James Lomas’s journal round-up for 21st May 2018

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Decision making for healthcare resource allocation: joint v. separate decisions on interacting interventions. Medical Decision Making [PubMed] Published 23rd April 2018

While it may be uncontroversial that including all of the relevant comparators in an economic evaluation is crucial, a careful examination of this statement raises some interesting questions. Which comparators are relevant? For those that are relevant, how crucial is it that they are not excluded? The answer to the first of these questions may seem obvious, that all feasible mutually exclusive interventions should be compared, but this is in fact deceptive. Dakin and Gray highlight inconsistency between guidelines as to what constitutes interventions that are ‘mutually exclusive’ and so try to re-frame the distinction according to whether interventions are ‘incompatible’ – when it is physically impossible to implement both interventions simultaneously – and, if not, whether interventions are ‘interacting’ – where the costs and effects of the simultaneous implementation of A and B do not equal the sum of these parts. What I really like about this paper is that it has a very pragmatic focus. Inspired by policy arrangements, for example single technology appraisals, and the difficulty in capturing all interactions, Dakin and Gray provide a reader-friendly flow diagram to illustrate cases where excluding interacting interventions from a joint evaluation is likely to have a big impact, and furthermore propose a sequencing approach that avoids the major problems in evaluating separately what should be considered jointly. Essentially when we have interacting interventions at different points of the disease pathway, evaluating separately may not be problematic if we start at the end of the pathway and move backwards, similar to the method of backward induction used in sequence problems in game theory. There are additional related questions that I’d like to see these authors turn to next, such as how to include interaction effects between interventions and, in particular, how to evaluate system-wide policies that may interact with a very large number of interventions. This paper makes a great contribution to answering all of these questions by establishing a framework that clearly distinguishes concepts that had previously been subject to muddied thinking.

When cost-effective interventions are unaffordable: integrating cost-effectiveness and budget impact in priority setting for global health programs. PLoS Medicine [PubMed] Published 2nd October 2017

In my opinion, there are many things that health economists shouldn’t try to include when they conduct cost-effectiveness analysis. Affordability is not one of these. This paper is great, because Bilinski et al shine a light on the worldwide phenomenon of interventions being found to be ‘cost-effective’ but not affordable. A particular quote – that it would be financially impossible to implement all interventions that are found to be ‘very cost-effective’ in many low- and middle-income countries – is quite shocking. Bilinski et al compare and contrast cost-effectiveness analysis and budget impact analysis, and argue that there are four key reasons why something could be ‘cost-effective’ but not affordable: 1) judging cost-effectiveness with reference to an inappropriate cost-effectiveness ‘threshold’, 2) adoption of a societal perspective that includes costs not falling upon the payer’s budget, 3) failing to make explicit consideration of the distribution of costs over time and 4) the use of an inappropriate discount rate that may not accurately reflect the borrowing and investment opportunities facing the payer. They then argue that, because of this, cost-effectiveness analysis should be presented along with budget impact analysis so that the decision-maker can base a decision on both analyses. I don’t disagree with this as a pragmatic interim solution, but – by highlighting these four reasons for divergence of results with such important economic consequences – I think that there will be further reaching implications of this paper. To my mind, Bilinski et al essentially serves as a call to arms for researchers to try to come up with frameworks and estimates so that the conduct of cost-effectiveness analysis can be improved in order that paradoxical results are no longer produced, decisions are more usefully informed by cost-effectiveness analysis, and the opportunity costs of large budget impacts are properly evaluated – especially in the context of low- and middle-income countries where the foregone health from poor decisions can be so significant.

Patient cost-sharing, socioeconomic status, and children’s health care utilization. Journal of Health Economics [PubMed] Published 16th April 2018

This paper evaluates a policy using a combination of regression discontinuity design and difference-in-difference methods. Not only does it do that, but it tackles an important policy question using a detailed population-wide dataset (a set of linked datasets, more accurately). As if that weren’t enough, one of the policy reforms was actually implemented as a result of a vote where two politicians ‘accidentally pressed the wrong button’, reducing concerns that the policy may have in some way not been exogenous. Needless to say I found the method employed in this paper to be a pretty convincing identification strategy. The policy question at hand is about whether demand for GP visits for children in the Swedish county of Scania (Skåne) is affected by cost-sharing. Cost-sharing for GP visits has occurred for different age groups over different periods of time, providing the basis for regression discontinuities around the age threshold and treated and control groups over time. Nilsson and Paul find results suggesting that when health care is free of charge doctor visits by children increase by 5-10%. In this context, doctor visits happened subject to telephone triage by a nurse and so in this sense it can be argued that all of these visits would be ‘needed’. Further, Nilsson and Paul find that the sensitivity to price is concentrated in low-income households, and is greater among sickly children. The authors contextualise their results very well and, in addition to that context, I can’t deny that it also particularly resonated with me to read this approaching the 70th birthday of the NHS – a system where cost-sharing has never been implemented for GP visits by children. This paper is clearly also highly relevant to that debate that has surfaced again and again in the UK.

