form throughout the study. 4

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o Revi ewi no wha t i s known Information wi 11 be identi fled and assessed on the sources and amounts of pollutants, levels of human exposure to these environmental hazards, the health effects resulting from such exposures, and costs of the diseases and health effects of such pollutants. On the basis of thi s information, priori ties for further studies of various environmental agents and health problems can be set according to the following criteria o the magnitude of their known, suspected, or potential health impacts, taking into account the amount of the hazardous material in the environment o the reliability of existing knowledge about them and the potential usefulness of additional information in minimizing harmful effects 0 the public perception of their importance o the need to study them further for policy purposes. O Assessing the importance and promise of available information - From the above activities, data needs will be identif~ed, promising areas for research will be outlined, and additional recommendations will be made for assembling the required data. O Developing illustrative case studies Case studies will attempt to integrate the many kinds of information needed to meet the congressional request. The development of concrete cases should demonstrate the practical difficulties, complexities, and uncertainties encountered in providing the estimates Congress wants. It would be particularly important to extract from these case studies any generalizations that might apply to methodology and to economic, political, or ethical issues . Two case studies should be undertaken at the outset. One would focus on ~ health problem and consider exposures as environmental determinants. The other would focus on a pollutant or source of pollution and consider all health consequences. Cost estimates would be attempted in both case studies. The approach should be to choose cases in which the etiologies are relatively well understood. These examples might serve: Health problems--chronic respiratory disease, lung cancer, angiosarcoma, chronic disorders of the nervous system Pollutants--asbestos, vinyl chloride, lead, nitrosoureas. 5

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o Desi gnino new methodologies In addition to the studies indicated above, the ongoing study needs a program to develop new methodologies. Once systematic attempts are mace to assess current information, it will become clear which areas require new methods to get quantitative results. The ongoing study, therefore, must explore the comparative meri ts of various data sources and methods for estimating health effects of the envi ronment and thei r cos t s . Some approaches entirely di fferer~t frown these customari ly taken may merit development and apprai Sal . These could include new ways of assessing fractional contributions to i llness and their costs other than on a sub~tance-by-substance or disease-by-disease basis. On the biological side, animal and other laboratory models offer attractive alternatives to putting human beings at hazard and may save enormous effort and time in risk estimation for the human population. Also required i s a consistent analytical methodology to model health outcomes on the basis of information from many different sources and of varying degrees of certainty. The Biennial Reports The biennial reports should contain data tables as well as the case studies and other descriptive material. Because methodological development is crucial, the committee suggests that periodically, as part of the ongoing study, ~ systematic review of the meth,odologies avai fable or being developed to do the work of the ongoing study be collated, summarized, and published. Almost all estimates obtained as part of the ongoing study will have substantial uncertainty, that is, the actual values could be quite di fferent from the estimate. The usefulness of the biennial reports will depend in part on how successfully the uncertainty is expressed.* As examples, public interest organizations, state and local officials, industry, labor, federal government officials, and researchers may use the data and reports for such specific purposes as setting policy, modifying work conditions, presenting a case in court, setting pollution emission standards, or planning a research pro ject . In all these si tuations , estimates of the uncertainty of the avai fable data and information on the methodological underpinning for estimates will be helpful. ., =Even i f the uncertainty spans a range of one or more factors of 10, so that an estimate of 1000 might actually be loo or 10,OOO with some probabi lity, that information may sti 11 be useful for making decisions. One of the goals of the ongoing study is to reduce these uncertain" ies . _6 _

