m207: health economics rationing in health care with indebtedness and gratitude to joanna coast,...

M207: Health Economics

Rationing in health care

With indebtedness and gratitude to Joanna Coast, Department of Social Medicine, University of Bristol, for writing a book, PhD thesis and presentation on priority-setting……

and for allowing me to plagiarise it all!!!!


Rationing in health care

• What does ‘rationing’ mean?• Rationing with respect to

efficiency or equity?• Implicit versus explicit rationing• Methods and examples of

explicit rationing


Rationing: what’s in a name?

• Economics concerned with choice between competing alternatives

• Based on axiom of scarcity - resources limited relative to wants

• Fundamental ‘economic problem’ is therefore allocation of these scarce resources

• ‘Rationing’ (and priority-setting) just another term for resource allocation


Rationing: what’s in a name?

“The word [rationing] is invoked to make the flesh creep, not to prompt argument about how to deal with the inescapable”

Rudolph Klein, 1992


Means of rationing• Market system - price mechanism

establishes equilibrium (efficient allocation)

• Non-market system - absence of price as allocative tool leads to other, non-price, techniques

• Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing


‘Philosophical’ basis of rationingPrice system - objective = efficiency

consumer sovereigntyallocation by WTP/ATP

Non-price - objective efficiency or equity’?

who decides on allocation?allocation by what criteria?


Objective: efficiency or equity?• Efficiency

– maximisation of ‘benefit’– utilitarian ethic – distribution is irrelevant

• Equity– just distribution – based on need? age? lottery?


Objective: efficiency or equity?• Philosophical basis price

system/efficiency is utilitarianism

• Other philosophical bases are generally pursued in non-price allocation

• Which do we adopt?


Three important ethical theories• Utilitarian - greatest good for

greatest number (maximise ‘utility’ or ‘happiness’)

• Deontological - cannot ignore duty to one individual for sake of good of others

• Rawlsian - ‘maxi-min’ criteria for seeking to secure good of the least fortunate in society


Ethics and ‘levels’ of rationing•Theories have varying degrees of

applicability at population and individual level

•Utilitarian and Rawlsian generally ‘population’ level, Deontological generally individual

•May adopt different ethical principle at each level of rationing (decision-making)


Who pays?

•Health Authority?

•Government?

•Taxpayer?


Who really pays?• Opportunity cost -

if we choose to do one thing, the cost of doing that is the value which would have been obtained from the best alternative choice

• Who pays - the person who does not receive treatment


Implicit or explicit rationing?

• Implicit rationing: care is limited, but neither the decisions, nor the bases for those decisions are clearly expressed.

• Explicit rationing: care is limited and the decisions are clear, as is the reasoning behind those decisions.


Rationing in the UK“Rationing in Great Britain has been implicit…It is a silent conspiracy between a dense, obscurating bureaucracy, intentionally avoiding written policy for macroallocation (rationing), and a publicly unaccountable medical profession privately managing microallocation so as to conceal life and death decisions from patients”

(Crawshaw, 1990)


Rationing in the NHS

• Predominately implicit rationing

• BUT increasing advocation of explicit rationing– 1989/91 reforms– 1994-5 Health Committee Report– 1996 Rationing Agenda Group– NICE?


Methods of explicit rationing

L ayp a rticip a tion

M ed ica lp a te rn a lism

P o lit ica lp ro cesses

E qu ity E ff ic ie n cy

Te ch n ica lm e th o ds

E xp lic itra tion ing

(Coast et al, Priority setting: the health care debate, John Wiley, 1996)


Explicit rationing: technical methods• Single principle• Little distinction between

setting priorities at different levels

• Examples– maximising health gain– need-based rationing– lotteries– age-based rationing


Technical method 1: ‘league tables’

• Economic evaluation produces information on cost-effectiveness

• If using comparable outcomes (eg QALY) can ‘rank’ according to c/e

• Can use resultant ‘league table’ to allocate resource to most c/e first


League tables: handle with care!• Studies show differences in

methodology– choice of discount rate– method of estimating utility values– range of costs included– choice of comparator

• Requires consistent methodology, ‘admission criteria’ for inclusion, applicability in local decision context


