RHC Week 3

Question 1

Objectives of public healthcare systems

Answer 1

1. efficient allocation of resources:
   - maximize health (e.g. QALYs) given budget constraint
2. equitable allocation of resources
   - allocate resources equitable and fairly

Question 2

When is a technology cost-effective?

Answer 2

cost-effective when:
∆ ct / ∆Qi < vi

not cost-effective when:
∆ ct / ∆Qi > vi

Question 3

Why would you not want to reimburse a health technology that IS cost-effective

Answer 3

o Rare disease (small patient group)
o Opportunity costs are too high, it may be more valuable/efficient to allocate resources to a different disease/treatment (better to spend budget differently, also relates to rare disease as an equity consideration)
o Treatment for, for example, toe fungus may be cost effective but has a low societal value or it is so cheap that people can buy it themselves
§ Example: Viagra, very cost effective and great benefits, but from societal perspective it is not that valuable
§ Example: paracetamol

Question 4

Why would you want to reimburse a health technology that is NOT cost-effective

Answer 4

o Public/political pressure
o Rare diseases – price is very high because it is so rare, but there is no other treatment. Patients cannot pay for treatment themselves as this is too expensive (e.g., rare disease)
o Unmet needs due to the lack of other treatments
o Young patients

Question 5

The social value of QALY gains (vi) can differ and depend on characteristis of, for example

Answer 5

• patients
  -diseases
• health technology

(schwappach)

Question 6

The i can depend on characteristics of patients

Answer 6

• Age: better for younger patients than for 90 year olds
• Gender: women live longer but with higher disease burden, but people can feel that men should be prioritised so there is less difference
• Lifestyle: smoking, unhealthy people should get lower weight than people who have always lived healthy
• SES: lower classes can be prioritised so there is less inequality
• Having children: people depending on them
• Past health consumption: if they already had a lot of healthcare in the past, now it is someone else turn
  Not desirable, by law this is not allowed in many countries. Feels like discrimination

Question 7

Characteristics of diseases

Answer 7

• Severity: cancers much more severe than the flu  very important. People with very bad illness are often prioritized over people who are not that ill
• Prevalence: people with rare diseases should have higher weight
• Type: episodic (migraines)
• Outcome: if people recover or die
• Acceptable health: we may find a QALY gain more value for a young person who can’t walk, versus for an old person who can’t walk. Because it is part of aging

Question 8

Characteristics of intervention

Answer 8

• Size/type of health gain: quality of life differs from gains in life expectancy
• Type of treatment: does it prevent future illnesses?
• Is there unmet need?
• Spillover effects: if you treat the parent, does this also help the children eat more healthy?

Question 9

Who are considered more severely ill is a normative question. There are different theories that provide different answers. Two important ‘severity approaches’ are:

Answer 9

1. severity of illness
2. fair innings

Question 10

severity of illness consists off

Answer 10

• prospective health
• rule of rescue
• absolute shortfall
• proportional shortfall

Question 11

prospective health

Answer 11

= how much health someone has left in the future

patients who have relatively less (or very little) prospective health are more worse off; the smaller the prospective health, the stronger the urgency to help these patients

Question 12

absolute shortfall

Answer 12

= how much health people lose as a consequence of disease if they do not have acces to treatment

–> disease related health loss (wihtout the new treatment)

(e.g. 20 years * 0.5 QOL point + 40 years * 1 QOL = 50 QALYs)

Question 13

proportional shortfall meaning

Answer 13

= amount of health they lose relative to the amount of health they would have had if they had not fallen ill

Question 14

proportional shortfall formula

Answer 14

disease related health loss (without the new treatment) / remaining health expectation in absence of the disease

example:
- Would have lived until age 80 years with QOL of 1 point
- Fell ill at age 20 years, QOL dropped from 1 to 0.5 and LE dropped from 80 to 40 years

((20 years * 0.5 QOL point + 40 years * 1 QOL point) / (60 years * 1 QOL point)) = 50/60 = 0.83

note: absolute shortfall is equal to the nominator in the proportional shortfall equation

Question 15

severity of illness

Answer 15

= focusses on the amount of health someone will lose in the future due to illness