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The committee makes the following recommendations about expre s s i no uncertainty Estimates of uncertainty should be attached to each estimate of amount of pollution, health effect, or health cost. A description of the ma jar sources of uncertainty shou Id be provi deaf . Whenever possible, the reporting system should employ numerical estimates, rather than imprecise terms such as "high," "medium," and "low." Admini strat ive Arrangements for the Ongoing Study According to PeLe 95-62 3 ~ the Department of Health and Human Services (nighs) and the National Academy of Sciences (NAS) are jointly responsible for the ongoing study. The NAS is a private organization chartered to provide independent advice to the government. Several officials of the NAS believe it ~ s inappropriate to undertake a study jointly with a government agency, because such an arrangement would compromise the NAS' historical role as an independent advisory body. Thi s TOM planning co~rrmi ttee recommends that the law be amended so that the NAS could serve in i ts customary advi very role . It i s believed desirable for the NAS to participate actively in the ongoing study on a continuing basi s . Further detai Is of the relationship would be arranged by officials of DENS and NAS. Whatever relationship is arranged, the TOM planning committee recommends an administrative arrangement that fixes responsibility and author) ty for the ongoing study in one clearly defined body. Within the constraints of the present law, the commi ttee describes what it believes to be the best of several alternative arrangements it considered in attempting to delineate some areas of joint activity whi le preserving the NAS ' role as an independent advi very' body. Most of the particulars of this arrangement could apply whether NAS served in a preferred advisory capacity or in an arrangement involving joint responsibility. DENS is assumed to be the lead government agency in the proposed arrangement, which entails formation of two committees, one organized by NAS and the second by DENS, each with different responsibilities for carrying out specific tasks of the ongoing study. The NAS would establish a permanent commi t tee wi th a rotating membership that included representation of the Institute of Medicine and other appropriate bodies within the NAS. 7

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The DHMS committee would have primary responsibility for operation of the ongoing study, for intergovernmental relationships involving the study, and for generating and assembling the data. The NAS committee would have lead responsibility for developing research goals, for much of the data analysis, and for overall evaluation of the program. The actual collection of the data would be the responsibility of individual agencies. The two committees would have joint responsibility for other areas, such as developing priorities for each biennial report and the specifics of its preparation, and recommending areas for study and subjects for special monographs. The committees would review the reports and provide evaluations to the Secretary of HAS. Chapter 5 presents other options for a lead federal agency and describes some of the difficulties inherent in coordinating an effort as extensive as the ongoing study. The various federal agencies, including those mentioned in the law, collect data in ways that respond to the needs of the particular agency, and appropriate incentives may be required to achieve the desired cooperation. However, voluntary cooperation should be sought by means that may include financial incentives and instructions, before further statutory means are undertaken. Many related efforts at coordination already exist; Appendix D lists about twenty interagency groups concerned with environmental health issues. This report emphasizes that whatever administrative arrangement is chosen should encourage mutually beneficial interactions with-the many groups--both in and outside the federal government, including international organizations--that have an interest in the ongoing study. Improving Information for the Ongoing Study In addition to suggesting a framework and administrative arrangement for the ongoing study, this committee made recommendations to improve the data and methods needed to provide the estimates Congress requested. Recognizing that resources are scarce, the committee recommends that existing data systems be used to the fullest extent, and that they be modified or expanded where feasible to facilitate relating exposure to health outcome and associated health costs. If new data systems related to health, the environment, or health costs are set up, experts in fields relevant to the ongoing study should work together so that the resulting data systems are useful for the ongoing study. 8

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Relating Exposure to Health Effects There seldom is a simple relationship between environmental hazards and health effects. The contribution of ~ given environmental factor can vary, depending on the conditions under which it is encountered, the presence of other factors in the environment that may modify its effects, and the susceptibility of the population exposed. A given substance can lead to multiple health problems, and people are exposed to a variety of potentially hazardous substances in their surroundings. It is extremely di fficult to determine causes of health problems that result from relatively low levels of exposure, especially i f the resulting health problems occur after a long latent period and have no features specifically identifying them as environmentally caused. The need for new kinds of data is, therefore, great. Appendix C i llustrates the variety of health effects, ranging from mi Id discomfort to fermi nal i l lness, that have -been associ ated wi th envi ronmen t a 1 fac t ors . Th e c omrn.~ t t ee emph a s i ze s th a t Major efforts should be undertaken to improve our abi li ty to relate environmental hazards to health ou tcome . The greatest needs for improved data lie in the general areas of actual exposure of individuals and groups, and more ~co~nplete reporting of morbidity, including partial disabilities, as well mart al i ty. As described in Chapter 2, the exposure data reseeded to determine dose /response curves are rarely avai fable . Exposure estimates are often based on calculations that use surrogate measures, such as ambient concentrations of materials in food, water, and air. Methods for more adequately assessing individual exposure should be explored. Although exposure episodes resulting from industrial accidents or chemicals leaking from toxic dumps should be prevented by all practicable means, these inadvertent events can sometimes provide useful information about health effects of environmental exposure. Therefore, -Inci OCR for page 1
programs among workers and other populations can monitor the effectiveness of efforts to prevent health problems from known hazards, and can also alert observers to new hazards. Longitudinal studies, which follow individuals over an extended time, provide a broader range of information than can other epidemiologic study designs. As an example, the Framingham Heart Study, begun over 30 years ago, has elucidated some of the major risk factors in heart disease. For purposes of the ongoing study, the committee notes that longitudinal studies will be required to obtain dependable, useful, population-based information. Longitudinal studies and development of appropriate data bases should be undertaken, and the needed long-term commitments of funds and personnel assured. The more powerful epidemiologic study designs also tend to be the more expensive. Appendix E gives some associated cost estimates. In the workplace, the possibility of associating exposure with health outcomes is high, and occurrence of occupational disease often constitutes the first warning of a new environmental hazard. The exposed populations can be identified and followed and the exposures often can be quantified, at least to some extent. Furthermore, occupational populations may encounter new toxic substances sooner than does the general public, and in greater amounts. Many of the previous recommendations for determining health effects apply particularly to the occupational environment. In general, any epidemiologic study should obtain information about occupation and industry where applicable. Additional specific recommendations for monitoring worker populations follow. Better information on occupational exposures should be sought. A National Occupational Hazards Survey should be conducted at regular intervals and the results disseminated widely. To hi ghl i ght occupations wi th increased mortality, the feasibility of instituting a national decennial occupational mortality series, such as Great Britain produces, should be explored. A li st of sentinel health events for occupational disease and illness should be developed to alert people to potentially preventable occupational health problems. -1Q-

