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Including Financial Protection and Equity in Health CEAs

Dean T. JamisonUniversity of Washington, Department of Global Health

Global Health Metrics and Evaluation ConferenceJune 16, 2013

104/10/2023

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Plan for this Talk

• Conceptual background

• Public finance of TB treatment of India

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Outcomes of a Policy

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• Health gains (burden of disease averted)

• Financial protection benefits (“insurance” to households from medical impoverishment)

• Income consequences for households

• Distributional consequences (across income groups, ethnic subgroups or between males and female)

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Evaluation of Policy:Extended Cost-Effectiveness

Analysis (ECEA)

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• Evaluation of interventions and platforms (CEA)(e.g. DOTS as an intervention surgical capacity at a district hospital as a

platform)

• Evaluation of Policies

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Policies

• Taxes and subsidies(e.g. universal public finance; tobacco taxes)

• Laws and regulation• Investment in capacity• Information and education

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Financial Risk Protection 1

• Enthoven (1987) stressed importance of FRP as a health system objective.

• Metrics include:• Incidence of impoverishment, excessive spending,

forced borrowing and forced asset sales (Wagstaff reviews results)

• Money-metric value of insurance

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Financial Risk Protection (2) Insurance

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• Risk aversionIndividuals value protection from the risk of uncertain adverse events

y = individual incomer = coefficient of relative risk aversion

• Approach consistent with recent workMcClellan & Skinner. The incidence of Medicare.

Journal of Public Economics 2006 Smith. Incorporating financial protection into the economic evaluation of health technologies. Health Economics 2012

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Financial Risk Protection (3)

• Money-metric value of insurance providedGamble with:- disease occurs at incidence p (depending on income)

- has treatment cost c

• For 1 individual, money-metric value of insurance = expected value - certainty equivalent of gamble

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ECEA Structure

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Policy Instrument

Health gains

(e.g. TB deaths averted)

Household expenditures

(e.g. TB-related costs

averted)

“Insurance” benefits(e.g. financial

protection from TB-related costs)

Poorest 2nd Poorest Middle 2nd Richest Richest

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Universal public finance of TB treatment in India

Work undertaken with Stéphane Verguet and Ramanan Laxminarayan

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Tuberculosis in India

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• TB epidemiologyAnnual incidence of 100 per 100,000 (sputum smear-positives) (WHO

2012)

4 times higher incidence among the poor (Muniyandi et al. 2007)

Case fatality rate of untreated case 0.32 (WHO 2012)

• TB treatment (DOTS)Cost of $100 per patientEffective at 90% (WHO 2012)

• Current DOTS coverage- average of 71%- bottom income quintile: 47%- top income quintile: 95%

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UPF for TB Treatment Over 1 Year for 1 Million Indians

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TB deaths averted

Poorest 2nd Poorest Middle 2nd Richest Richest

Treat TB-infected with DOTS

DOTS coverage (~ 90%)

DOTS effectiveness

(~ 90%)

TB costs averted for households

Financial protection

benefits

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Benefits over 1 Year with UPF for 90% coverage of TB Treatment (per

million population)

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Outcome Total Income

Quintile I (Poorest)

Income Quintile II (Poorer)

Income Quintile III (Middle)

Income Quintile IV

(Richer)

Income Quintile V (Richest)

1 TB deaths averted 80 40 25 12 3 0

2Private

expenditures crowded out

$29,000 6,000 6,000 7,000 6,000 4,000

3Money-

metric value of insurance

$9,000 5,000 2,000 1,000 1,000 0

Total cost of public program of $65,000

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Coping Mechanisms: Borrowing

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• Without UPF, when faced with costly treatment, the poor borrow from peers or sell assets

• 50% of poor households in India borrow money/sell assets at high interest rates (Kruk et al. 2009)

• Assume the poor take a loan over 10 years at annual interest rate of 20% to subsidize TB treatment

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Benefits over 1 Year for 1 Million Indians with UPF for TB Treatment

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Outcome Total Income

Quintile I (Poorest)

Income Quintile II (Poorer)

Income Quintile III (Middle)

Income Quintile IV

(Richer)

Income Quintile V (Richest)

1 TB deaths averted 150 100 50 0 0 0

2Private

expenditures crowded out

$70,000 0 15,000 25,000 20,000 10,000

3Money-

metric value of insurance

$10,000 0 3,000 4,000 2,000 1,000

Total cost of public program of $130,000

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Comparative Analysis – Ethiopia

Stéphane Verguet, Zachary Olson, Joseph Babigumira, Margaret Kruk,Kjell Arne Johansson, Carol Levin,

Rachel Nugent, Clint Pecenka, Mark Shrime,David Watkins, Dean Jamison

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Ethiopia

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Thank you

Contact Information:Djamison@uw.edu