Question 16

Fair innings

Answer 16

focusses on lifetime health and consist of two arguments (not only focus on amount of health already lost)
1. equal innings argument
2. sufficient innings argument

Question 17

1. equal innings argument

Answer 17

= people who have not yet had their fair inning (i.e., a ‘normal’ life-span of 70 QALYs in 1997) are worse off than those who have had their fair innings

–> dit houdt in dat iedereen een ‘equal’ recht heeft op hetzelfde aantal QALYs. Younger pateints are further away from 70 QALYs than older patients, so they are worse off when falling ill

Question 18

2. sufficient innings argument

Answer 18

= people who have had their fair innings are better of than those who have not (yet) had their fair innings; the further away from this fair innings, the worse they are considered to be

–> deze bouwt voort op het eerste argument: als iemand van de 70 QALYs bv heeft gehaald, dan wordt die persoon minder belangrijk voor gezondheidswinst en krijgen zij geen prioriteit voor behandeling

Question 19

What is considered to be a fair QALY expectancy?

Answer 19

There is no consensus about the fair innings, it is an ethical discussion. People born in 2000 had a higher fair innings, than people born in 1980, is this a fair difference? Between generation you get differences, because you use the QALY expectancy at birth as fair innings.

Question 20

fair innings example patient

Answer 20

• Would have lived until age 80 years with QOL of 1 point
• Fell ill at age 20 years, QOL dropped from 1 to 0.5 and LE dropped from 80 to 40 years
• In the past, this patient has lost 5 years * 0.8 QOL points + 3 * 0.9 QOL points = 6.7 QALYs

Fair innings (at the moment of falling ill/need for treatment) = 20 years * 1 QOL point – 6.7 QALYs = 13.3 QALYs (out of 80 QALYs that may be considered fair)

Patients who are further removed from their fair innings are more worse off

Question 21

Severity of illness aim

Answer 21

= reduce inequalities in terms of current and future/prospective health in society

Question 22

severity of illness standpoint

Answer 22

= the value of health gains is greater (weight >1) when gained by patients with lower levels of current and future prospective health without the new treatment

Question 23

severity of illness disregards

Answer 23

= patients’ past health and age

Question 24

fair innings aim

Answer 24

= reduce inequalities in terms of lifetime health in society

Question 25

fair innings standpoint

Answer 25

= everyone is entitled to have a 'normal' life-span and, therefore, the value of health gains is greater (weight >1 ) when gained by patients who lose a larger share of their lifetime health without treatment

Question 26

fair innings does NOT disregard

Answer 26

= patients' past health (uses their age as a proxy)

Question 27

Health care acts

Answer 27

1. Youth Act 2. Social Support Act 3. Public Health Act 4. Long-Term Care Act 5. Health Insurance Act 1,2,3 are tax based. 4,5 are insurance based

Question 28

policies demand side rationing health insurance act

Answer 28

- Mandatory deductible of 385 EUR; voluntary deductible of +500 EUR against premium rebate of 240 EUR - Decisions on delineating basic benefits package made by Minister of Health, based on advice from the National Health Care Institute (ZIN)

Question 29

Decision-making process of ZiN

Answer 29

1 scoping: exploring the situation and determening what information is needed 2 the assessment: collecting, presenting and assessing info 3 the apraisal: naming and wieghing up relevant arguments and determining the contribution to advice 4 formulating an dsubstantiating advice

Question 30

Quantiative integration of equity consideration

Answer 30

Equity considerations can be integrated in the assessment stage of decision-making by weighting either the QALY gains (Qi) or the Monetary threshold (vi) in an economic evaluation: - Attach equity weight (>1) to QALY gains, while keeping monetary threshold fixed (decision rule becomes: ∆ct/(w*∆Qi) < vi) - Attach equity weight (>1) to monetary threshold, while keeping QALY gains fixed (decision rule: ∆ct/∆Qi < w*vi)  the outcome is the same

Question 31

Increases likelihood that a health technology is cost-effective...?