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Chris Sampson’s journal round-up for 19th March 2018

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Using HTA and guideline development as a tool for research priority setting the NICE way: reducing research waste by identifying the right research to fund. BMJ Open [PubMed] Published 8th March 2018

As well as the cost-effectiveness of health care, economists are increasingly concerned with the cost-effectiveness of health research. This makes sense, given that both are usually publicly funded and so spending on one (in principle) limits spending on the other. NICE exists in part to prevent waste in the provision of health care – seeking to maximise benefit. In this paper, the authors (all current or ex-employees of NICE) consider the extent to which NICE processes are also be used to prevent waste in health research. The study focuses on the processes underlying NICE guideline development and HTA, and the work by NICE’s Science Policy and Research (SP&R) programme. Through systematic review and (sometimes) economic modelling, NICE guidelines identify research needs, and NICE works with the National Institute for Health Research to get their recommended research commissioned, with some research fast-tracked as ‘NICE Key Priorities’. Sometimes, it’s also necessary to prioritise research into methodological development, and NICE have conducted reviews to address this, with the Internal Research Advisory Group established to ensure that methodological research is commissioned. The paper also highlights the roles of other groups such as the Decision Support Unit, Technical Support Unit and External Assessment Centres. This paper is useful for two reasons. First, it gives a clear and concise explanation of NICE’s processes with respect to research prioritisation, and maps out the working groups involved. This will provide researchers with an understanding of how their work fits into this process. Second, the paper highlights NICE’s current research priorities and provides insight into how these develop. This could be helpful to researchers looking to develop new ideas and proposals that will align with NICE’s priorities.

The impact of the minimum wage on health. International Journal of Health Economics and Management [PubMed] Published 7th March 2018

The minimum wage is one of those policies that is so far-reaching, and with such ambiguous implications for different people, that research into its impact can deliver dramatically different conclusions. This study uses American data and takes advantage of the fact that different states have different minimum wage levels. The authors try to look at a broad range of mechanisms by which minimum wage can affect health. A major focus is on risky health behaviours. The study uses data from the Behavioral Risk Factor Surveillance System, which includes around 300,000 respondents per year across all states. Relevant variables from these data characterise smoking, drinking, and fruit and vegetable consumption, as well as obesity. There are also indicators of health care access and self-reported health. The authors cut their sample to include 21-64-year-olds with no more than a high school degree. Difference-in-differences are estimated by OLS according to individual states’ minimum wage changes. As is often the case for minimum wage studies, the authors find several non-significant effects: smoking and drinking don’t seem to be affected. Similarly, there isn’t much of an impact on health care access. There seems to be a small positive impact of minimum wage on the likelihood of being obese, but no impact on BMI. I’m not sure how to interpret that, but there is also evidence that a minimum wage increase leads to a reduction in fruit and vegetable consumption, which adds credence to the obesity finding. The results also demonstrate that a minimum wage increase can reduce the number of days that people report to be in poor health. But generally – on aggregate – there isn’t much going on at all. So the authors look at subgroups. Smoking is found to increase (and BMI decrease) with minimum wage for younger non-married white males. Obesity is more likely to be increased by minimum wage hikes for people who are white or married, and especially for those in older age groups. Women seem to benefit from fewer days with mental health problems. The main concerns identified in this paper are that minimum wage increases could increase smoking in young men and could reduce fruit and veg consumption. But I don’t think we should overstate it. There’s a lot going on in the data, and though the authors do a good job of trying to identify the effects, other explanations can’t be excluded. Minimum wage increases probably don’t have a major direct impact on health behaviours – positive or negative – but policymakers should take note of the potential value in providing public health interventions to those groups of people who are likely to be affected by the minimum wage.

