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Classen_HealthEcon_Class9 - Cutler/McClellan CBA and...

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Unformatted text preview: Cutler/McClellan CBA and Cutler/McClellan CBA and Intro to CEA Class 9 Loyola University Chicago Prof. Tim Classen February 9, 2011 Class Outline Discussion of Cutler/McClellan Cost­Effectiveness Analysis Value of Technological Change Treatment expansions vs. substitutions Incremental C­E Ratios QALYs and Cost­Utility Analysis Value of Technological Innovations in Health Care Obviously, innovations over time have increased longevity and improved health­related QoL CBA may be useful to consider the value of such innovations Many argue that we spend “too much” on health care in the U.S. Technological improvements make up large part of increases in health spending So, how do we use the tools just considered to address the questions of “Is what we spend worth it?” and “How much should we spend?” Cutler and McClellan (2001) Argue that benefits from tech. improvements in healthcare far outweigh costs Benefits include both increased longevity and higher QoL Some benefits may be due to unobserved factors (spending outside of health care that benefits health) So, better to study specific conditions Value of Tech. Change in HC New technologies can be either substitutes for old tech. or provide expansions to new forms of care MRI substitutes for x­ray Prozac expands treatment of depression beyond talk therapy and increases % of depressed population treated Could cost more or less than old tech. (CEA) Conclude that benefits from reduced infant mortality and better treatment of heart attacks outweighs ALL increases in health care spending Are treatments effective? Measuring Costs and Benefits Use PDV of current and future costs of conditions (at 3% discount rate) Include costs of future conditions that would not have occurred w/out intervention? Value 1 QALY at $100,000 Measure contribution of technology (as opposed to unmeasured factors) based on results from clinical trials Discount benefits as same rate? Time­varying? Include increased productivity, so probably have to include increased costs from future conditions Changes in treatment of AMI Decomposing Increased Cost of AMI Treatment Cost of care increased from $12k to $21.7k in 14 years! Nearly half of increase in cost is due to improved treatments/technology Life expectancy after AMI increased more than a year during period studied Base cost on Medicare reimbursement in year after AMI W/out even measuring increased QoL, benefit outweighs increased costs Allow for $25k of consumption and no work, with $100k Value of Life year, (benefit – cost increase) = ~ $60k Even with benefits from non­tech changes (lower smoking rates), tech. has big net benefit Improvements in treatment for LBW Babies Tech. changes in treatment of low­birthweight infants improved dramatically from 1950 to 1990 High cost ($40k), but mortality for <2,500g babies fell from 18% to 6% and increased life exp. by 12 years – present value of $240k Increases labor productivity Try to disentangle from changes in maternal behavior But also don’t consider benefit of reduced long­term health risks from LBW babies (conservative est.) Higher QoL Expansions in Treatment for Depression with SSRIs Innovation in treatment for depression provides large benefits due to previously untreated depressed patients seeking care Also part of increased spending on prescription drugs which gets attention 50% of depressed patients on SSRI by 1996, with SSRIs having same net costs as previous therapies but more effective (with lower time costs) Increase QALYs by 0.1 to 0.6 and allow for more productive time provides large benefit Possibly 50% of depressed not receiving care 4 of 5 conditions have large net benefits Policy conclusions Attempts to reduce “waste” in HC system may stymie tech. innovation Adjusting for quality, price of medical care actually declines over time Need to focus more on benefits of our HC system, rather than just costs Cost Effectiveness Analysis Cost Effectiveness Analysis Benefits measured in natural units Costs relative to benefits in clinical units Costs per unit of effectiveness Calculate Incremental Cost Effectiveness Ratios Reduction in length of hospital stay; increased longevity; change in blood pressure, etc. Outcome Measures for Cost­ Effectiveness Analysis Any measure relevant for question at hand (e.g. deaths, smoking quits, bp/lipid point reductions) However, cross­intervention comparisons may be limited by not having a common denominator. Many analyses attempt to incorporate outcome measures like life years or quality adjusted life years (QALYs) to facilitate such comparisons. QALY­type measures may be better suited (or at least more sensitive) to evaluating some interventions than others (e.g. common cold vs. chronic pain reduction). Use incremental cost­effectiveness ratios (ICERs) to evaluate interventions. Including $$$ (i.e. CBA as a special case of CEA). ICER ICER Ratio of incremental costs to incremental “effectiveness” is called Incremental Cost Effectiveness Ratio Treatment A Cost Life length $200,000 69 Treatment B $300,000 71 ICER = (∆ costs)/(∆ effectiveness) i.e. dollars per “unit” of incremental effectiveness $50,000/life year provided by B relative to A Limitations of CEA Limitations of CEA Unambiguous only when one alternative is at least as effective as others, but at lower cost (or more effective at same cost) Multiple outcomes Otherwise must think about ICER relative to cutoff Benefits (or harms) of procedures may have multiple dimensions Longevity is increased, but what about QoL? Which outcome is most relevant or representative after treatment? Use a combination of factors? Ignore conditions? Cost Utility Analysis Cost Utility Analysis CUA converts effectiveness measures into a common unit Based on the notion of utility, or satisfaction Utility here refers to health­related quality of life Incorporates changes in both quantity of life (mortality) and quality of life (morbidities) U(Q,T) where Q is health­related quality of life and T is time to live When to use? When to use? When health­related QoL is important Treatment affects both morbidity & mortality Outcomes have multiple dimensions Multiple interventions are considered Treatment of chronic conditions like arthritis, diabetes Neonatal intensive care, stroke patients, cancer patients Health­Related Quality of Life Health­Related Quality of Life Interventions may improve health by How to measure quality of life? Increasing length of life Improving quality of life Presence or absence of morbidities? Quality of Life vs. Clinical improvements 1/3 of adults are obese – useful? How to rank co­morbidities in relative sense? Treatment may improve clinical measures, but does patient have better QoL? Measure QoL using Quality Adjusted Life Years (QALYs) QALY Measures QALY Measures Provides scale of quality of health from 0 (~death) to 1 (full health) for given time period So, 6 months of full health may be equivalent to a year of health at 0.5 Based on individual’s preferences How to elicit? Useful in considering $/QALY improvements Offer patient “gamble” of treatment relative to current state How much time in best health vs. year in current health Ranking health status pre­ and post­treatment ...
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