Answer 31

∆ct/(w*∆Qi) < vi: ICER becomes lower so it is easier to fall below vi ∆ct/∆Qi < w*vi: vi becomes higher so it is easier for the ICER to fall below it  you make it more likely that the treatment will fall under the monetary threshold

Question 32

Decision criteria NL

Answer 32

1. Necessity of care 2. effectiveness 3. cost-effectiveness 4. feasibility

Question 33

Decision framework

Answer 33

0.00-0.10 = €0 (w = 0) 0.11-0.40 = €20,000 (w = 1) 0.41-0.70 = €50,000 (w = 2.5) 0.71-1.00 = €80,000 (w = 4)

Question 34

Maximum reference value

Answer 34

Maximum reference value of 80,000 EUR/QALY was substantiated by: - Rule of thumb <3 times GDP per capita (~90,000 EUR in NL) per DALY averted is good value for money for a health technology (WHO, 2002) - Most reimbursed health technologies in the United Kingdom had an ICER of ~79,000 GBP/QALY (Devlin & Parker, 2004) - Worldwide estimations of the value of a statistical life was ~80,000 EUR (Viscusi & Aldy, 2003)

Question 35

2 pos and neg afspects of the decision framework

Answer 35

Positive aspects: 1. Framework in line with theoretical and empirical evidence 2. Equity considerations systematically and transparently integrated (consistency between decisions) Negative aspects: 1. Current range of equity weights (1-4) may be too high (not in line with empirical evidence and risk of welfare loss because of high opportunity costs) 2. A different severity operationalization may be better aligned with societal preferences 3. Equity considerations relating to patients’ age not taken into account (which would be in line with empirical evidence)

Question 36

How is discussion settled in the Netherlands?

Answer 36

ZIN integrates equity considerations based on proportional shortfall in assessment stage of decision-making process, and (since 2018) integrates equity considerations based on all individual elements of the PS equation in the appraisal stage. That is: - Prospective health/rule of rescue - Absolute shortfall

Question 37

Why is equity important when rationing health care?

Answer 37

* Rationing can also be justified on the basis of equity * Equity of service use means that a person can access health care according to their need (rather than their capacity to pay). * People with greater need often gain more from health care than those who are healthy (i.e. > marginal benefit)

Question 38

UHC

Answer 38

Universal health coverage means that everyone has access to quality health care without suffering financial hardship. "health for all"

Question 39

UHC dimensions

Answer 39

population: who is covered? services: which services are covered? financial: what proportion of costs are covered?

Question 40

Why is health financing important for UHC

Answer 40

“Health systems are fuelled by their financing arrangements. These arrangements include the amount of funding the system receives, the ways funds are moved through the system to frontline providers, and the incentives created by the mechanisms used to pay providers.” - Lancet Commission on Financing for Primary Health Care

Question 41

Core health financing functions

Answer 41

1. revenue raising 2. pooling 3. benefit design pagage 4. purchasing

Question 42

1. revenue raising

Answer 42

= the collection of revenue (e.g. taxes, insurance contributions, user fees) for the delivery of health services

Question 43

2. pooling

Answer 43

= the accumulation of prepaid funds (e.g. taxes, insurance contributions, user fees) to pay for health services for a group of people

Question 44

3. benefit design package

Answer 44

= the specification of the goods and services paid for by the purchaser using prepaid funds. It defines the entitlements as well as obligations of the covered population (e.g. free outpatient services at primary health care facility)

Question 45

4. purchasing

Answer 45

= the mechanism by which mobilized and pooled funds are transferred to providers who deliver health services

Question 46

Four principles to guide health financing reforms in support of UHC

Answer 46

1. move towards predominant reliance on compulsory (i.e. public) funding sources 2. reduce fragmentation to enhance redistributional capacity (i.e. more prepayment, fewer prepayment schemes) 3. pursue the progressive universalism of benefit and ensure coherence with policies on rationing 4. move towards strategic purchasing to align the funding and incentives with promised servcies, promote efficiency and accountability, and sustain progress

Question 47

Increasing spending can improve health up to a point but efficiency matters always

Answer 47

life expectancy is shorter in countries with very low levels of health spending, but there are many factors other than spending that influence health at higher levels of spending, there's no clear relationship with life expectancy

Question 48

Not all revenue sources have potential to raise adequate, stable and equitable funds for health

