RH - week 4

Question 1

Background healthcare system - belgium

Answer 1

1. Compulsory health insurance:
   o >99% of the population is covered
   o Broad benefits package
   o Private, non-profit sickness funds
   o Low membership cost (+-8,25 Euro per month) covers insurance services (so insurance/care paid through social security contributions)
2. Role of NIHDI (National Institute for Health and Disability Insurance)  oversee the health insurance market
   o Directed by representatives of government, trade unions, providers, sickness funds
   o Financed through taxes and social security contributions
   o Distributes resources between health insurers (Similar to Germany)
   o They enforce and set the “rules of the game”: e.g. reimbursements, track expenditures, “administrative police” for providers and insurers
3. Provision of healthcare:
   o Providers are mainly paid fee-for-service, partially DRGs (diagnosis related groups) (77) for some types of hospital care. These DRG concern uncomplex care that can be standardized.
   o Patients are largely free to choose their provider (referrals may shorten waiting list)
4. Patient Payments:
   o Outpatient care: patients pay full price, and get reimbursed (partially) afterwards
   o Inpatient care: third-payer arrangements
   o There is a maximum expenditure threshold (maximumfactuur) that depends on household income. Above this threshold, households do not longer pay copayments.

Question 2

Outpatient

Answer 2

you go to the GP and you pay the GP and later on the insurance reimburses a part of your costs of seeing the GP.

Question 3

Third payer system

Answer 3

only pay your share on the spot. The GP costs 26 euros. The insurance pays 20 euros, so you must pay 6 euro

Question 4

Supply-side rationing: closed end budgets

Answer 4

Schokkaert & van de Voorde (2005) :
* Setting of a global budget (defined by health insurers, providers and NIHDI)
* Growth norm: maximum expenditure increase of 2,5% (before 2020 1,5%)  2,5 % above the budget from last year
* 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 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

Question 5

Defining the closed end global budget

Answer 5

Defining the closed end global budget
Calculation of budget determined by law: budget of last year + 2.5% annual growth
In addition: inflation indexation for health services, and specific expenditures
Specific COVID-19 related issues (to economic circumstances), were important before 2022:
- Separate bookkeeping for COVID-19 expenditures (PCR testing etc.). +-1,5 billion in 2021.
- Healthcare personnel fund: to avoid/decrease shortage of healthcare workers

A large part of the global budget is defined by last year’s expenditures. A second part is defined by political decisions. (the electronic and integrated patient file)

Question 6

Defining the closed end global budget III
Further efforts on:

Answer 6

1) Prevention by care trajectories and integrated care
2) Advanced care planning
3) Appropriate care (medications, physiotherapy for certain patients)
4) Financial accessibility (reduced income-dependent deductible, third party payer system, dental care, and transportation)

Question 7

Budget overruns

Answer 7

The overruns are partly countered with a “clawback” clause in contracts for innovative pharmaceuticals. Up until a maximum, pharmaceutical companies restitute the difference between projections and actual spendings. Overruns remain because of the maximum.
Intended actions to further avoid overruns:
* Make reimbursement for pharmaceuticals more stringent(?)
* International cooperation to enquire about and review pharma prices
* Incentivize correct use of pharmaceuticals (frequent reassessment of patients’ pharmaceutical initiated by pharmacists – cooperating with GPs and patients)

Question 8

3 types of quotas

Answer 8

1. numerus clausus: fixed number of medical students
2. Quota on some hospital/inpatient services. E.g. number of hospital beds: not increasing since 1982
3. Quota/restrictions on number of hospitals that can provide certain types of care

Question 9

Demand-side rationing: Insurance structure

Answer 9

How does the situation of an insured individual look like?
* Patient pays copayment (possibly after first paying everything upfront)
E.g.: GP visit; 25 euro on the spot, 19 euro reimbursed afterwards. In the end you pay 6 euros on spot.
* There is a maximum expenditure threshold (maximumfactuur) that depends on household income. Above this threshold (+-450 euro for the lowest income households  in 2022 a new bracket which lowers this to 250 euro), households do not longer pay copayments.
* Because of healthcare insurance, there is likely an issue with moral hazard. Since individuals do not bear the full cost of care, they are more likely to 1) use more care (ex-post moral hazard), 2) behave differently (ex-ante moral hazard). The spot-price (the 26 euros) and copayments (the 6 euros left) try to reduce this.

