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Cost-Effectiveness & Resource Allocation. Wisconsin Public Health and Health Policy Institute May 26, 2005. For consideration…. How should the health policy community balance competing priorities of: Maximizing health Minimizing budget - PowerPoint PPT Presentation
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Cost-Effectiveness &Resource Allocation
Wisconsin Public Health and Health Policy Institute
May 26, 2005
For consideration… How should the health policy community balance competing priorities of:
Maximizing health
Minimizing budget
Should prevention be thought of differently from other types of health care?What is the role for the public in this discussion?
Life Expectancy at Birth
Infant Mortality RatesInfant Mortality Rates (per 1,000 Live Births)
By OECD Country in 2000
Percentage of GDP Spent on Health Care in 1990 and 2000
9.9
8.6 9.07.8 7.4
6.95.9 6.0
13.0
10.69.5 9.1
8.3 8.0 8.0 7.87.3
11.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
UnitedStates
Germany France Canada Australia OECDMedian
NewZealand
Japan UnitedKingdom
1990 2000
Heart (26) 68.6 1.1 30.3Pulmonary (25) 37.5 41.9 20.6
Psychiatric (25) 21.1 59.2 19.7
Cancer (18) 41.9 27.4 30.7
Infectious ( 6) 95.2 -17.5 22.3
Percent change in spending attributable to:
Increase cost/ Rise in treated Increased treated case prevalence population
Reasons for Changes in Medical Care Spending1987-2000. Thorpe, K et al, . Health Affairs, 2004
Disease and $s (in billions)
Cost-Effectiveness Analysis
(aka…..value for money)
Costs
Costs include:
Care by health professionalsLabs and X-RaysHospital/facility chargesMedicationsOther expenses related to illness
Effectiveness in Cost-Effectiveness Analysis
An effective treatment or intervention does one or both of the following:
Increase how long people live
Improve or maintain how well people feel
Quality-adjusted life years:A measure of effectiveness
(Life expectancy) (quality of life)=QALYs
Health-related Quality of Life
0 1
Dead Perfecthealth
Calculations:Quality-Adjusted Life Years
If, HRQL= 0.7
And,A treatment gives 10 extra years of life (@ 0.7 per year)
Then…. People receiving the treatment
gain Seven Quality-Adjusted Life Years (7 QALYs)
A QALY is a QALY is a QALY
#People HRQL LE = QALYsSaves 100 x 0.8 x 50 = 4000 Lives Improves 10,000 x 0.1 x 4 = 4000 HRQL
The cost-effectiveness of one thing compared to another…
Cost treatment A – Cost treatment B Effectiveness treatment A – Effectiveness treatment B
= COST per QALY
For example…
Cost Life Expectancy HRQLQALYS
Group A $80,000 2 Years X .6 = 1.2 Group B $ 4,000 1 Year X .8 = 0.8 Cost-effectiveness:
$80,000 - $4,000 = $76,000 = $190,000/QALY 1.2 – 0.8 0.4
What’s a “Good” Buy?
“Expensive” more than 100K/QALY
“Reasonable” 50K/QALY
“Very Efficient” less than 25K/QALY
Cost-Effectiveness AnalysisSome Questions…..
Should “life-saving” be placed on the same mathematical scale as “quality improving”? Is it appropriate to consider cost per QALY when diseases are
immediately life-threatening?
How would we justify discriminating against people who have diseases that are “inefficient” to treat?
Should QALYs count the same regardless of whether they go to young or old? The not so sick, versus the very sick?
When prevention is as “cost-effective” as cure, which gets priority?
Condition/Treatment Cost per QALY
Treatment for Erectile Dysfunction $6,400/QALY
*Physician Counseling for Smoking $7,200/QALY
Total Hip Replacement $9,900/QALY
*Outreach for Flu and Pneumonia $13,000/QALY
Treatment of Major Depression $20,000/QALY
Gastric Bypass Surgery $20,000/QALY
Treatment for Osteoporosis $38,000/QALY
*Screening For Colon Cancer $40,000/QALY
Implantable Cardioverter Defibrillator $75,000/QALY
Lung-Volume Reduction Surgery $98,000/QALY
Tight Control of Diabetes $154,000/QALY
*Treating Elevated Cholesterol ( + 1 risk factor) $200,000/QALY
Resuscitation After Cardiac Arrest $270,000/QALY
Left Ventricular Assist Device $900,000/QALY
COST/QALY: Selected Medicare Services
For consideration…
Should prevention be thought of differently from other types of health care?
Condition/Treatment Cost per QALY Cost per person
Number of people to treat
TOTAL COST
Erectile Dysfunction $6,400/QALY $480 5 million 3 billion
Physician Counseling for Smoking $7,200/QALY $128 4 million 0.5 billion
Total Hip Replacement $9,900/QALY $31,000 250,000 7 billion
Outreach for Flu and Pneumonia $13,000/QALY $17.50 20 million 0.35 billion
Major Depression $20,000/QALY $2,000 2 million 4 billion
Gastric Bypass Surgery $20,000/QALY $81,000 70,000 6 billion
Treatment for Osteoporosis $38,000/QALY $950 5 million 5 billion
Screening For Colon Cancer $40,000/QALY $350 8.4 million 3 billion
Implantable Cardioverter Defibrillator
$75,000/QALY $35,000 50,000 1.75 billion
Lung-Volume Reduction Surgery $98,000/QALY $50,000 20,000 1 billion
Tight Control of Diabetes $154,000/QALY $1400 4.8 million 7 billion
Elevated Cholesterol $200,000/QALY $1350 8 million 11 billion
Resuscitation After Cardiac Arrest $270,000/QALY $45,000 130,000 6 billion
Left Ventricular Assist Device $900,000/QALY $100,000 100,000 10 billion
Estimated costs of treating selected conditions. Gold, et al, 2005 (unpublished)
SUNDAYBUSINESS February 27, 2005, Sunday
ECONOMIC VIEW: How to Save Medicare? Die Sooner
By DANIEL ALTMAN (NYT) 1103 words Late Edition - Final , Section 3 , Page 1 , Column 5
We are such stuff as dreams are made on, and our little life is rounded with a sleep…
The Tempest
Shakespeare, W. et al
For consideration…
What is the role for the public in this discussion?
Health, Defense and Education15
8
0
2
4
6
8
10
12
14
16
2003
HealthDefenseEducation
%of GDP
3.6