Answer 48

Public - Direct taxes (income and business taxes) - indirect taxes (e.g. valued added tax VAT) - non-tax revenue (e.g. resources rent and royalties) - compulsory contributions (e.g. social health insurance SHI) Private - voluntary health insurance contributions VHI - out-of-pocket spending OOPS (e.g. user fees) External - foreign aid (donors)

Question 49

From an equity perspective there are three types of funding sources

Answer 49

* Progressive : relative contribution increases with wealth (e.g. income taxation) * Proportional : relative contribution is constant (e.g. social health insurance premium) * Regressive : relative contribution decreases wealth (e.g. flat user fees)

Question 50

In LMICs, most health spending comes from domestic sources especially out-of pockey

Answer 50

(most government health spending is associated with smaller share of out-of-pocket spending) - high income countries rely mostly on government sources - LMICs rely more heavily on out-of-pocket spending (OOPS) - external aid is still important for some LMICs

Question 51

Pooling averages out individual risk/expected costs

Answer 51

- the main objective is to maximise the redistributive capacity of colleted funds - ideally pools are large in size, diverse in health risks, and participation is compulsory or automatic

Question 52

Fragmentation affects UHC objectives

Answer 52

* Inequity in distribution of resources (and services) due to fragmentation of pools (e.g. population groups or geographic r egions) → uneven quality care and unmet need * Limits on financial protection due to redistribution barriers and small pools (e.g. community-based health health insurance) → financial hardship or foregone care * Inefficiencies in health system because of duplication of the administrative work required to manage pools (and purchase services) → higher costs and less potential gains from economies of scope/scale

Question 53

Benefit packages can be used to improve

Answer 53

* Efficiency of the health system by prioritising primary health care (PHC) and cost-effective interventions * Transparency by communicating explicitly entitlements and obligations * Utilisation relative to need by reducing access barriers * Financial protection by reducing out-of-pocket spending for essential care

Question 54

Key criteria for guiding decisions on rationing and prioritizing services

Answer 54

- health needs of population - cost-effectiveness of interventions - health maximization (e.g. QALYs) - equity in health

Question 55

Primary health care is at the core of most benefit packages (i.e. 'what to buy')

Answer 55

* Definitions of PHC vary across countries but typically include: ▪ Multisectoral policies and population-based interventions (e.g. road safety legislation, tobacco taxes, media campaigns to promote healthy behaviours) ▪ Periodic outreach services (e.g. vector control, vaccinations, family planning) ▪ General outpatient care (e.g. safe abortion, antenatal and childcare, testing and treatment infectious diseases, screening, diagnosis and management of NCDs ▪ General inpatient care (e.g. complicated birth, surgery and trauma care)

Question 56

scale up essential health services until there's universal access

Answer 56

* Benefits should be communicated in a way that’s simple to understand. Confusion about entitlements and obligations is a barrier to access * Even when essential benefits are clearly defined, inequalities in effective coverage can remain * If benefits exceed what can be delivered, implicit (untransparent) rationing will result (i.e. denial of treatment, supply shortages, lower quality care)

Question 57

Reduce or eliminate out-of-pocket payments for all essential services

Answer 57

* Even low co-payments are an obstacle to service use particularly in low-income groups * Fixed co-payments of an absolute amount are easier for people to understand than percentage co-payments because there is less uncertainty * The cost of medicines is a primary driver of out-of-pocket spending and poor financial protection in many countries.

Question 58

Purchasing is a continuum from 'passive' to 'strategic'

Answer 58

Passive: - resource allocation using norms (e.g. number of beds) - little or no selection of providers - little or no quality control - price and quality taker Strategic: - payment systems that create deliberate incentives for efficiency, equity and quality - selective contracting - price and quality maker - managing costs - governance and coordination across providers

Question 59

Allocative efficiency

Answer 59

* Can we better spend additional health care euros on something else (either other government spending or private consumption)? * Education etc * Maybe we can spend our extra income better on something else? * Already central question in CEA. Don’t really `need’ financial sustainability as a motivation…

Question 60

Marginal costs of public funds (MCPF)

Answer 60

* Collective financing of health care comes at a cost: * Taxes distort individual decisions, e.g. to work * If you want to finance something, that is not free. Wordt betaald vanuit taxes. Als je meer uren werkt moet je meer geld afstaan als belasting dus dan ga je het misschien niet doen omdat je het niet waard vindt dat je maar weinig krijgt voor dat extra uur werken.