Question 10

Demand-side rationing: Insurance structure - cost sharing

Answer 10

The poor are likely to react more to the cost-sharing, and may forego necessary care.
Subsidized Health Insurance:
* The EU-Silc survey: 1.2% of population has unmet need for healthcare (0.1% in NL)
* Subsidized insurance: “Increased Reimbursement” (IR)
* Based on social protection benefits or income
* Need for a household income investigation (assigned per hh)
* Lower co-payments & third-party payer system for GP care (e.g. GP €1.5 vs €6)
* discounts on public transport, telephone bills and heating fuel
* Problems (exempt low-income from cost-sharing): arbitrary threshold, stigma  many people don’t do this, because you have to apply for it.

Question 11

3 main systems to ration care in Belgium:

Answer 11

1. Closed end budgets
2. Supply quota
3. Demand-side cost-sharing

Question 12

Structure of Health Care in the UK

Answer 12

• Archetypal ‘Beveridge-style’ 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, although there is a small component funded through national insurance
• Apart from emergency care, access to the system is through a general practitioner (family physician)
• Slightly different arrangements in the 4 constituent countries of the UK (England, Scotland, Wales and Northern Ireland)
• Generally regarded as a ‘national treasure’

Question 13

Copayments in the UK Health Care System

Answer 13

• Prescription charges (with exceptions for the poor, children and the elderly)
• Dentistry and Optometry (excluding children)
• Long-term care for the elderly (shrinking public sector)
• Out-of-pocket expenses (eg travel, parking charges)

Note: the biggest cost people bear in the UK NHS is the cost of their own time in seeking and receiving health care

Question 14

Rationing by Waiting Time

Answer 14

• The fixed annual budget for the NHS means that there are several physical limits on the resources available, such as hospital beds, nurses and some categories of physicians
• Given the demand for health care, this translates to long waiting times for some services
• Depending on the type of services required and the time of year, a patient could experience a series of waits for care
  o Waiting times are longer in the winter, because in the winter people are getting more sic
• Recent data suggest that more than 7 million people are currently waiting for care under the NHS
  o Before the corona pandemic, there were 5 million people waiting
• Rarely denies care altogether, but delays could lead to a worse outcome for the patient (eg detection of cancers)
• Discriminates against individuals who might lose income from time off work (eg self-employed), or whom have difficulty making appointments because of inflexibility in their working arrangements
• Might help perpetuate inefficiencies in the health care system

Question 15

Measures to Shorten Waiting Times or to Manage Waiting Lists

Answer 15

• Waiting list targets, with or without penalties to NHS organisations
• Offering patients more choice and increasing competition
• Prioritising waiting lists, so that patients with the biggest potential health gain are processed quicker

Question 16

Rationing by Socio-Economic Status

Answer 16

• 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 (approx.10%), or are able to pay for some services privately (eg a surgical consultation, or the surgery itself)
• Some forms of health care have very limited public provision for adults (eg dentistry, optometry) and most people pay privately

Rich people have more access than poor people

• Existence of private options clearly introduces inequalities
• In recent years, efforts have been made to ensure a clearer separation of NHS and private care, by:
  o reforming clinical specialists’ contracts
  o separating public and private facilities
  o monitoring of specialists’ waiting lists

Question 17

Rationing by Location

Answer 17

• All medicines are completely free in Scotland, Wales and Northern Ireland, but not in England
• Scotland also has greater publicly-funded access to social care for the elderly
• Groups of local GPs (Clinical Commissioning Groups) may have different policies on access to some services, leading to ‘postcode’ rationing
  o Depending on your zip code, you have more or less access
• More wealthy areas may attract more health professionals and have the local tax base to provide some forms of social care
  o If there is more tax base, people can provide more

People in the UK are paying more than in the other countries, because there are more people living in the UK. It is more expensive to make things free if there are more residents in a country.

• Likely to introduce inequalities, unless funding differentials have been introduced to reduce inequalities
• Variation in practice (eg by Clinical Commissioning Groups) is often considered to suggest inefficiencies, unless the variations can be explained by local differences in need or healthcare provision

Question 18

Rationing by Science

Answer 18

• The motivations behind the establishment of the National Institute for Clinical Excellence (NICE) in 1999 were to:
  o tackle ‘postcode’ rationing
  o identify technologies that were both clinically and cost-effective so that they could be given priority for patient access
• The idea was to use ‘health technology assessment’ (HTA) to assess which treatments were good ‘value for money’, hence leading to a better use of the NHS budget
• Controversial, as it involves explicitly denying access to therapy for some patients
• Consistent with the Maynard definition of ‘need’ and with maximizing the overall health of the population, given the resources available
• Questions have been raised about the methods used to assess the cost-effectiveness of therapies
• A critical issue concerns the level of the ‘cost-effectiveness threshold’ and how this is set
• Requires a substantial amount of political will

If you are just being quit and do not tell people you’re ratioing, people are never going to know. The problem with rationing by science is that people will know that you’re rationing.