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Problems of human reproduction received particular consideration from the committee. These problems include loss of libido, inability to conceive, having a miscarriage or stillbirth, or having ~ child with low birthweight, with physical or mental impairment, or one who develops cancer or other i llness as a result of prenatal exposure. Environmental agents can affect the reproductive capacities of both males and females. Appropriate surveys and records are needed to monitor reproductive outcomes to associate adverse outcomes with possible environmental exposures, especially exposures that occur in the workplace. Problems of individuals within the population with special susceptibility also were considered. These include individuals in certain age groups, for example, infants and the elderly, those who may have suffered previous exposures that led to heightened susceptibility, and those with particular genetic traits (See Appendix F). Identifying individuals of greater susceptibility to speci fic environmental factors can be important in developing occupational and environmental health policies, and in interpreting environment-related health statistics, but can also raise many difficult questions. Estimating Costs Cost estimates must be used with due recognition that they i lluminate value judgments but do not replace them. They are not a substitute for the political and administrative processes of environmental decision making, but they are invaluable in informing them. Estimation of costs will depend to a great extent on the data available to relate health problems to environmental hazards. However, even if these data were available, theoretical and practical problems would sti 11 make cost estimates difficult. Chapter If discusses some of the difficulties in estimating the costs enumerated in the law, using the two methods commonly employed to estimate costs of health effects in monetary terms--the output-accounting (or human-capital) approach and the wit lingness-to-pay approach. Output accounting measures direct costs for medical expenses and indirect costs that correspond to lost output. Wi llingness-to-pay measures the resources individuals would forgo to reduce a risk of death or illness. Each method has limitations and is appropriate only for certain applications. Major functions of the ongoing study are to assess the suitability of the available methods and data for providing the cost estimates Congress has requested and to foster improved methodologies and data. In order to indicate the range of possible results within the limits of accuracy of avai fable methods, 1 1

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Health costs should be calculated using both output-accounting and wi 1 lingness-to-pay methods, to the extent feasible. In the first few biennial reports of the ongoing study, estimates of monetary losses due to morbidity and mortality associated wi th environmental factors should be presented using a range of fixed values Drawn from existing studies for cost per death, cost per day of i llness, and cost per year of li fe lost. An illness or disease can result from several independent or interacting causes, which may include one or more environmental factors. However, environmental agents may increase the severity and costs of an illness, as well as the number of cases of illness. For example, air pollution may exacerbate asthma. Attempts should be made to determine the proportion of tote' health costs of a disease or illness that should be attributed to environmental factors if a certain proportion of the cases could reliably be estimated as caused by these factors. Although the estimate of total national health care expenditures (direct costs) is reasonably accurate, the methods of allocating these costs among diagnoses need improvement. For example, although many patients have multiple health problems, costs are allocated to the primary diagnosis. Consequently, An investigation should be made of the difficulties of analysis introduced by the presence of multiple diagnoses. The committee recommends steps to enhance the data available for estimating direct costs longitudinal survey of patients in a prospective study of costs by diagnosis should be begun. In addition to longi tudinal surveys, cross-sectional surveys of patients to determine utilization and costs of medical care should be considered as a source of information about direct costs and health effects. A longitudinal study would enable more accurate allocations of direct costs among particular illnesses and diseases and also should provide valuable new kinds of information about the distribution of costs of an illness or disease over an extended time. There is a particular need for longitudinal studies to provide incidence-based cost data (that is, the present and future costs (from discovery until cure or death) of new cases of the diseases discovered during a specified time period), in contrast to the usual cost estimates, which are prevalence-based (that is, give the costs incurred during a specified time period by all cases of a disease that existed during that time -12-

