Rationing Healthcare Flashcards
1
Q
rationing (Breyer 2013)
A
To limit the beneficial health care an individual desires by any means – price or non-price, direct or indirect, explicit or implicit
2
Q
efficiency
A
to maximize welfare (happiness) -> get as much as possible out of it
3
Q
equity
A
to notion fair distributions (of welfare) -> distribute happiness in a fair way
4
Q
Opportunity cost
A
costs of the other best option -> the same resources can produce more health/wellbeing elsewhere
5
Q
Scarcity
A
never enough resources to satisfy all human wants and needs -> can’t fulfil all wishes -> rationing is inevitable due to scarcity
6
Q
Markets do not result in optimal (efficient) outcomes in health care due to specific characteristics
A
- Uncertainty and consequences of insurance (moral hazard)
- Information asymmetry between consumers and suppliers
- Existence of externalities (vaccin) -> behaviour has effect on other people in society
7
Q
Weale (1998): basic principle of many health care systems
A
is to offer (i) comprehensive, (ii) high quality medical care, (iii) to all citizens -> given scarcity, you cannot fulfil all three wishes at the same time
8
Q
Types of rationing
A
- price rationing
- non-price rationing
- primary rationing
- secondary rationing
- implicit rationing
- explicit rationing
- hard rationing
- soft rationing
9
Q
price rationing
A
make use of the price mechanism -> price serves as a rationing tool by balancing supply and demand
10
Q
non-price rationing
A
do not make use of the price machansime -> the allocation of limited amounts below market price, which often means “free of charge”.
11
Q
primary rationing
A
involves limiting (collectively financed) health care (limit how much you spend on health care) -> it involves determining (directly or indirectly) the budget available for health care
12
Q
secondary rationing
A
once the budget has been set, there is scarcity in the system (ideally other way around) (once you have a budget you have to decide where to use it). Also allocating resources associated with ‘natural’ scarcity is labelled secondary rationing: e.g. transplantable organs. This latter scarcity is not (or less) directly based on policy choices
13
Q
implicit rationing
A
sets limits to resources (i.e. sets the level of scarcity) but does not indicate (in detail) how the scarce resources should be allocated (says to healthcare do your thing) -> often lower-level decision makers
14
Q
explicit rationing
A
sets limits to resources available in combination with choices on how the scarce resources should be allocated -> making explicitly clear who gets what (and when, how and from whom)
15
Q
hard rationing
A
If you cannot have it publicly, you cannot have it at all (e.g. organs)
16
Q
soft rationing
A
If you cannot have it publicly, you may be able to buy it elsewhere (e.g. quicker care, dental care)
17
Q
Health care goals
A
- Quality of care
- Access: financial and physical
- Efficiency
- Affordability
18
Q
Rationing and health care goals
A
- Implicit rationing (without rules or proof the ‘system’ makes choices in line with this goals) helps to increase affordability
- Explicit rationing can help to make choices in line with health system goals while attempting to preserve affordability
- Important in rationing is to avoid damage (to efficiency or equity) as much as possible (and monitor the effects of any policy!)
19
Q
Voluntary insurance
A
- Problems with equity: low incomes and high risks have difficulties buying insurance
- Premiums often risk-related or community-rated
- Adverse selection
20
Q
Supply side rationing
A
- (Primarily) restricts the supply of care
- Important examples: budget constraints, limiting numbers of doctors (trained or hired), limiting number of hospital beds, etc.
- Supply-side rationing associated with (mandatory) integrated systems like NHS
- By leaving demand (in direct sense) unaffected, a mismatch between demand and supply typically occurs
- Waiting lists as common consequence (with health damage)
21
Q
Demand side rationing
A
- (Primarily) restricts the demand of care
- Important examples: limiting the types of health care interventions covered by health insurance (e.g. limiting basic benefits package) or some form of own payments
- Demand-side rationing associated with (mandatory) contract and reimbursement systems
- By leaving supply (in direct sense) unaffected, a mismatch between demand and supply could occur (with incentives for SID, etc.)
- Own choices may lead to health damage
22
Q
Consequences of rationing
A
- Patient: health / wellbeing -> continued problems, deterioration, death, etc.