Question 19

Is Rationing in the UK Rational?

Answer 19

• One way of answering this question is to explore the extent to which the approaches to rationing are aligned with the objectives of the health system
• The objectives of systems like the NHS in the UK are:
  o income protection (eg. for the poor)
  o equality of opportunity (eg access to care according to health ‘need’)
  o maximising the total health gain from the healthcare budget

Question 20

What is Meant by ‘Need’?

Answer 20

• It can be defined clinically, meaning that a person has health condition which can be treated and that the person desires treatment
• Bearing in mind the importance of opportunity cost in the allocation of health care resources, Maynard (2013) defines ‘need’ to mean that a person has a health condition for which there is a clinically and cost-effective treatment
• A recent health economics definition of ‘need’ is the extent of a person’s absolute or proportional ‘QALY shortfall’

Question 21

Rationale Behind NICE’s Approach

Answer 21

• HTA needs to be comprehensive, covering all types of health technologies
• Methods need to be standardized, but also reflect the particular features of different types of technologies
• HTA needs to be applied to both current and emerging technologies
• HTA needs to consider both ‘clinical and cost-effectiveness’

Question 22

NICE’s Technology Assessment Programme

Answer 22

• Considers the clinical and cost-effectiveness of new health technologies
• The programme covers, drugs, medical devices and procedures, but in the last 3-4 years has been dominated by drugs, especially cancer drugs
• Often leads to restrictions in, or refusals in coverage for, the technologies concerned
• Positive recommendations must be implemented by the NHS in England within 3 months

Question 23

The QALY Metric

Answer 23

• The QALY is measure of health gain, expressed in terms of the number of life years gained, adjusted by the quality of life in those years
• The quality of life is adjusted by ‘health state preference values’ on a scale from of 0 to 1
• The health state preference values can be obtained by different elicitation methods and can be obtained from patients or members of the general public
• Different elicitation methods give different results, but in the UK the standard is the EQ-5D measure (which uses values obtained from the general public)

Question 24

Assessments of Incremental Cost per QALY

Answer 24

• Provides a standardized approach for making a sequence of decisions across all health sectors
• Recognizes the budget constraint, if the correct decision-making threshold is applied
• Relatively transparent, as compared with more qualitative assessments of ‘added clinical benefit’
• Flexibility can be introduced thorough ‘deliberative decision-making’ and the use of ‘modifiers’
• Enables the assessment of cost-effectiveness in different indications and patient sub-groups

Question 25

Methodological Shortcomings of QALYs

Answer 25

• QALYs are not ‘utilities’ or ‘preferences’, but just a measure of health gain based on individuals’ valuations of health states
• QALYs are based on assumptions that probably do not hold
  o interval scale (all equivalent changes on the valuation scale are worth the same value)
  o constant proportional trade-off (the length of time in a health state does not affect an individual’s valuation of it)
  o additive independence (the order in which individuals experience health states does not affect their value of a state)
• QALYs do not reflect all the social value gained from health interventions
  o convenience of therapy, treatments for serious diseases, scientific spillovers, etc.)

Question 26

So why do decision-makers in the UK use QALYs?

Answer 26

• The main benefits of health care are the gains in length and quality of life
• The QALY is a metric that can be used, in a standardized fashion, for a sequence of decisions about health technologies in a range of disease areas
• The inadequacies of QALYs can be compensated for in a ‘deliberative decision-making process’
• The alternative approaches, such as estimates of ‘added clinical value’, used in France and Germany, lack transparency and decisions are hard to defend
• Other stated preference approaches, such as Discrete Choice Experiments (DCEs) and Multi-Criteria Decision Analysis (MCDA), are not currently sufficiently ‘standardized’ for use in these decisions

Question 27

Determining the Cost- Effectiveness Threshold

Answer 27

• The threshold can be based on (i) the opportunity cost of services displaced (ii) the societal willingness to pay for health gains, or (iii) aspirations about the level of health care spending (eg the former WHO guidance of 1-3 times GDP per capita)
• Most health economists prefer the opportunity cost approach, which treats the health care budget as being exogenously determined by the political process
• Under this approach, the threshold cannot be set independently of the health care budget

Question 28

Has HTA/Economic Evaluation Been Useful in the UK? Arguments For

Answer 28

• It has helped the NHS to justify restrictions on technologies of limited value, or poor value for money
• It has helped the NHS to target expensive therapies to the patients that experience the greatest benefit
• It has provided a sound basis for price negotiations with technology manufacturers, especially for pharmaceuticals