L11

Question 1

Why is economic evaluation of HC important?

Answer 1

to inform decision-making about the allocation of scarce resources and make sure resources are being used efficiently and equitably

Question 2

What is welfarism?

Answer 2

Utility maximising allocation of resources (see notes? how does this link to the following definitions?)

Question 3

What is individualism?

Answer 3

Consumer choice theory: the only relevant info. in making social choices is the view of individuals

Question 4

What is consequentialism?

Answer 4

We are concerned with outcomes of choices rather than processes

Question 5

What is the Pareto principle?

Answer 5

A desirable allocation of resources should at least satisfy the idea that no one can be made better off without making someone else worse off

Question 6

Why is the pareto principle not the be all and end all of welfarism?

Answer 6

Is very easily met! tells us nothing about how equitable an allocation is tf doesn’t help us find optimal social welfare tf not a very useful concept in Health econ.

Question 7

What was Kalder’s (1939) compensation principle?

Answer 7

A policy is beneficial if those gaining from the move could potentially compensate those who lose

Question 8

Explain how Kalder’s (1939) principle may be applied?

Answer 8

Add up value of gains and losses - if sums to a positive value then potential pareto improvement, tf should be implemented, and then (may) choose to compensate those who lose out (note: two parts are theoretically seperable; one doesn’t have to compensate - see example in notes)

Question 9

2 advantages of welfarism?

Answer 9

1) only interested in individual’s utility, which sum to make up society tf should be fine!
2) utility of individuals should reflect what they find important

Question 10

Disadvantage of welfarism and implication of it?

Answer 10

Money must be used as an indicator of utility (eg. utility of health/life) therefore puts a monetary value on HC concepts like life and death; many people dislike this idea

Therefore HC uses an extra-welfarism approach

Question 11

Theoretical characteristics of extra-welfarism? (3)

Answer 11

1) Use of outcomes rather than utility (health focus)
2) Sources of valuation other than just the affected individuals (population-based - how much do non-affected people value the intervention)
3) Permits interpersonal comparisons of well-being

Question 12

What does the ‘extra’ refer to?

Answer 12

Health rather than utility

Question 13

Why do welfarists criticise EWism?

Answer 13

Believe that health -> utility tf unnecessary approach

Question 14

Why do EWists argue in favour of EWism?

Answer 14

Argue that EWism makes it harder to distinguish between equity and efficiency - in welfarism it is too easy to compensate poor health with health from a different source, EWism is not easy to do this (???)

Question 15

What is economic evaluation?

Answer 15

Comparative analysis of alternative courses of actions ITO both costs and consequences

Question 16

Define opportunity cost?

Answer 16

Value of the best forgone alternative when a decision is made

Question 17

5 types of HC analysis?

Answer 17

1) CEA (cost-effectiveness analysis)
2) CCA (cost-consequence analysis)
3) CMA (cost-minimisation analysis)
4) CUA (cost-utility analysis)
5) CBA (cost-benefit analysis)

Question 18

Cost-effectiveness analysis: approach? measurement unit types? type of questions it addresses?

Answer 18

Extra-welfarist
eg. lives saved/cancers detected - physical/natural unit
Addresses technical efficiency questions

Question 19

2 ways a CEA evaluates its findings?

Answer 19

1) Dominance: eg. more units at a lower cost/unit - makes sense!
2) Cost effectiveness ratio (CER): calculates the cost per extra unit of benefit (see slides 8 and 9 example?)

Question 20

ICER = ?

Answer 20

Difference in costs/difference in consequences

Question 21

2 advantages of CEA?

Answer 21

1) straightforward to calculate

2) appealing to clinicians

Question 22

2 disadvantages of CEA?

Answer 22

1) not clear what measure to use if no obvious outcome

2) not informative system for decision-makers/commissioners

Question 23

What is a CCA?

Answer 23

Special case of a CEA: it lists all costs and consequences of different choices (basically a ‘first step’) (see slide 1 page 10)

Question 24

Pros of a CCA? (3)

Answer 24

1) can see all outcomes
2) natural units
3) Few ‘assumptions’

Question 25

Cons of a CCA? (3)

Answer 25

1) no relative importance indicators
2) decision rule requires dominance
3) assumes decision maker capacity

Question 26

What is a CMA?

Answer 26

Special type of a CEA: ignores outcome/performance element, only concerned with the LOWEST COST OPTION (dominance decision rule is this)

Question 27

Con of CMA?

Answer 27

Too simplistic to assume all interventions have equivalent outcomes!

Question 28

What is approach is a CUA? How are outcomes measured? How are results described?

Answer 28

Extra-welfarist
QALYs
Results ITO cost per additional QALY gained

Question 29

What is a QALY?

Answer 29

Quality-adjusted life year
Combines life years in a particular state of life
1 QALY is one life year in full health

Question 30

What is the decision rule for a CUA?

Answer 30

Dominance or cost-utility ratio

Question 31

When are CUA best used? (3)

Answer 31

1) When health-related QofL is most important outcome
2) Interventions that affect both mortality and morbidity
3) Suitable for comparing a wide range of outcomes

Question 32

When not to use a CUA?

Answer 32

When existing variable is already available and appropriate and documented

Question 33

2 pros of CUA?

Answer 33

1) Combines both length and quality of life into one unit

2) Allows cross-disease comparisons

Question 34

2 cons of CUA?

Answer 34

Costly and time-consuming

Dependent on method/scale used

Question 35

What is a CBA? What units does it use? What is its decision rule?

Answer 35

Monetary valuation of costs and benefits of a decision to address whether a programme should be implemented
Decision rule: implement if B-C>0 (net benefit)

Question 36

Advantage of CBA over CEA/CUA? Why rarely used in health?

Answer 36

Broader scope than CEA/CUA (for example…?)
Not used much in health bc. of difficulties in applying some elements (eg. WTP and DCE)
Also places monetary value health concepts like life tf many dislike it in health! (see table page 13 of lecture notes?)