Economics and public policy 0 NHS research and development as a public good

This paper analyses National Health Service R&D as a Samuelsonian public good. It also identifies other characteristics of NHS R&D: supplier-induced demand; information asymmetries; jointness in production of R&D, medical education and health care; multiplicity in research funding sources; uncertainty about research outcomes; the difficulty of measuring and valuing research outcomes; and the behavioural characteristics of the institutions which produce R&D. The principal conclusion is that a centrally planned approach is unlikely to solve the problems arising from these characteristics, whereas the creation of an appropriate institutional and behavioural framework is more promising. The recent reforms in the arrangements for supporting R&D in the NHS can be seen as a response consistent with this analysis, are outlined and set in their historical context.R&D; supply and demand

Mark versus Luke? Appropriate Methods for the Evaluation of Public Health Interventions

The purpose of this paper is to demonstrate that a social decision making approach to evaluation can be generalised to interventions such as public health and national policies which have multiple objectives and impact on multiple constraints within and beyond the health sector. We demonstrate that a mathematical programming solution to this problem is possible, but the information requirements make it impractical. Instead we propose a simple compensation test for interventions with multiple and cross-sectoral effects. However, rather than compensation based on individual preferences, it can be based on the net benefits falling on different sectors. The valuation of outcomes is based on the shadow prices of the existing budget constraints, which are implicit in existing public expenditure and its allocation across different sectors. A ‘welfarist’ societal perspective is not sufficient; rather, a multiple perspective evaluation which accounts for costs and effects falling on each sector is required.cost-effectiveness analysis, decision rules, public health

Efficiency, equity and equality in health and health care

Three common “Es” have high ethical and political content for health policy: efficiency, equity and equality. This article examines the links between the three, with especial attention given to (a) the claimed conflict between efficiency and equity, (b) the equity of inequalities and (c) the conflict between six equity principles: equal health, equal health gain, equal value of additional health, maintaining existing distributions, allocation according to need and equal per capita resources. Conclusions include: Efficiency and equity do not inherently conflict  an inefficient allocation can be equitable  an efficient allocation can be inequitable  an inefficient allocation can become more efficient without increasing inequity what is equitable often requires inequality in health and inequality in resource distribution per capita  equality in health requires inequality in resource allocation  equality in resource allocation typically leads to inequality in health  allocation according to need typically leads to inequality in healt

Cost-effectiveness thresholds in health care: a bookshelf guide to their meaning and use

There is misunderstanding about both the meaning and the role of cost-effectiveness thresholds in policy decision making. This article dissects the main issues by use of a bookshelf metaphor. Its main conclusions are these: It must be possible to compare interventions in terms of their impact on a common measure of health. Mere effectiveness is not a persuasive case for inclusion in public insurance plans. Public health advocates need to address issues of relative effectiveness. A ‘first best’ benchmark or threshold ratio of health gain to expenditure identifies the least effective intervention that should be included in a public insurance plan. The reciprocal of this ratio – the ‘first best’ cost-effectiveness threshold – will rise or fall as the health budget rises or falls (ceteris paribus). Setting thresholds too high or too low costs lives. Failure to set any cost-effectiveness threshold at all also involves avertable deaths and morbidity. The threshold cannot be set independently of the health budget. The threshold can be approached from either the demand-side or the supply side – the two are equivalent only in a health-maximising equilibrium. The supply-side approach generates an estimate of a ‘second best’ cost-effectiveness threshold that is higher than the ‘first best’. The second best threshold is the one generally to be preferred in decisions about adding or subtracting interventions in an established public insurance package. Multiple thresholds are implied by systems having distinct and separable health budgets. Disinvestment involves eliminating effective technologies from the insured bundle. Differential (positive) weighting of beneficiaries’ health gains may increase the threshold. Anonymity and identity are factors that may affect the interpretation of the threshold. The true opportunity cost of health care in a community, where the effectiveness of interventions is determined by their impact on health, is not to be measured in money – but in health itself

QALYs versus HYEs - a theoretical exposition

There has been a vigorous dispute about quality adjusted life years (QALYs) and it has been argued that they are an inappropriate measure of patient utility and that a more efficient approach is to measure outcomes in terms of health year equivalents (HYEs). This paper explores the theoretical underpinning of this debate. It explores the claim that QALYs are liable to misrepresent consumer preferences and hence lead to decision-makers choosing options which are not those preferred by the public. It also considers the claim that HYEs do not suffer from this defect. We argue that none of the examples offered to date demonstrate the alleged tendency of QALYs to misinterpret preferences. We also suggest that although QALYs may misinterpret preferences in a way that HYEs do not, since they require that the individual’s utility function be additively separable over time, there is no evidence to date that QALYs do so.QALY, HYE

