1. 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. Context Expenditure on health increased rapidly

3. 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. 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. 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. 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. 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. 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. 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. 10 QALY league table

11. 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. 12 A shifting threshold

13. 13 CE-ratio by equity

14. 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. 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