The Economics of Health Care and New Technologies

1. The Economics of Health Care and New Technologies • Friday October 18, 2002 • Between Technology and Humanity, Brussels • Jan Busschbach PhD, • Department of Medical Psychology and Psychotherapy, Erasmus MC, Rotterdam, The Netherlands • Busschbach@mpp.fgg.eur.nl • Elly Stolk • institute for Medical technology Assessment (iMTA), Erasmus University, Rotterdam, The Netherlands

2. ContextExpenditure on health increased rapidly

3. Politicians are striving for budget control • Physicians could not reduce increase in cost • Could not do it • Hippocrates’ Oath • Were not willing to do it • Asked to reduce own income • Did not recognise the problem • Politicians introduced fixed budgets • Successful at the start • from 1980 • Measure gets blunt

4. Politicians need a rational to control increase in costs • Physicians, patients, ethics... • Did not came up with reasons NOT to treat • Instead give (very good) reasons to treat EVERY SINGLE patient • They failed to take cost consideration into account • Economists give a rational • Recognise the political problem • Competition of allocations in time of scarcity • Offered rational decision framework: • Cost-effectiveness

5. Health economics maximise the goals of health care • Cost effectiveness • Much health, for low costs • Emphasise • those interventions which produce most health for the lowest cost • Suppress • those interventions which produce little health for the much money • those interventions which produce little health at the costs of more health losses elsewhere • Rational • If indeed the goal of health care is maximise health in the population

6. Is the main motive of health care maximal health in the population? • What about the huge investments in • Expensive care for elderly • The severe handicapped patient • The end stage demented patient • Improving the health state does not seem to be the aim • Do we understand the investments in these patients if the aim is to maximise health? • Other motivations fit better…. • Priority by severity • Feeling pity, sympathy, compassion, sacrifice, offering, solidarity

7. One doctor and two snakes • Two patients with snake bites • There is only one serum • The doctor divides the serum • Both men die • But the doctor does not feel guilty • An economist would deny treatment to one • He denies one patient treatment • and that patients dies... • Economist would not feel guilty

8. Two different aims • The economist • Maximises health • Looks for ways to maximise health • Give all serum to one patient • The doctor • Aims reducing severity of illness • Targets the worse case • As soon as he gives the serum to one, the other becomes more sever ill • Only way out: make them equal ill • Reveals that no good measure of equity is available • Of course: these are stereotypes… • What are the formal positions? • We are in need of formal way to represent health (equity)

9. Quality Adjusted Life Years (QALY) • Multiply life years with quality index • Quality of life index • 1.0 = normal health • 0.0 = extremely bad health (death) • Example • Losing sense of sight • Quality of life index is 0.5 • Life = 80 years • 0.5 x 80 = 40 QALYs • Accepted measure of health • Used by the WHO (DALY)

10. QALY league table

11. Efficiency / Equity trade-off • The more severe the health state • The more we are willing to contribute • The more money we a willing the spend • We accept a high cost per QALY • Ad the price of a lower average level of health in the population • We reduce variance at the price of lower average health in the population

12. A shifting threshold

13. CE-ratio by equity

14. Implication interaction equity / efficiency • Economists become increasingly aware that efficiency is not the only target of health care systems • Relevant empirical research to account for distributional concerns is possible and warranted • multiple equity concerns might be included, and that these might be traded off against each other • A model that combines economic and distributional concerns makes health care policy more understandable • Reimbursement of long transplantation • Bad cost effectiveness, high burden • No reimbursement of Viagra • Good cost effectiveness, low burden

15. What are the consequences for new technology • They should aim a severe patients • The higher the burden the better • Explains the existence of burden of disease studies • They should be cost effective • Much health for low costs • Interaction must be account for • if the burden is high, cost effectiveness may be less • There is little room for cost effective medicine in patient with a low burden