Question 61

Laffer Curve

Answer 61

above this point you loose earning, people starts working less. Productivity goes down and you loose money. Laffer curve is strong exaggeration of MCPF

Question 62

Intertemporal budget constraint of the government

Answer 62

present value of remaining net tax payments of existing generations + present value of net tax payments of future generation = present value of all future government consumption - government net welath

Question 63

lifetime net benefits

Answer 63

= what do you pay to the government over your life and what do you get in return

Question 64

formula cost-effectiveness

Answer 64

In CEAs, we generally look at Δc/ΔQ

Question 65

V =

Answer 65

ability that we have to shift, are we willing to pay for HC costs now that we have to pay for later generations. Thresholds (intervention In cost analysis, what does this costs per patient and how much health gains it has) is the 20.000€ acceptable or not. What do you want to pay for additional health gains? What are we willing to pay for additional health gains? Should relate to how much are we willing to spend in the long run. Grenswaarde waaronder iets nog kosten effectief is, hoe veel ben je te bereid te betalen voor 1 QALY?

Question 66

fiscal rules

Answer 66

= aim to depoliticize policymaking and remove discretionary intervention; limit the ability to make drastic changes. * Aim: predictability of government action (by committing to long run rules)

Question 67

Types of fiscal rules

Answer 67

1. expenditure rules 2. revenue rules 3. debt rules 4. balanced budget rules

Question 68

expenditure rules

Answer 68

= the total government spending is limited

Question 69

revenue rules

Answer 69

= limit the tax income that the government can raise

Question 70

debt rules

Answer 70

= the total government debt cannot be higher than for example 60%

Question 71

Effects of fiscal rules on government spending

Answer 71

* Fiscal rules seem to have been successful in containing gov. spending * Rules which embedded expenditure targets worked best * Effect on transfers greater than on government consumption; social insurance is transfers. More likely to lower the insurance (link with visibility). Ze cutten eerder deze transfers dan hun eigen spending (dus bijv well fare of sickness benefits cutten). Omdat dit een relatief kleine populatie is, is dit een aantrekkelijkere optie voor ze. * Endogeneity is a big issue: countries with greater intrinsic fiscal discipline might be more likely to set up fiscal rules

Question 72

balance budget rules

Answer 72

each year the budget the expenditures and incomes have to match. A limited gap. (the difference between government income and spending cannot be higher than for example 6%

Question 73

Do fiscal rules curtail health spending? II

Answer 73

* According to Schakel et al (2017): * Modest effects: association between having a fiscal rule in place and decrease in health spending is $100 per capita. * Interaction with health system design (e.g. level of decentralization) * Implicit allocative effect * Some sectors might be better protected against budget cuts than others (cure versus prevention) * Risk of cost-shifting from public to private * Again, identification of causal effects remains a big issue

Question 74

Three waves of reform

Answer 74

* Wave 1 (50s-70/80’): Universal coverage and equal access  increasing access and expanding the ability of the medical sector * Wave 2 (80s-90s): Controls, Rationing, and Expenditure Caps * Limited supply, unlimited demand (waiting lists, dissatisfaction) * Limited incentives for efficiency; when you budget hc spending that you actually have incentives for incentives. You want to deliver the most value and the most health but does this happen that way? * Wave 3 (2000s): Incentives and competition * Not always delivered expected efficiency/saving gains * Concerns about adverse selection, behavioural limits to individual decision making

Question 75

containment policies

Answer 75

* Long-term policy has followed the international trend: * Budgeting (80s/90s) * Market Oriented Policies to stimulate efficiency(00s/10’) * Increasing role of government and return of budgeting (and waiting lists?) * Major reforms, at least partly aimed at increased efficiency * Cure: Regulated competition 2006 * Care: Long-term care reform, aimed at shift from institutional care to home- and informal care * Risk of cost-shifting very real * Hard to steer on efficiency in short-term policy: * Difficult to see how budget cuts/slices at the national level affect allocative decisions on lower levels (e.g. within the hospital)