Health Economics: Introduction and Overview

Question 1

What is scarcity?

What do economic analyses do?

Answer 1

• scarcity is the idea that resources are limited

- health analyses help decisino-makers faced with choices concerning resource scarcity

Question 2

What is the difference between a normative and postive stance on economic analyses?

Answer 2

Normative = certain objectives are to be achieved, base decision on this 
Positive = predict observable factors on costs and benefits

Question 3

What is involved in health economics?

Answer 3

A - things that influence health 
B - what is health? value of health
C - demand for healthcare
D - supply of healthcare
E - microevaluation at the treatment level 
F - market equilibrium 
G - evaluation at whole system level 
H - planning budgeting and monitoring mechanisms

Question 4

What is opportunity cost?

Answer 4

the value of the consequence forgone by choosing to deploy resources in one way rather than in their best alternative use

Question 5

What is technical efficiency?

Answer 5

• producing output in the best way possible, without wasting scarce resources
• meeting a given objective at least cost
• e.g. treatments for glue ear, which is the best treatment?

Question 6

What is allocative efficiency?

Answer 6

• producing the pattern of output that best satisfies the pattern of consumers wants or needs
• do we treat glue ear or do we treat something else/?

Question 7

What are the key objectives of economic analysis?

Answer 7

• to promote the efficient use of healthcare resources

- to ensure the maximum total benefit is derived from the finite resources available

Question 8

Define economic evaluation

Answer 8

• a comparative analysis of alternative courses of action in terms of both costs and consequences

Question 9

What are the main types of economic evaluation?

Answer 9

• cost effectiveness analysis
• cost utilty analysis
• cost consequence analysis
• cost minimisation analysis
• cost benefit analysis

Question 10

What is cost-utility analysis?

Answer 10

• must consider QoL

in Quality Adjusted Life Years (QALY’s)

Question 11

What is cost-effectiveness analysis?

Answer 11

• must choose one single outcome
• in natural units
  e. g. lives saved, increased survival

Question 12

An incremental economic evaluation answers the following question:

Answer 12

What is the difference in costs and the difference in consequences of option A compared to option B

Question 13

What is meant by marginal benefit?

Answer 13

• the increase in befit as a result of increasing production by one additional unit
• average benefit goes down and so does marginal benefit

Question 14

What is meant by marginal cost?

Answer 14

• the increase in costs as a result of increasing production by one additional unit

Question 15

What is the difference between marginal and incremental cost?

Answer 15

• the increase in costs as a result of increasing production by one additional unit
• incremental is the additional cost comparing A and B

Question 16

What is the decisions rule for cost-effectiveness analysis?

Answer 16

• dominance = new intervention is cheaper and better

- CE ratio = difference in costs/differnce in consequences

Question 17

What kind of questions can CEA address?

Answer 17

technical efficiency questions

- what is the best way to treat glue ear?

Question 18

What is the ICER

Answer 18

incremental cost effectiveness ratio
difference in costs/differences in benefits
- gives you £ per extra unit of benefit

Question 19

Why is CUA preferred over CEA?

Answer 19

• CEA hard to judge if it is good value as in natural units
• preferred CUA as QALY’s used
• QALY’s help with allocative efficiency as you can compare across interventions

Question 20

What does NICE consieer to be cost effective?

Answer 20

less than £20,000 per QALY

Question 21

Define equity

Answer 21

• attempting to address equitable concerns requires a departure from the pursuit of maximisation to enzsre a more equal distribution in the relevant outcome
• focuses on pursuit of a fair distribution and the burden of finance

Question 22

What is healthcare needs to be fair?

Answer 22

• health
• the use of healthcare
• access to healthcare

Question 23

What is horizontal equity?

Answer 23

people with equal health needs receive equal treatment, irrespective of demographic

Question 24

What is vertical equity?

Answer 24

individuals with unequal needs should be treated according to their differential need

Question 25

What are the limitations to horizontal equity?

Answer 25

geography, waiting times, patient info

differences in the units of measurement

Question 26

What are the limitations to vertical equity?

Answer 26

operationally difficult
how unequal do conditions need to be?
financing