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M207: Health Economics Rationing in health care With indebtedness and gratitude to Joanna Coast, Department of Social Medicine, University of Bristol,

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Presentation on theme: "M207: Health Economics Rationing in health care With indebtedness and gratitude to Joanna Coast, Department of Social Medicine, University of Bristol,"— Presentation transcript:

1 M207: Health Economics Rationing in health care With indebtedness and gratitude to Joanna Coast, Department of Social Medicine, University of Bristol, for writing a book, PhD thesis and presentation on priority-setting…… and for allowing me to plagiarise it all!!!!

2 M207: Health Economics Rationing in health care What does rationing mean? Rationing with respect to efficiency or equity? Implicit versus explicit rationing Methods and examples of explicit rationing

3 M207: Health Economics Rationing: whats in a name? Economics concerned with choice between competing alternatives Based on axiom of scarcity - resources limited relative to wants Fundamental economic problem is therefore allocation of these scarce resources Rationing (and priority-setting) just another term for resource allocation

4 M207: Health Economics Rationing: whats in a name? The word [rationing] is invoked to make the flesh creep, not to prompt argument about how to deal with the inescapable Rudolph Klein, 1992

5 M207: Health Economics Means of rationing Market system - price mechanism establishes equilibrium (efficient allocation) Non-market system - absence of price as allocative tool leads to other, non-price, techniques Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing

6 M207: Health Economics Philosophical basis of rationing Price system - objective = efficiency consumer sovereignty allocation by WTP/ATP Non-price -objective efficiency or equity? who decides on allocation? allocation by what criteria?

7 M207: Health Economics Objective: efficiency or equity? Efficiency –maximisation of benefit –utilitarian ethic –distribution is irrelevant Equity –just distribution –based on need? age? lottery?

8 M207: Health Economics Objective: efficiency or equity? Philosophical basis price system/efficiency is utilitarianism Other philosophical bases are generally pursued in non-price allocation Which do we adopt?

9 M207: Health Economics Three important ethical theories Utilitarian - greatest good for greatest number (maximise utility or happiness) Deontological - cannot ignore duty to one individual for sake of good of others Rawlsian - maxi-min criteria for seeking to secure good of the least fortunate in society

10 M207: Health Economics Ethics and levels of rationing Theories have varying degrees of applicability at population and individual level Utilitarian and Rawlsian generally population level, Deontological generally individual May adopt different ethical principle at each level of rationing (decision-making)

11 M207: Health Economics Who pays? Health Authority? Government? Taxpayer?

12 M207: Health Economics Who really pays? Opportunity cost - if we choose to do one thing, the cost of doing that is the value which would have been obtained from the best alternative choice Who pays - the person who does not receive treatment

13 M207: Health Economics Implicit or explicit rationing? Implicit rationing: care is limited, but neither the decisions, nor the bases for those decisions are clearly expressed. Explicit rationing: care is limited and the decisions are clear, as is the reasoning behind those decisions.

14 M207: Health Economics Rationing in the UK Rationing in Great Britain has been implicit…It is a silent conspiracy between a dense, obscurating bureaucracy, intentionally avoiding written policy for macroallocation (rationing), and a publicly unaccountable medical profession privately managing microallocation so as to conceal life and death decisions from patients (Crawshaw, 1990)

15 M207: Health Economics Rationing in the NHS Predominately implicit rationing BUT increasing advocation of explicit rationing –1989/91 reforms – Health Committee Report –1996 Rationing Agenda Group –NICE?

16 M207: Health Economics Methods of explicit rationing ( Coast et al, Priority setting: the health care debate, John Wiley, 1996)

17 M207: Health Economics Explicit rationing: technical methods Single principle Little distinction between setting priorities at different levels Examples –maximising health gain –need-based rationing –lotteries –age-based rationing

18 M207: Health Economics Technical method 1: league tables Economic evaluation produces information on cost-effectiveness If using comparable outcomes (eg QALY) can rank according to c/e Can use resultant league table to allocate resource to most c/e first

19 M207: Health Economics League tables: handle with care! Studies show differences in methodology –choice of discount rate –method of estimating utility values –range of costs included –choice of comparator Requires consistent methodology, admission criteria for inclusion, applicability in local decision context

