Preventing Obesity and NCDs: an Economic Framework Michele Cecchini Health Division

Chronic Diseases and Prevention Increasing prevalence of chronic diseases in the OECD area –Incidence is increasing (ageing, lifestyles) –Mortality is decreasing (better healthcare) Some risk factors are declining (e.g. smoking)… … but others are rising (e.g. unhealthy diet and physical inactivity) Prevention or treatment?

Obesity: a Growing Problem

The Goals of Prevention Prevention may offer opportunities to: Increase social welfare Enhance health equity Relative to a situation in which chronic diseases are treated when they emerge

Four Analytical Steps 1.Identifying the key factors that determine health and disease 2.Assessing possible market and rationality failures affecting those determinants 3.Identifying viable preventive interventions 4.Evaluating the impact of interventions on social welfare and health equity

Determinants of Health The “Layers of Influence” model - Dahlgren & Whitehead, 1991

Are Interventions Justified? “Maintaining good health is an important goal for most individuals, but health is by no means the only outcome that individuals value when they choose how to lead their own lives. Individuals wish to engage in activities from which they expect to derive pleasure, satisfaction, or fulfilment, some of which may be conducive to good health, others less or not at all. […] An assessment of the role of prevention must not ignore those competing goals” (Sassi and Hurst, 2008)

Is Prevention Justified? Market and rationality failure: –Externalities –Information failures –Supply-side market failures –Failures of rationality Existing policies have undesired effects Health inequalities

Externalities In any given moment, obese patients cost more Source: Brunello et al., 2008 Bhattacharia & Sood, 2005

Production Externalities It is widely assumed that prevention may lead to a healthier and more productive workforce Our analysis shows that prevention produces two effects: –Increase in years lived in good health (diseases are prevented or delayed) –Increase in years lived with chronic diseases (premature mortality is prevented) Overall effect largely depends on labour markets’ ability to absorb the former

Production Externalities Production Externalities Physician-Dietician Counselling (EUR-A) Health outcomes Impact on health expenditure

Production Externalities (EUR-A)

“Social Multiplier” Effect in BMI Clustering of overweight and obesity within families and social networks suggests interaction between genetic factors and social environments “Social multiplier” effect –Negative externalities, which may potentially turn into positive externalities –Initiatives involving peer- groups or families may exploit the social multiplier effect

Inequalities in Overweight Education Level

What Policy Options? Increase choice Information, education, change established preferences (nudging) Raise the price of unhealthy choices Ban unhealthy behaviours

Cost-of-illness Studies Mortality Morbidity Resources used to deal with the disease Costs borne by public agencies Costs borne by patients and their families Production losses

Limitations of Cost-of-Illness Studies Do not measure outcomes of health care Global cost of illness would not be eliminated by any intervention; changes take place at the margin Interventions to reduce the cost of illness may not be available The human capital approach does not reflect the real cost of morbidity and mortality

Roux & Donaldson, 2004 Konnopka, Bodemann, Konig, 2011 Cost-of-Illness Studies Cost of obesity in selected OECD countries

What Does This Mean? If there were a treatment that made all obese people non-obese and equivalent in health to people who had never been obese, and if this treatment cost nothing to apply, [and if it had immediate effect] and it were given to all obese people, then in the immediately subsequent time period direct health care costs would be reduced by [X%]. Adapted from Allison et al., 1999

What Matters the Most? Does prevention improve health? Does it reduce health expenditure? Does it improve health inequalities? Is it cost-effective?

Generalized Cost-effectiveness Analysis Acknowledges global budget constraints Allows the comparison of interventions within and outside the health sector Identifies the mix of interventions that generates the largest health gain Improves the transferability of results across similar settings

What Has Been Done OECD health working papers HWP 32, 45, 46, 48 Paper in Lancet series on chronic diseases Lancet paper on priority interventions “Best buys” paper for the UN Summit on NCDs OECD/Euro Observatory book