Decision making

Question 1

What is health economics?

Answer 1

*The study of how peopleand societyend up choosing to employ scarce productive resources (alternative uses)
*… to produce various commodities and distribute them for consumption (now/ in future)
*… among various persons/ groups in society

Question 2

Efficiency

Answer 2

A measure of the relationship between the results achieved and the resources expended. All about maximising the outcomes for a given amount of resources.

Question 3

Equality

Answer 3

All people should be treated equally

Question 4

Equity

Answer 4

recognition that health care should be fairly available to all members of society irrespective of ability to pay
–Horizontal equity: equal; access to health care to those with equal needs
–Vertical equity: how people with different needs should be treated differently/ unequally.

Question 5

Inequity

Answer 5

those differences in health (between groups) that are avoidable and are considered unfair OR that reflect OR are the consequence of an underprivileged position AND can be fixed.

Question 6

A way of improving equity in the health system

Answer 6

improving people’s access to health care.

Question 7

Universal coverage

Answer 7

*The WHO defined a universal health system as one that provides all citizens with adequate health care at an affordable cost.
*Key elements of universal health care coverage:
–Everyone is able to use health services when needed (access)
–Provides financial protection against the cost of health care for everyone

Question 8

NHI strategy rationale

Answer 8

• Pooled (publicly controlled) resources
  will provide means to exercise greater
  public control over health financing
  which will in turn allow for:
• better integration of the health care
  system,
• increased cross-subsidation,
• more concentrated purchasing
  power and purchasing efficiency

Question 9

NHI strategy approach

Answer 9

• Reallocation of medical aid tax credits
• Increase taxes:
• General taxes
• Payroll tax, etc.

Question 10

Challenges to UHC

Answer 10

*Scarce resources
*We need to choose how we use them to achieve UHC
*Need to consider the opportunity costs of resources that may have been used differently
*One way of evaluating and prioritising resources…economic evaluation

Question 11

What is an economic evaluation

Answer 11

*Comparative analysis of costs and consequences of alternative courses of action.
–Weighing up inputs vs the resulting outputs
–To contain costs and manage demand
–To maximise the benefits from health care spending.
–Improve decisions around the allocation of health care resources
–Identify ways to redirect resources to achieve more
–Identify neglected opportunities that are relatively inexpensive
–To overcome regional variations in access.
–To provide bargaining power with suppliers of health care products

Question 12

How to do an economic evaluation

Answer 12

*Perspective
–Health care providers
*Costs of providing the service (infrastructure, staff salaries and medication)
*Key indicators: change in number of deaths

–Patient/ household perspective
*Include cost of accessing care (travel costs, loss of income, time)
*i.e. OOP and value of time

Question 13

Types of economic evaluation

Answer 13

1. cost effectiveness
2. cost utility
3. cost benefit
4. cost minimisation
5. cost consequences

Question 14

cost effectiveness

Answer 14

evaluates two or more policy alternatives in terms of their relative costs and outcomes, where the outcomes are measured in a single natural unit (e.g. disease case averted)

Question 15

cost utility

Answer 15

Evaluates two or more policy alternatives in terms of their relative costs and outcomes, where the outcomes are expressed by a generic measure of health status that considers both the effect on mortality and morbidity (e.g., quality-adjusted life-years (QALYs) and
disability-adjusted life-years (DALYs)).

Question 16

cost benefit

Answer 16

Evaluates two or more policy alternatives in terms of their relative costs and outcomes, where both the costs and outcomes are expressed in monetary terms. In principle, it should value the interventions
relevant costs and outcomes based on the preferences of those affected (i.e., the individuals’ willingness to pay).

Question 17

cost minimisation

Answer 17

Compares the costs of two or more policy alternatives which are all assumed to have equivalent health effects.

Question 18

cost consequence

Answer 18

Evaluates two or more policy alternatives in terms of their relative costs and outcomes, where the outcomes are not summarised in a single measure, and multiple outcomes of interest are
reported.

Question 19

What does “Threshold” refer to in healthcare policy?

Answer 19

In healthcare policy, a “Threshold” refers to the societal value placed on living longer and healthier lives, which guides decisions on the allocation of healthcare resources.

Question 20

Is there an explicit threshold policy worldwide?

Answer 20

No, explicit threshold policies exist in some parts of the world, but much of the developing world does not have such policies in place.

Question 21

Why are threshold policies important?

Answer 21

Threshold policies are important because they help determine how resources are allocated to various health interventions, aiming to maximize the societal value of health improvements and longevity.

Question 22

What is a potential consequence of not having a threshold policy?

Answer 22

Without a threshold policy, there may be inconsistencies and inequities in how healthcare resources are distributed, potentially leading to suboptimal health outcomes and inefficient use of resources.

Question 23

What is a key criticism of the “one size fits all” threshold approach?

Answer 23

A key criticism is that it is unlikely a “one size fits all” threshold is sensible, as different populations and health conditions require tailored approaches.

Question 24

Why is the threshold concept considered a value?

Answer 24

The threshold concept is considered a value because it differs depending on factors like the burden of disease, severity of conditions, and characteristics of the population in need.

Question 25

Some criteria for decision making

Answer 25

*Cost-effectiveness/ efficiency should not be the only decider on whether or not to implement a new intervention.
*Size of the health issue: major burden vs rare conditions
*Ethics: Rule of rescue
*Equity: poor vs rich beneficiaries
*Feasibility and sustainability: available resources vs new resources to be developed
*Acceptability to stakeholders: discontinuation of current practice
*Political considerations: global vs local agenda
*Value judgement
*Budget availability
*Decision-making rules

Question 26

What is the main decision rule in cost-benefit analysis for selecting an optimal intervention?

Answer 26

The main decision rule in cost-benefit analysis is to select an intervention if its net benefit is positive or if its benefit-cost ratio is above one, meaning its monetized benefits outweigh its costs.

Question 27

What does it mean if an intervention has a positive net benefit?

Answer 27

If an intervention has a positive net benefit, it means that the total benefits, when monetized, exceed the total costs, justifying the intervention in terms of increasing societal welfare.

Question 28

Limitations of economic evaluation

Answer 28

*Lack of routinely collected data in the health system
*Results are often country-specific| context
*Based on assumptions around patient pathways through care
*Methodological controversies surrounding how to measure costs and outcomes.
*Controversies around cost-effectiveness threshold assumptions
*Assumptions around budget availability
*Consideration of opportunity cost
*But overall useful in thinking about how to spend scarce resources

Question 29

What other factors should be considered in priority setting besides cost-effectiveness?

Answer 29

Other factors to consider in priority setting include value judgment, budget availability, and decision-making rules.

Question 30

Priority setting values

Answer 30

1. Treat people equally
2. Favouring the worst off
3. Utilitarianism
4. Promoting and rewarding social usefulness

Question 31

Utilitarianism

Answer 31

This approach prioritises people for treatment with the aim of doing the greatest good for the greatest number of people, either by saving the most number of lives and/or saving the largest number of life-years.