- Social environment: ‘family effect’, informal caregiving, increased costs/reduced income, etc.
- Health system: dissatisfaction, tough choices in system, pressure and burden (waiting lists), etc.
- Society: inequities, higher costs of ultimate medical treatments, more absenteeism / presenteeism, justice/safety (mental health), less financial / health protection, etc.
23
Q
Supply-side rationing
A
- Through introducing closed end budgets, and other restrictions, supply of care effectively restricted
- Common in public systems (public integrated and public contract) where government involvement in health care is strong
- Through restriction of the quantity of supply (financial, doctors, beds, …) in combination with common restrictions on price, total costs are controlled
- Implicit rationing (although this sometimes becomes explicit at lower level)
- Result is a system that is “naturally restricted” in its capacity to treat people, often leading to waiting
24
Q
Waiting: positive aspects
A
- Reduces need to use other rationing mechanisms
- Waiting time functions as a price - longer waiting induces lower demand
- In principle, this should work similar for the rich and the poor (no socio-economic differences)
- Especially unnecessary care should be restricted
- Existing waiting times and waiting lists can reduce the flow of referrals
- Waiting lists can help to use available capacity optimally
- Prioritisation on waiting lists possible based on medical need, so that negative medical side-effects of waiting may be minimised
25
Waiting: negative aspects
- Loss of quality of life during waiting
- Health state may worsen during waiting time (even causing unnecessary deaths)
- Recovery time may increase with waiting time
- Treatment may sometime be less successful after waiting times (e.g. cancer treatment)
- Higher medical costs due to “worse cases” and lower success rates
- Uncertainty in patients about when they will be treated
- Dissatisfaction in society with health care systems when waiting times are perceived as too high
- Costs in other economic sectors due to absence of waiting employees
- Higher risk of becoming permanently disabled when waiting keeps you away from work for longer period
- Differences in waiting times between countries (or regions) may induce cross-border care, which has specific problems
26
optimal waiting times + problem
this waiting time is long enough to discourage demand, but short enough to limit negative aspects from waiting
Problem: optimal waiting time differs per disease, per situation, per individual etc. and may not be only based on medical need
27
how to reduce waiting times
- Supply-side expansion (if capacity considered too low): reducing budgetary/capacity constraints, rewarding productivity.
- Demand side reduction (if capacity is deemed adequate): less referrals, less demand (e.g. co-payments)
- Process / regulations: improving utilization facilities, maximum waiting time guarantees, choice (given variation in waiting times)
28
socio-economic inequity in waiting times
- People with higher SES engage more actively with the system and exercise pressure when they experience long delays.
- May have better social networks (“know someone”) and use them to gain priority
- May have a lower probability of missing scheduled appointments
- May articulate their wishes and needs better and more forcefully
29
overconsumption
consuming beyond the point where benefits exceed costs: welfare losses -> price for the consumer is 0
30
ex ante moral hazard
less prevention and more risk -> because if you fall ill, the bill will not send to you.
31
ex post moral hazard
demand more and more expensive care -> if you are ill you want the best possible care because the cost is zero.
32
cost-sharing
certain percentage of costs is borne by patient -> effect: the experienced price is raised and the incentive for consumption and moral hazard decreased
33
asymmetric information
consumers don't have enough knowledge --> patient cannot determine own demand ('self-diagnose')
34
Defining the basic benefits package
- Limiting demand by selecting which treatments are covered in a national (insurance) scheme
- Less coverage means more care is left to own payment or private (additional) insurance, or is simply unavailable
- Many countries aim to have comprehensive coverage, but it may be necessary to exclude some care to ensure inclusion of other care (opportunity costs)
35
Decision criteria basic benefits package
- Necessity
- Effectiveness
- Cost-effectiveness
- Feasibility
36
decision rule
B-C > 0 -> viΔQi – Δct > 0 -> Δct / ΔQi < vi
- V = value of QALY = value we attach as a society on 1 QALY
- ct = total costs -> Δct = differences in costs intervention A and B
- Q = QALY -> ΔQ = differences in the QALYS intervention A and B
- Subscript I = needed if we want to distinguish between different QALY gains
37
ICER
costs per QALY
38
Belgium supply-side rationing
closed end budgets:
- Setting of a global budget (defined by health insurers, providers and NIHDI)
- Growth norm: maximum expenditure increase of 2,5% -> based on the year before
- The adjustment of growth norm is done to be in line with expected expenditures based on current policies (so no structural cuts in budgets and services)
- Possibility for exceptions
- Global budget divided in partial budgets/targets: in case of overrun the minister of social affairs can suggest corrective measures e.g. the fee schedule is adjusted (lower payments for providers) or an increase in co-payments (more payments by patients) is undertaken.
