Tackling inequalities: the role of cost

effectiveness By

Alan MaynardEmail: alan.maynard@york.ac.uk

Introductory issues

The production of health

Types of poverty

Scarcity, ethics and economics

Outline

Please contract scepticaemia and let it affect every aspect of your work!

Scepticaemia is defined “an uncommon generalised disorder of low infectivity. Medical school education is likely to confer life-long immunity”

Source: Skrabanek and McCormick, “Follies and Fallacies in Medicine” 1989

Scepticaemia

“the philosophers have only interpreted the world in various ways; the point is to change it”

(Karl Marx, Theses on Feuerbach (1845)) The purpose of public health is to provide

evidence to pursue the social goals of efficiency, equity and expenditure control in health production and distribution

Public health is a subject not a discipline A subject like public health uses disciplines such

as sociology, psychology, statistics and economics to explain society using testable hypotheses.

The purpose of public health

The production of health is determined by many inputs, of which health care is one

An important policy problem is to determine which inputs improve health the most at least cost: the efficiency or cost effectiveness challenge

Then given our interest in inequality, there is a need to identify the impact of efficient health production policies on the distribution of health, and whether efficiency has to be foregone to improve equity

The role of health care ……….

The production of health

Medical hero: Archie Cochrane

“ I once asked a worker at a crematorium, who had a curiously contented look on his face, what he found so satisfying about his work. He replied that what fascinated him was the way in which so much went in and so little came out. I thought of advising him to get a job in the NHS, it might increase his job satisfaction, but decided against it. He probably gets his kicks from the visual demonstration of the gap between input and output. A more statistical demonstration might not have worked so well.”

Archie Cochrane, “Effectiveness and Efficiency” (1972)

Scepticism about health care

Health production

IncomeWealthNutritionSanitationEducationHousingWorkLeisureGenetic endowmentHealth care

Healthcapitalstock

Healthydays / yearsof life

Is income inequality a major determinant of good health? If so policy design must be careful:◦ Cross sectional poverty i.e. how many are living in

poverty today? What social security/fiscal policy to use?◦ Life cycle poverty i.e. what is your experience of

poverty over your life? e.g. Rowntree’s analysis of life cycle poverty in York in

1899: born into poverty, relative affluence after school and pre-

marriage, more poverty when married and rearing children, relative affluence after children leave home and still employed, poverty in old age.

◦ Life cycle poverty now? Policy options?

An income perspective: types of poverty 1

Inter-generational poverty ◦ i.e. do the poor children of one generation inherit

the deprivation of their parents? E.g. “Income in Two Generations”

(Atkinson, Maynard and Trinder (1983)◦ Evidence of limited income mobility between

generations, with education (years of school) the major determinant of improved income status

Types of poverty 2

Not sufficient to answer “income redistribution” or “education”

Need to identify the form of “income” distribution (e.g. the mode child benefits and pensions?)

Need to identify the form of “education” (e.g. pre-school to develop play and attention skills gives a better rate of return than teenage interventions) .

Need to identify life cycle effects of early interventions (e.g. Heckman et al, Science 3/2014)

Where to invest to produce health?

Identifying “effect” alone is a necessary but not a sufficient condition to invest in health production

Economics starts from the assumption that resources are limited and that scarcity affects the behaviour of all individuals and institutions

Scarcity obliges us to make choices Each choice we make involves an opportunity

cost The opportunity cost is the value of what we

give up when we make a choice

The role of economics

Investing in health care and other ways of producing health involves opportunity costs

A decision to treat my cancer deprives other patients of care which would increase the length and quality of their lives

Rationing involves depriving patient of care from which they could benefit, and that they wish to have

Investing in health production locally to reduce smoking, teenage pregnancy and car pollution means less is available for social care

Every investment action by individuals and institutions involves an opportunity cost

From opportunity cost to rationing

Willingness and ability to pay= deprive the poor Random allocation: the second Oregon

experiment (NEJM, 2013)=deprive those who lose in the lottery

Personal characteristics e.g.◦ Age: the fair innings approach◦ Gender and marital status◦ Religion◦ Mental health and learning difficulties◦ Education◦ Use of addictive substances e.g. tobacco and alcohol◦ Personal characteristics e.g. weight

Rationing criteria in health care: what are the opportunity costs?

Which investment gives you “the biggest bang for the buck” in terms of producing improvements in the length and quality of life of citizens (QALY)?

“what is clinically effective may not be cost effective, but what is cost effective is always clinically effective” (Maynard, Lancet, 1998)

Rationing by economic efficiency: cost effectiveness

Hippocratic oath focuses on benefit, and ignores opportunity cost

To economists this individual perspective is unethical They emphasise the social perspective i.e. in health

care resources are limited to circa £110 billion. The imperative is to maximise health

production/improved patient outcomes from that fixed budget.

Allocation of care should be based on “need” defined as those who benefit most at least cost: the cost effectiveness rule

Economics and ethics

Inefficiency is unethical as it deprives potential patients/citizens of care/preventive activities from which they could benefit

Inefficiency is unethical

1. Cost to the NHS/public provider?2. Cost to the patient/citizen?3. Costs to the carers of patients/citizens?

Technology appraisals (TAs) by the National Institute for Health and Care Excellence (NICE) includes only costs to the NHS

What costs should you include?

1. Benefits to the patient/citizen?2. Benefits to the carers?3. (external benefits i.e. the effects on your

quality of life of your best friend’s health improving? )

The National Institute for Health and Care Excellence includes only the benefits to patients in their TA work

What benefits should you include?

NICE’s perspective is determined by legislation

Patient groups and the pharmaceutical industry seek inclusion of “societal benefits”

Quality of societal data is poor. Need to put QoL measurement for carers into

trials? An example of the effects of competing cost

and benefit perspectives: programme of getting children to walk to school: what costs and effects to include?

Why the restricted use of cost and benefit data?

Inadequate attention to cost effectiveness Evaluation of health production investments

that ignore the economic approach exposes practitioners to being ignored, and perhaps even ridiculed

A problem with public health

In health care for instance the efficiency rule is discounted because of equity/social goals e.g. low birth weight babies

Tackling inequalities in health using the cost effectiveness approach could identify the interventions that advantage the more affluent rather than the poor e.g. advice on smoking?

Thus essential to identify the distribution of costs and effects.

Would there be social support to weight QALY gains in favour of the poor?

The efficiency-equity trade off

Living wage (Pickett) Early childhood (Melhuish) Replace 30 mph speed limits with 20mph limit (Dorling) “Health first” approach to tackling worklessness

(Bambra) “Participatory budgeting” in mental health (McKensie) Further and adult education (Chandola & Jenkins) Improve employment conditions for public sector

workers (Nazroo) “Age friendly” environments for older people (Hendig &

Phillipson) Source: “If You Could Do One Thing…: local actions to

reduce health inequalities”, British Academy, 2014

Local government interventions to produce health: cost effectiveness?

1. Resources are limited, and evidence of the cost effectiveness of competing interventions to reduce health inequalities is essential

2. Investments that are efficient may not reduce inequality

3. If efficiency has to be given up to reduce inequality, the opportunity costs of such choices should be explicit

4. Such explicitness can ensure accountability and good governance of society’s scarce resources

Good luck in your work but expect problems…….

Conclusions

We should be kind to all people, even those who are vested with authority, but we must be ruthless in seeking and criticising the evidence on which their beliefs are founded

Skrabanek & McCormick 1992