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A new method has been developed for estimating the indirect costs of disease. The method, called the friction cost method, analyzes the impact of workers' absences on productivity and the influence of the labor market situation on the indirect cost by taking into account the short-, middle and long-term effects of illness. Its applicability has been validated through the investigation of short-term friction costs in Netherlands in 1990.

The human capital aproach preferred by Johanneson and Karlsson fails to provide a satisfactory analysis of the relation between production costs and absence on the company level. They prefer to comply with economic laws such as marginal productivity and equality of wages but they admit that there is not much difference offered by their indirect short term absence cost estimates. Johannesson and Karlsson's traditional neoclassical approach is highly unrealistic given the mortality, disability and long term absence in the present world.

The article describes the nature of medium term consequences and the method of health estimation using Dutch macro-economic sectoral models. These models are reply to comments given by authors Magnus Johanneson and Göran Karlsson on indirect costs estimation of medical care. The controversy arises with respect to long term absence, disability and mortality of their comments. Johanneson and Karlsson argue that no indirect costs of disease will occur after the friction period. They focus on the role of internal labour reserves and the role of unemployment in their method. They find indirect costs much smaller than estimates based on human capital approach. The article presents the model to advise Dutch government and parliament on short term and medium term economic development. The economic aspects of medium term concern the influence of absence in work on labour productivity, labour costs per unit of output and the degree of international competitiveness. This also holds for the impact of disability premiums on labour supply and labour costs.