→ Supply is effectively rationed this way
39
Belgium supply-side rationing quotas
1. “Numerus clausus”: fixed number of medical students
2. Quota on some hospital/inpatient services -> e.g. number of hospital beds
3. Quota/restrictions on number of hospitals that can provide certain types of care (cancer)
40
Belgium demand side rationing
Cost-sharing:
- Patient pays copayment
- There is a maximum expenditure threshold (maximumfactuur) that depends on household income
- Issue with moral hazard -> use more care en behave diffently -> reduce with payments
41
LMIC health care system
- Fewer resources for health per capita
- Higher out-of-pocket expenditure shares
- Low tax base and formal employment
- Tougher expenditure trade-offs
- Reliance on external aid
- Higher/different disease burdens
- Primary/community care access focus and quality issues
- Large inequalities in health outcomes and access (e.g. gender, wealth)
- Weaker institutional frameworks, inefficient governance, imperfect data etc.
42
LMIC primary health care is “free” but
- You have to wait a long time
- You need to tip to skip the lines or see the doctor at all
- Quality is so poor you rather not…
- The clinic is far and travel costly
- Private underuse may lead to externalities on others
43
LMIC rationing
- Price rationing: access based on ability to pay
- Demand-side rationing: high OOP payments (bribes/tips)
- Implicit rationing
- Budget lacking
44
Uk Health Care System
- National health service with universal coverage and few payments at point of use
- Operates with a fixed annual budget, determined by the Ministry (Department) of Health and Social care
- Financed mainly from general taxation (small component national insurance)
- Apart from emergency care, access to the system is through a general practitioner (family physician)
- Copayments (prescription, dentistry, long-term care, OOP)
45
Rationing by Waiting Time
The fixed annual budget for the NHS -> several physical limits on the resources available (hospital beds, nurses) -> high demand so long waiting times for some services
46
Measures to shorten waiting times or to manage waiting lists
- Waiting list targets, with or without penalties to NHS organizations
- Offering patients more choice and increasing competition
- Prioritizing waiting lists, so that patients with the biggest potential health gain are processed quicker
47
Rationing by location
- All medicines are completely free in Scotland, Wales and Northern Ireland, but not in England -> more people live in England so too expensive
- Groups of local GPs may have different policies on access to some services, leading to ‘postcode’ rationing = rationing by where you live
- More wealthy areas may attract more health professionals and have the local tax base to provide some forms of social care -> in poor places are few health professionals
48
Rationing by socio-economic status
- Having greater knowledge of health care may help patients navigate the system better, although little formal evidence on this
- Some people have private health insurance in addition to NHS cover, or are able to pay for some services privately
- Some forms of health care have very limited public provision for adults (eg dentistry, optometry) and most people pay privately
49
rationing by science
use ‘health technology assessment’ (HTA) to assess which treatments were good ‘value for money’, hence leading to a better use of the NHS budget
50
What is meant by ‘need’?