Health, health expenditures and equity

This paper offers some reasons why it may be interesting to examine the distribution of health, health care, and payments for health care. The reason for a legitimate concern for these distributions is mainly because they relate to a more fundamental concern with the distribution of health itself. It is argued that an equitable distribution must take account of the whole distribution and that it is insufficient to discuss equity in terms of minimum standards. A concept of need based on capacity to benefit from health care is clarified and applied. Horizontal equity is considered in terms of three alternative principles, whose consistency with one another and with efficiency are examined using a diagrammatic technique that enables the simultaneous consideration of carious equity principles and efficiency. It is shown that equality of treatment in the senses of outcome or input are mutually consistent under particular conditions, and also consistent with efficiency.distribution

Cost-containment in Europe

Cost-containment is not in itself a sensible policy objective because any assessment of the appropriateness of health care expenditure in aggregate, as of that on specific programs, requires a balancing of costs and benefits (at the margin). International comparisons of expenditures can, however, provide indications of the likely impact on costs/expenditures of structural features of health care systems. This paper reviews the evidence based upon OECD data for both European countries and a wider set and outlines some current policies in Europe that are directed at controlling health care costs.

Funding research in the NHS

This paper is the text of the 1994 Francis Fraser Lecture given at the Royal College of Physicians on 2 June 1994. It presents the outcome of the consultation exercise conducted by the taskforce on R&D in the NHS chaired by Professor Culyer and identifies the principle problems currently confronting the conduct of R&D in the NHS, including both R&D supported by other sponsors that is dependent on NHS resources and a flow of suitable patients. The main points addressed include: • The fact that some arrangements for the funding of research (e.g. non-SIFTR, and R&D support for London Postgraduate hospitals) are temporary; • That SIFTR is a general hospital subsidy, more related to undergraduate numbers than R&D activity, which is not quality assessed and which appears to be poorly targeted on R&D activity within teaching hospitals, and which is not available to support non-teaching institutions or community-based care; • The pressures of the internal market for patient services which threatens the funding of research currently met through prices; • That there is evidence of non-cooperation in R&D projects from some fundholding GPs; • That referrals are increasingly local and increasingly difficult to obtain for major research centres; • That service support for non-MRC research is not always available; • That there is inadequate coordination at the top level between different funders of R&D and an inadequate mechanism for identifying and prioritising the service needs of R&D; • That much R&D in trusts is not evaluated or supported by explicit mechanisms; • And that the reform of the NHSE is seen as a threat to the valuable work of Regional Directors of R&D.research and development, R&D

Health service ills: the wrong economic medicine (a critique of David Green's Which Doctor?)

In a recently published monograph of the INstitute of Economic Affairs by Dr David Green entitled Which Doctor?, the argument is made that the ills of the NHS can all at root be laid at the door of one professionally regulated froup: the doctors, and that, if only this encumbrance could be removed, the full beneficial fruits of a deregulated market would be harvested. In this Discussion Paper, Professor Culyer mounts a conprehensive rebuttal of Dr Green's argument, arguing not only that the deregulation of the medical profession is insufficient ro produce the market results predicted by Dr Green, but that it would also produce direct harms while detracting attention from issues whose resolution would have substantial impact upon efficiency in the NHS.

The internal market: an acceptable means to a desirable end

This Discussion Paper argues that the government has been right both in its rejection of market solutions to health insurance and in its injection of competition into provider markets. The particular advantages of the latter are that the collective expression of demand is maintained, with impetus being given to the better identification of health care needs and the most effective ways of meeting them. The ill effects of provider competition in the United States are outlined and reasons for not expecting them to be replicated in Britain explained. Emphasis is laid on the powerful moral case for efficiency in the provision of health care, and clear definitions of this much-abused term are offered. The reforms of the White Paper are likely to strengthen the hands of ministers in securing a larger share of the public expenditure cake for health care. The changes pose no threat to the traditional pursuit of equity in the NHS and are appropriate means of attaining what Professor Culyer calls “communism in health” (to each according to her need; from each according to financial ability). Difficulties are anticipated both from the speed of implementation and, in particular, from the fragmentation of the demand side between health authorities, general practitioners, and local authorities. The need for further change and rationalisation is anticipated here.market, efficiency