20 M207: Health Economics The Oregon Plan decision to stop funding for organ transplantation Oregon Health Services Commission begins work List List plan begins

21 M207: Health Economics Oregon List Version 1 Efficiency principle 1600 condition/treatment pairs Cost/QALY gained –social values –outcome –cost

22 M207: Health Economics Oregon List Version 1... looked at the first two pages of that list and threw it in the trash can... the presence of numerous flaws, aberrations and errors (Harvey Klevit, member, Oregon Health Services Commission)

23 M207: Health Economics Oregon List Version 2 Equal treatment for equal need 709 condition/treatment pairs Method: –Development & ranking of categories –Ranking C/T pairs within categories Public preferences Outcome –Professional judgement

24 M207: Health Economics Oregon List Version 2 Top Five C/T pairs 1 Pneumonia - medical 2 Tuberculosis - medical 3 Peritonitis - medical/surgical 4 Foreign body - removal 5 Appendicitis - surgical Bottom Five C/T pairs 705 Aplastic anaemia - medical 706 Prolapsed urethral mucosa - surgical 707 Central retinal artery occlusion - paracentesis of aqueous 708 Extremely low birth weight, < 23 weeks - life support 709 Anencephaly - life support

25 M207: Health Economics Technical method 2: PBMA 1Split health care service into programs and subprograms - homogenous output 2Estimate current spending and outputs (benefits?) achieved by each programme 3Identify marginal programs which would be the first to be cut or expanded as budget changes

26 M207: Health Economics Technical method 2: PBMA 4Identify change in output as result of adding/subtracting budget (eg £100,000) 5Decision based on (re)allocation which yields greatest overall benefit

27 M207: Health Economics PBMA: panacea or poison? +combines pluralistic bargaining & technical exercise + applies correct concept within data limitations - problems with data - quality, absence, robustness -subjectivity (bargaining) - who decides? - what is the maximand - output=???

28 M207: Health Economics Explicit rationing: political processes Processes and structures Debate and bargaining multiplicity of objectives Micro versus macro level

29 M207: Health Economics Medical discussion and debate Current form of decision making Variable: therapies funded in some localities but not all Different weight to different principles? Yes No Yes

30 M207: Health Economics Public participation? Who should be involved? What methods should be used to obtain representative views? silent voices? How should information be presented? How should public views be used? What weight should public views be given?

31 M207: Health Economics New Zealands Core Services Consultation Document National Advisory Committee on Core Health and Disability Support Services Public meetings about broad priority areas Consultation over broad ethical framework Panel discussions to formulate guidelines incorporating social factors

32 M207: Health Economics Success of Core Services Incrementalism –but how much has actually changed? Public consultation –emphasis on hearing many voices –have public ACTUALLY influenced priorities? –how have methodological problems been dealt with? –concern with overconsultation

33 M207: Health Economics Advantages and disadvantages Technical + implied neutrality + clarity of objectives –data hungry –inherent value judgements –weaknesses in methods –rigidity –implementation problems Bargaining + suited to uncertain and complex situations + decisions based upon compromise –heavily dependent on which groups are included –slipping back to implicit rationing

34 M207: Health Economics Challenges to explicit rationing Potential impact upon the stability of the health care system Potential for disutility arising from explicit rationing

35 M207: Health Economics Potential instability (Mechanic) Individual strength of preference not considered Lack of acceptance of explicit rationing Challenges to health authority Weakening resolve of health authority Return to implicit rationing

36 M207: Health Economics Utility of implicit rationing Deprivation disutility - patients who are aware that care is being rationed may suffer a sense of grievance if they are not treated Denial disutility - citizens may suffer disutility from being asked to partake in the process of denying care to other members of society

37 M207: Health Economics "it is easier to bear inevitable disease or death than to learn that remedy is possible but one's personal resources, private insurance coverage or public programme will not support it" (Evans & Wolfson, in Mooney, 1994)

38 M207: Health Economics for physicians to have to face these trade-offs explicitly is to assign to them an unreasonable and undesirable burden (Fuchs, 1984)

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