- Defined clinically: that a person has health condition which can be treated and that the person desires treatment
- Maynard (2013): that a person has a health condition for which there is a clinically and cost-effective treatment
- Health economics: the extent of a person’s absolute or proportional ‘QALY shortfall’
51
ICER
Incremental Cost-Effectiveness Ratio = (cost_new - costs_existing) / (effects_new - effects_existing)
52
QALY
- measure of health gain, expressed in terms of the number of life years gained, adjusted by the quality of life in those years
- 0 QALY = dead
- 1 QALY = perfect wellbeing
53
The Cost-Effectiveness Threshold
In order to assess whether particular interventions are ‘cost-effective’, it is necessary to compare them with a pre-determined cost per QALY threshold
54
NL health care system: tax funded
- Public Health Act: focus on individual and collective prevention, health promotion, and public health threats (infectious disease control)
- Social Support Act (wmo 2015): focus on providing support to people with (physical or mental) disabilities, increasing people’s self-reliance, ability to live at home, and be productive (household support)
- Youth Act (JW): focus on support and care for young people and their families coping with parenting and developmental issues, psychological problems and disorders (dyslexia care)
55
NL health care system: insurance funded
- Long-term care act (Wlz): focus on most vulnerable groups in society (people with severe physical or intellectual disabilities, long-term psychiatric disorders) who need 24-hour care (nursing homes)
- Health insurance act (Zvw): focus on curative healthcare services and secondary and tertiary prevention (medical care and hospitalization )
56
Rationing in tax-funded healthcare system
- Tax-funded healthcare Acts are enforced by the national government and implemented by local authorities on the municipality (gemeente) level.
- Government responsible for:
o Allocation of fixed budget to municipalities based on objective distribution key (supply-side rationing)
o Determining maximum level of co-payments (demand-side rationing)
- Municipalities responsible for:
o Ensuring (timely) access to customized, high-quality care
o Early signalling of care needs, and taking action
57
Rationing in insurance-based healthcare system
- Insurance-based healthcare Acts are enforced by the government and implemented by policymakers, health insurers, and healthcare providers.
- Long Term Care Act (Wlz):
o Mandatory income-based premium
o Demand-side implicit rationing:
Access based on needs (re-) assessment by CIZ and availability of informal care
Income-dependent copayment: accounts for differences in price sensitivity between SES groups and ensures access for lower income groups
- Health Insurance Act (Zvw):
o Mandatory for everyone of ≥ 18 years
o Broad coverage of curative healthcare services
o Insurance companies obliged to accept anyone at same premium and contract competing care providers
o Healthcare allowance for lower income groups (zorgtoeslag)
o Focus on demand-side explicit rationing:
Mandatory deductible of €385
Demarcation of basic benefits package by ZIN
58
Stages demarcation of the basic benefits package
1. selection
2. assessment
3. appraisal
4. policy decision
59
selection
- Horizontal scan for medicinal products (inpatient & outpatient pharmaceuticals)
- Closed entry system for outpatient pharmaceuticals and open entry system for inpatient pharmaceuticals
60
assessment
decision criteria:
1. Necessity (of insurance and of care)
2. Effectiveness
3. Cost-effectiveness
4. Feasibility
61
Necessity
- Necessity of insurance: should a pharmaceutical be included in the BBP, or can patients pay for it out-of-pocket
- Necessity of care:
o Including a pharmaceutical in the BBP is more necessary when it is used to treat patients who are more severely ill
o There are different normative theories about who are more severely ill -> two ‘severity approaches’ used in the Netherlands:
Proportional shortfall: most important, directly related to cost-effectiveness
Absolute shortfall: used to give insight into how proportional shortfall is calculated
62
proportional shortfall
formula = disease related QALY loss (without new treatment) / remaining QALY expectation in absence of the disease
63
effectivesness
Pharmaceuticals must conform with the “established medical science and medical practice” to be considered effective, this is defined broadly in the Zvw as:
- Being evidence-based
- Belonging to the area of expertise and domain of medical specialists
64
cost-effectiveness
- The incremental cost-effectiveness ratio (ICER) of a pharmaceutical is calculated as Δct / ΔQi
- You need to know if the ICER is below the value of a QALY (in other words: below the monetary threshold (v))
- Decision rule for cost-effectiveness: Δct / ΔQi < v
65
feasibility
Is it possible and sustainable to include a pharmaceutical in the BBP? What is the impact on the:
- Healthcare workforce
- Climate and environment
- Organisation of healthcare
- Budget (e.g., in relation to saving- or substitution effects, market share)
66
ACP
gives the Executive Board (RvB) of the National Health Care Institute recommendations relating to the package advice -> it tests such recommendations against the four package criteria: effectiveness, cost-effectiveness, necessity and feasibility -> APC discussed dossiers that are cases in which there is doubt about whether to reimburse or not
67
Cost-effectiveness analysis (CEA) in theory
- Two different theoretical origins
o Maximize health under budget constraint -> healthcare perspective
o Welfare economics -> societal perspective
- Rules of thumb can be derived from theoretical models
o Reimburse intervention if ICER < threshold (value)
- Critical assumptions underlying models include
o Threshold reflects opportunity costs -> there are no better options to improve population health
o Costs are exogenous -> ICER reflects costs, which is different from price
68
CEA in practice
- Mainly used for assessing new pharmaceuticals:
o Results CEA often input for price negotiations
o Relation asking price and costs unclear
o Price new medicine determines to a large extent the ICER
- Threshold values used by ZIN vary between 20,000 and 80,000 per QALY
o Should reflect maximum Willingness to Pay for health
o Old threshold values but more recent research does not suggest these need to be adjusted upwards
o Opportunity costs in health care somewhere vary 20,000 and 80,000
69
why patents?
