HEA PTP: M207 Health Economics1 Measurement & Valuation of Health What is health? Why do we need to measure it? How can it be measured? Why do we need.

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Presentation transcript:

HEA PTP: M207 Health Economics1 Measurement & Valuation of Health What is health? Why do we need to measure it? How can it be measured? Why do we need to value it? How can it be valued?

HEA PTP: M207 Health Economics2 What is health? Good health is…not bad health Absence of disease Good health is…a positive thing Total physical and mental well-being Good health is…two-dimensional A long life and a happy life Good health is…multidimensional A long life plus an ability to do all the things that one wants to do Good health is a …subjective concept What makes me happy is not the same thing that makes you happy What made me happy yesterday is not the same thing that makes me happy today

HEA PTP: M207 Health Economics3 Why measure health? Health is the product of health care not ops performed, no patients treated etc Clinical reasons - effectiveness Economic reasons - efficiency

HEA PTP: M207 Health Economics4 Length of life Mortality (numbers, rates, SMRs) Life expectancy Life years lost Quality of life Numerous QoL measures (generic and specific) SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital anxiety and depression scale etc….

HEA PTP: M207 Health Economics5 Limitations of measurements/need for valuation Confines response to questions posed - may not incorporate all relevant aspects of health Multitude of instruments - compatibility? Ambiguity in assessing overall improvement of detriment in health Efficiency - value of benefits > value (opp) cost

HEA PTP: M207 Health Economics6 Valuation versus Measurement Value is determined by benefits sacrificed elsewhere Valuation requires wade-off benefits measurement does not

HEA PTP: M207 Health Economics7 Methods of valuing health Utility or prefoeuce assessment eg QALYS Monetary terms eg WTP

HEA PTP: M207 Health Economics8 QUALITY ADJUSTED LIFE YEARS (QALYS) Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years If healthy:QALY = 1 If unhealthy:QALY < 2

HEA PTP: M207 Health Economics9 QL Weighting

HEA PTP: M207 Health Economics10 QALY PROCEDURE Identify possible health states - cover all important and relevant dimensions of QoL Derive weights for each state Multiply life years (spent in each state) by weight for that state

HEA PTP: M207 Health Economics11 UTILITY WEIGHT Utility = satisfaction/well-being - reflects a consumers preferences Utility weights are necessarily subjective - they elicit an individuals preferences for, or value of, one or more health states. Must:1.Have interval properties 2. Be anchored at death and good health

HEA PTP: M207 Health Economics12 TECHNIQUES FOR MEASURING UTILITY Variety of techniques available, including: Time Trade off Person Trade Off Standard Gamble Magnitude Estimation Rating Scale

HEA PTP: M207 Health Economics13 OBTAINING UTILITY WEIGHTS Two means of obtaining utility weights: 1.Evaluation specific/holistic measures - develop evaluation specific (holistic) description of health state and then derive weight for that specific state directly by population survey 2.Use generic or multi-attribute instruments - use predetermined weights, based on combination of dimensions of health yeilding a finite number of health states/values

HEA PTP: M207 Health Economics14 EVALUATION SPECIFIC/HOLISTIC MEASURE Advantages:1.Sensitive 2.Account for wider QoL factors (eg process utility, duration/prognosis) Disadvantages1.Cost and time intensive 2.Lack of comparability

HEA PTP: M207 Health Economics15 GENERIC (MAU) INSTRUMENTS Advantage:1.Supply weights off the shelf Disadvantages:1.Insensitive to small changes in health 2.Dimensions may not be sufficiently comprehensive 3.Weights may not be transferable across groups

HEA PTP: M207 Health Economics16 SOME OTHER ISSUES Choosing respondents for utility estimation - whose values count What constitutes a correct health state description? What is the appropriate measurement technique? Aggregation of values? Biases - against, life enhancing versus life-saving etc.

HEA PTP: M207 Health Economics17 Why Monetary Valuation? Assessment of allocative efficiency ie positive Net Present Value (NPV) Valuation of non-health benefits eg process, information, convenience Valuation of non-use benefits ie externalivies, orphan value

HEA PTP: M207 Health Economics18 Methods of Monetary Valuation Court awards (death/injury) Political process/implicit public sector awards Life insurance Human capital - value of production Observed wealth - risk trade-off Direct survey

HEA PTP: M207 Health Economics19 Human Capital Approach Benefits=gains in productive output (due to ill health) Valuation Basis=earnings / wage data Issues=discriminatory value based on researcher not value based on economic theory

HEA PTP: M207 Health Economics20 Willingness to Pay Approach Benefits=what someone is willing to give up (pay) to have the commodity Valuation basis=money represents a claim on benefits from consumption of other commodities =individual preference

HEA PTP: M207 Health Economics21 Means of Estimating WTP