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period regardless of when they began). Existing data sources also should be used to develop profiles of medical care costs that individuals with specific diseases or illnesses incur. The committee further recommends that prevalence- and incidence-based studies be compared to see how closely prevalence-based costs approximate incidence-based costs in situations where incidence-based costs would be more appropriate. This type of comparison would be valuable because prevalence-based data are more easily obtained than incidence-based data. For estimating direct costs, Net direct costs of illnesses should be calculated in addition to the total direct costs now reported. Total direct costs are direct costs as conventionally estimated. Net direct costs take into account future direct costs, appropriately discounted, that would have been incurred if the person had not died. Net direct costs of a disease or illness are the total direct costs minus the discounted value of the health costs for other health problems that would have been incurred if the person had survived. Net direct costs are the appropriate measure of direct cost reductions that could be expected if the incidence of an illness or disease decreased; use of total direct costs instead of net direct costs would exaggerate the savings in medical expenditures that could be realized by eliminating some diseases. Indirect costs include loss of output because of illness or death of the worker. The loss of output for employed workers is measured by their earnings, including supplements to wages paid by employers. To improve the quality of data on indirect costs due to mortality and decreased productivity, the committee recommends that New data sets containing personal and job characteristics for workers should be developed. They should include major personal characteristics, health histories, and work histories, including occupation, industry, and firm. Improved methods for valuing non-market time, including time for housekeepers, retirees, the unemployed, and others not in the labor market, are also required. Willingness-to-pay est imate s depend primari ly on two types 0 f data--wage premiums pal d for ri sky work and surveys that ask people how much they would pay to reduce their chance of illness or death by a small amount. The values of willingness-to-pay may be based partly on the same considerations of mortality, direct medical costs, and lost output as output accounting, but also include lost leisure, pain, suffering, and other subjective costs of illness. In -13-

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principle, all costs that matter to the potential victims are included. However, the wage premiums for risky work assume that workers are fully aware of the hazardous nature of the job. Recommendations for improving willingness-to-pay estimates of health costs associated with environmental hazards follow. Wage data used in willingness-to-pay estimates should be improved. According to economic theory, the appropriate measure of risk premiums should use after-tax wages rather than before-tax wages. However, information related to gross wages also should be available for other types of calculations. Surveys should supplement the use of market-based studies in estimating risk premiums paid to workers. The committee proposes that, after identifying to the extent possible the diseases and symptoms caused or exacerbated by environmental hazards, the ongoing study should include surveys to assess the willingness-to-pay to avoid the health effects. Health effects of concern might include acute and chronic respiratory disease, angina, or death from a specified disease. Pain and suffering that accompany illness and disease can lead to a variety of psychosocial problems such as reduced self-esteem, social isolation, and emotional problems for the individual and the victim's family. Although some recent attempts have been made to evaluate these by the output-accounting methodology,surveys of willingness-to-pay seem at the moment the most promising method for measuring costs of pain and suffering. It is recommended that questions be added to surveys to determine if they yield consistent and reasonable answers for valuing pain and suffering. Any approach to the measurement of costs of pain and suffering must be regarded as a re search problem at this time. Conclusion Although the cost estimates that Congress has requested cannot be obtained with precision soon, attempts to obtain such estimates can be helpful in making decisions so long as the assumptions, limitations, and uncertainties of any estimates are clearly indicated. The ongoing study provides a unique opportunity to evolve new methodologies and to focus and coordinate widely scattered efforts to determine the health benefits associated with improvements in the environment. These efforts should enhance our ability to prevent health problems associated with environmental factors . -14-