The Oregon Plan• 1987 - decision to

stop funding for organ transplantation

• 1989 - Oregon Health Services Commission begins work

• 1990 - List 1• 1991 - List 2• 1994 - plan begins


Oregon List Version 1

• Efficiency principle• 1600 condition/treatment pairs• Cost/QALY gained

– social values– outcome– cost



“... looked at the first two pages of that list and threw it in the trash can”

“... the presence of numerous flaws, aberrations and errors”(Harvey Klevit, member, Oregon Health Services Commission)



• Equal treatment for equal need• 709 condition/treatment pairs• Method:

– Development & ranking of categories– Ranking C/T pairs within categories

•Public preferences•Outcome

– Professional judgement



Top Five C/T pairs

1 Pneumonia - medical2 Tuberculosis -

medical3 Peritonitis -

medical/surgical4 Foreign body -

removal5 Appendicitis -

surgical

Bottom Five C/T pairs

705 Aplastic anaemia - medical706 Prolapsed urethral mucosa

- surgical 707 Central retinal artery

occlusion - paracentesis of aqueous

708 Extremely low birth weight, < 23 weeks - life support

709 Anencephaly - life support


Technical method 2: PBMA

1Split health care service into ‘programs’ and subprograms - homogenous output

2 Estimate current spending and outputs (benefits?) achieved by each programme

3 Identify ‘marginal programs’ which would be the first to be cut or expanded as budget changes


Technical method 2: PBMA4 Identify change in output as

result of adding/subtracting budget (eg £100,000)

5Decision based on (re)allocation which yields greatest overall benefit


PBMA: panacea or poison?+combines pluralistic bargaining & technical

exercise

+ applies ‘correct’ concept within data limitations

- problems with data - quality, absence, robustness

- subjectivity (bargaining) - who decides?

- what is the maximand - output=???


Explicit rationing: political processes

• Processes and structures

• Debate and bargaining

• “multiplicity of objectives”

• Micro versus macro level


Medical discussion and debate

• Current form of decision making

• Variable: therapies funded in some localities but not all

• Different weight to different principles?

Yes

No

No

Yes

Yes


Public participation?

• Who should be involved?• What methods should be used to

obtain representative views? silent voices?

• How should information be presented?

• How should public views be used?• What weight should public views be

given?


New Zealand’s Core Services

• 1991 - Consultation Document• 1992 - National Advisory

Committee on Core Health and Disability Support Services

• 1992-3 - Public meetings about broad priority areas

• 1993 - Consultation over broad ethical framework

• 1994 - Panel discussions to formulate guidelines incorporating social factors


Success of Core Services• Incrementalism

– but how much has actually changed?

• Public consultation– emphasis on hearing many voices– have public ACTUALLY influenced

priorities?– how have methodological problems been

dealt with?– concern with “overconsultation”


Advantages and disadvantages

Technical+ implied neutrality+ clarity of objectives

– data hungry– inherent value

judgements– weaknesses in methods– rigidity– implementation

problems

Bargaining+ suited to uncertain

and complex situations

+ decisions based upon compromise

– heavily dependent on which groups are included

– slipping back to implicit rationing


Challenges to explicit rationing

•Potential impact upon the stability of the health care system

•Potential for disutility arising from explicit rationing


Potential instability (Mechanic)• Individual strength of

preference not considered• Lack of acceptance of

explicit rationing• Challenges to health

authority• Weakening resolve of

health authority• Return to implicit rationing


Utility of implicit rationing

• Deprivation disutility

- patients who are aware that care is being rationed may suffer a sense of grievance if they are not treated

• Denial disutility

- citizens may suffer disutility from being asked to partake in the process of denying care to other members of society


"it is easier to bear inevitable disease or death than to learn that remedy is possible but one's personal

resources, private insurance coverage or public

programme will not support it"(Evans & Wolfson, in Mooney, 1994)


“for physicians to have to face these trade-offs explicitly is to assign to them an unreasonable

and undesirable burden”

(Fuchs, 1984)

m207: health economics rationing in health care with indebtedness and gratitude to joanna coast,...

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