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Understanding Cost of Illness: Analyzing Health Care Expenditure

Explore the economic impact of diseases through Cost of Illness studies, measuring health output and expenditure across different demographics and diseases. Gain insights into resources allocation and health care policy priorities.

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Understanding Cost of Illness: Analyzing Health Care Expenditure

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  1. Johan Polder, PhD | Professor in Health Eonomics Cost of illness - Framework & Data “Measuring education and health volume output” OECD - Paris, June 6th- 7th, 2007

  2. An economist knows the price of everything, but the value of nothing.

  3. The value of health

  4. Health Outcome: Dutch evidence • Infectious diseases • Disability adjusted life expextancy (DALE): +1.7 • Costs per DALY avoided: € 3400 • Cancer • DALE: +0.31 (male); +0.85 (female) • Costs per DALY avoided: € 15,500 • Cardiovascular diseases • Life expectancy: +2.3 (male); +3.8 (female) • Costs per DALY avoided: € 2000 • Generic efficiency of the health care system • Meerding WJ, Polder JJ, et al., (forthcoming, september 2007)

  5. Health output: Cost of illness • Cost of illness (COI) analysis is the main method of providing an overall view on the economic impact of a disease. • Such studies have been used to set priorities for health care policy and describe resource allocations for various diseases.

  6. Cost of illness - Approaches - Top-Down Approach Bottom-Up Approach • health expenditures from • National Health Accounts as • a fixed starting point • complete disease • no double counting • comorbidity (partial) • no longitudinal analysis • direct evaluation of patient • specific data • few special diseases • double counting • comorbidity • longitudinal analysis

  7. GENERAL Cost of illness (COI): What? • Demographic and epidemiological view on health expenditure • Health expenditure by demand • Direct medical costs only • Break down of health expenditures to patient (or demand) characteristics as: • Disease (categories) • Age • Gender • Function • Financing

  8. Cost of illness (COI): Why? • Description • Health expenditure by supply and demand • All combinations • Projection • Forecasts of future health expenditure • Ageing / changing disease patterns • Comparison • Over time: trends in health care costs • Between countries: better understanding of cross-country differences in health care systems and costs (for similar or different demography / epidemiology)

  9. General COI: How? • Health care costs are known for each sector and actor • Statistics Netherlands: 80 actors according HP-classification • For each actor utilisation data is retrieved • By diagnosis, age, gender, function, financing • comprehensive registries and studies in the Netherlands (most of them were used, ± 50 major data sources) • Key variables represent equal health care use • contacts, inpatient days, prescriptions, … • some need weighing: hospital interventions, prescribed medicine • Costs are broken down using key variables

  10. top-down method step I: health expenditures step II: providers step III: disease-based indicators step IV: cost of illness Accounting process

  11. The Netherlands in the worldShare of health care costs in the GDP (%)

  12. Key figures • 16 million inhabitants • Life expectancy • About 75 for men • About 81 for women • Bismarck-based health care system • Social health insurance • Tax financed care plays a minor role • GDP • About € 30,000 per head of the population • (€ 78,000 per worker) • Health expenditure • About € 3,500 per inhabitant (average)

  13. Three perspectives • Blue: Dutch health and social care accounts • € 60 billion • Yellow: Budget Ministry of Health • € 44 billion • Pink: OECD SHA • € 45 billion • quite different boundaries

  14. Relations between perspectives • Dutch health and social care accounts • Standard: comprehensive; time series available; SHA-based • Dutch Ministry of Health • Minus: prevention, personal expenditures on e.g. over the counter drugs, occupational health, social care • OECD System of Health Accounts • Minus: homes for the elderly, home care, care and provisions for people with mental/intellectual disabilities • Plus: investments

  15. Dutch HA versus SHA / figures

  16. COI-2003: Costs by provider (€ mln)<OECD definition of costs>

  17. COI-2003: costs by disease (€ mln)

  18. COI-2003: per capita costs by age & gender (€)

  19. COI-2003: population costs by age & gender

  20. COI-2003: Gender difference explained (€ mln)

  21. COI-2003: by age and diagnosisDistribution ICD-9 chapters (%)

  22. All results: www.costofillness.nl

  23. Drugs: results by diagnosis

  24. Drugs: results by age & gender

  25. Mental health care: Results by age & gender

  26. International comparisons(Report by Heijink R, Polder JJ, et al., 2006)

  27. Curative care: overall picture comparable

  28. Long term care: large differences

  29. Comparability by age

  30. Conclusions • Cost of illness studies • value health output • allow for detailed analyses of health expenditure by aspects of supply & demand • can be used for projections & comparisons • Cross-national comparisons should focus on cure • COI-studies reveal the societal value of health care • (Health) economists have learned a lot about value (rather than price), but can learn even more…..

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