- Traditional theoretical economic arguments:
o Being a follower is better than being a leader.
o High fixed costs, low constant marginal costs
o No innovation under these circumstances
- Solution: create (temporary) monopolies by granting patents.
70
competition
Anybody can enter a market -> lot of demand -> price lowers -> until supply equals demand
71
monopoly
1 supplier -> no competitive price -> supplier can decides the price -> prices will be higher -> fewer people will have access -> loss ( = deadweight loss)
72
cost-effectiveness and patents
- Health care to a large extent publicly financed -> CEA is used as tool to sort out which technologies offer most value for money.
- Without competition, CEA is the only tool to drive down prices
- CEA can be seen as a form of value based pricing
- Higher CEA threshold -> more incentives to innovate
73
Alternative ways to induce innovation
distinction between rewarding an idea and reward for copies of ideas
74
Long-term care (LTC)
range of difference services and supports designed to help individuals with chronic illnesses, disabilities, or other long-term health conditions manage their daily lives over an extended period(nursing homes, medical care at home, social care, cleaning, groceries, supported devices)
75
LTC: a suitable case for social insurance
- Independent probabilities: risks are different
- Asymmetric information
o Moral hazard: does the person really need the care or can they pay for it themself
o Adverse selection: only high risk in pool -> premium goes up -> low risk don’t take an insurance -> premium goes up -> etc.
76
Individuals’ LTC insurance choice
- Individuals tend to underinsure
- Complex insurance products
- Uncertainty about need
- Uncertainty about coverage
- People don’t like to think about old-age
77
LTC is different from cure
1. LTC hasn’t a clear outcome -> with ‘normal’ care we cure a specific health problem -> LTC the purpose is not to make people better but to give them a value life with these chronic illnesses (hard to measure)
2. Part of formal LTC can be substituted by:
o Informal care
o Private financed services (buy it privately)
78
reimbursement decisions in LTC
- Care and assistance strongly integrated: integrated care packages in NL -> hard to decide what to insure because part of it is medical care and other part is social care
- Lack of clear outcome measures: makes cost-effectiveness assessment difficult
79
LTC rationing mechanism
- Eligibility: define criteria that will decide whether you get services or not
- Co-payments: financial incentive to only use care when they need it
- Waiting list
80
Delay
time between eligibility and admission
81
Germany Healthcare system overview
- Statutionary health insurance (SHI)
- Shared decision making powers among the federal government, the states and self-governance of health system actors
- Substitutive: private health insurance (PHI) covering select population groups alongside the possibility of supplementary and complementing private insurance alongside SHI
- Fractured system that divides into outpatient and inpatient services with seperate financing/planning/allocation bodies.
82
Germany co-payments in SHI
- 10% of the price at the point of use -> minimum €5, maximum €10
- Applies to prescriptions, inpatient days and medical devices
- SHI insured cannot be charged above amounts agreed in benefits package
- But pay-for-service individual health services
83
Rationing Germany
- non-price rationing
- demand-side rationing methods (co-payments, also for GP0
- explicit rationing
- flexible budget
