Classen_HealthEcon_Class11

# Classen_HealthEcon_Class11 - Cost­Effectiveness Analysis...

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Unformatted text preview: Cost­Effectiveness Analysis Cost­Effectiveness Analysis and QALYs Class 11 Loyola University Chicago Prof. Tim Classen February 14, 2011 Class Outline Cost­Utility Analysis Markets for Health Insurance 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 Example QALY Calculations Example QALY Calculations Two pieces of data are needed Path of health states along with duration of each Preference weights for each health state Duration 8 years 8 years Health State Home Dialysis Mastectomy QALY Weight 0.65 0.48 Example 1: Home Dialysis Example 1: Home Dialysis QALYs gained from 8­year life extension on home dialysis 0.65 x 8 = 5.2 QALYs (no discounting) With discounting, need to consider the effect of getting the benefit in the future in today’s terms = 4.4 QALYs 0.65 × 1 + 1 +1 + ... + 1 (1.05) (1.05) 2 (1.05)7 Example 2: Mastectomy Example 2: Mastectomy Symptoms → mastectomy: 6 years of life Screening → mastectomy: 9 years of life QALYs gained by screening (Gain 2 years of life vs. 1 year lived w/out diagnosis) 0.48 x 2 – (1 – 0.48) = 0.44 QALY (no discounting) 0.48 x (0.71 + 0.677) – 0.52 = 0.15 QALY (with discounting at 5% per year) 0 1 Symptom 7 Death w/o screening 9 Death w/ screening Screen From Cost-Effectiveness Analysis Registry at https://research.tufts-nemc.org/cear/Default.aspx CUA studies growing popularity CUA studies growing popularity Concerns with CUA? Concerns with CUA? Theory is only valid at individual level Responses tend to depend on wording People find it hard to imagine certain events Responses tend to differ after an event has occurred (vs. asking prospectively) Assumes independence between utility from health and wealth Aggregation can be done under restrictive assumptions (mean utility of society) Other Issues in QALY use Other Issues in QALY use Special value for saving people near death? Should we consider people’s “potential health”? Is value of an effect for an individual proportional to length of effect? Is value of an effect for a population proportional to the number of individuals? Does the distribution of QALYs matter? Should we ask individuals about how they would value hypothetical effects on their own health or the effects on groups of individuals? Ethical concerns Ethical concerns Decision­making using CEA/CUA based on external valuation criterion CEA/CUA may avoid direct monetary valuation, but decision makers using these studies for resource allocation decisions (at least) implicitly place monetary value on outcomes Cost per QALY tables, published threshold values (often quite arbitrary or not very applicable to the case) Markets for Health Insurance Markets for Health Insurance Review Demographic Trends Demand for Health Insurance Pricing of Health Insurance Plans Share of U.S. Population 45% 40% Share of Population 35% 30% 25% 20% 15% 10% 5% 0% 1950 Now: 55% between 20 & 60 vs. 19% above 60 2050: 48% between 20 & 60 vs. 26% above 60 0-19 20-39 40-59 60-74 75+ 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Year Age Profile of U.S. Age Profile of U.S. Will the Baby Boom Will the Baby Boom Bust Medicare? Life Expectancy by Age 90 Life Expectancy Given Age Reached 80 70 60 50 40 30 20 10 0 2003 1989-91 1979-81 1969-71 1959-61 1949-51 1939-41 1929-31 1919-21 1909-11 1900-1902 0 20 40 65 85 Age Reached Sources of Payment for Health Care 50% 45% 40% Private Insurance Out of Pocket Medicare Medicaid Share of Total NHE 35% 30% 25% 20% 15% 10% 5% 0% Projections Medicare Part D 19 65 19 68 19 71 19 74 19 77 19 80 19 83 19 86 19 89 19 92 19 95 19 98 20 01 20 04 20 07 20 10 20 13 20 16 20 19 Year 19 62 How Insurance Benefits How Insurance Benefits Everyone Involved Health insurance benefits three main parties: patients, providers, and insurance companies. Patients receive affordable health care and transfer risk of large financial/health losses. Providers receive increased demand for their services and a predictable form of payment. Insurance companies earn profits from the premiums paid by their pool of consumers. Everyone Pays for Health Care Everyone Pays for Health Care People may believe that when insurance pays for something, it’s free. That is clearly not the case. In reality, every dollar spent on health care comes from individual households, whether it’s obtained via premium payments, tax dollars, higher service charges for those who can afford them, or some other method. Thus, insurance doesn’t reduce the cost of medical care; rather, it redistributes costs so that different people end up paying. Think of insurance as transferring payments over time for an individual (pay premiums for many years and then get benefit when unhealthy) OR at a point in time, healthy people pay for care of sick. Demand for Health Insurance Demand for Health Insurance Uncertainty over future health Risk aversion Alternative view: Access to expensive procedures Financial risk from loss of health requiring medical care Can’t insure “health” ...
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