Aligning policy objectives and payment design in palliative care. BMC Palliative Care [PubMed] Published 7th March 2018

Health care at the end of life – including palliative care – presents challenges in evaluation. The focus is on improving patients’ quality of life, but it’s also about satisfying preferences for processes of care, the experiences of carers, and providing a ‘good death’. And partly because these things can be difficult to measure, it can be difficult to design payment mechanisms to achieve desirable outcomes. Perhaps that’s why there is no current standard approach to funding for palliative care, with a lot of variation between countries, despite the common aspiration for universality. This paper tackles the question of payment design with a discussion of the literature. Traditionally, palliative care has been funded by block payments, per diems, or fee-for-service. The author starts with the acknowledgement that there are two challenges to ensuring value for money in palliative care: moral hazard and adverse selection. Providers may over-supply because of fee-for-service funding arrangements, or they may ‘cream-skim’ patients. Adverse selection may arise in an insurance-based system, with demand from high-risk people causing the market to fail. These problems could potentially be solved by capitation-based payments and risk adjustment. The market could also be warped by blunt eligibility restrictions and funding caps. Another difficulty is the challenge of achieving allocative efficiency between home-based and hospital-based services, made plain by the fact that, in many countries, a majority of people die in hospital despite a preference for dying at home. The author describes developments (particularly in Australia) in activity-based funding for palliative care. An interesting proposal – though not discussed in enough detail – is that payments could be made for each death (per mortems?). Capitation-based payment models are considered and the extent to which pay-for-performance could be incorporated is also discussed – the latter being potentially important in achieving those process outcomes that matter so much in palliative care. Yet another challenge is the question of when palliative care should come into play, because, in some cases, it’s a matter of sooner being better, because the provision of palliative care can give rise to less costly and more preferred treatment pathways. Thus, palliative care funding models will have implications for the funding of acute care. Throughout, the paper includes examples from different countries, along with a wealth of references to dig into. Helpfully, the author explicitly states in a table the models that different settings ought to adopt, given their prevailing model. As our population ages and the purse strings tighten, this is a discussion we can expect to be having more and more.

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Sam Watson’s journal round-up for 12th February 2018

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Tuskegee and the health of black men. The Quarterly Journal of Economics [RePEc] Published February 2018

In 1932, a study often considered the most infamous and potentially most unethical in U.S. medical history began. Researchers in Alabama enrolled impoverished black men in a research program designed to examine the effects of syphilis under the guise of receiving government-funded health care. The study was known as the Tuskegee syphilis experiment. For 40 years the research subjects were not informed they had syphilis nor were they treated, even after penicillin was shown to be effective. The study was terminated in 1972 after its details were leaked to the press; numerous men died, 40 wives contracted syphilis, and a number of children were born with congenital syphilis. It is no surprise then that there is distrust among African Americans in the medical system. The aim of this article is to examine whether the distrust engendered by the Tuskegee study could have contributed to the significant differences in health outcomes between black males and other groups. To derive a causal estimate the study makes use of a number of differences: black vs non-black, for obvious reasons; male vs female, since the study targeted males, and also since women were more likely to have had contact with and hence higher trust in the medical system; before vs after; and geographic differences, since proximity to the location of the study may be informative about trust in the local health care facilities. A wide variety of further checks reinforce the conclusions that the study led to a reduction in health care utilisation among black men of around 20%. The effect is particularly pronounced in those with low education and income. Beyond elucidating the indirect harms caused by this most heinous of studies, it illustrates the importance of trust in mediating the effectiveness of public institutions. Poor reputations caused by negligence and malpractice can spread far and wide – the mid-Staffordshire hospital scandal may be just such an example.

The economic consequences of hospital admissions. American Economic Review [RePEcPublished February 2018

That this paper’s title recalls that of Keynes’s book The Economic Consequences of the Peace is to my mind no mistake. Keynes argued that a generous and equitable post-war settlement was required to ensure peace and economic well-being in Europe. The slow ‘economic privation’ driven by the punitive measures and imposed austerity of the Treaty of Versailles would lead to crisis. Keynes was evidently highly critical of the conference that led to the Treaty and resigned in protest before its end. But what does this have to do with hospital admissions? Using an ‘event study’ approach – in essence regressing the outcome of interest on covariates including indicators of time relative to an event – the paper examines the impact hospital admissions have on a range of economic outcomes. The authors find that for insured non-elderly adults “hospital admissions increase out-of-pocket medical spending, unpaid medical bills, and bankruptcy, and reduce earnings, income, access to credit, and consumer borrowing.” Similarly, they estimate that hospital admissions among this same group are responsible for around 4% of bankruptcies annually. These losses are often not insured, but they note that in a number of European countries the social welfare system does provide assistance for lost wages in the event of hospital admission. Certainly, this could be construed as economic privation brought about by a lack of generosity of the state. Nevertheless, it also reinforces the fact that negative health shocks can have adverse consequences through a person’s life beyond those directly caused by the need for medical care.

Is health care infected by Baumol’s cost disease? Test of a new model. Health Economics [PubMed] [RePEcPublished 9th February 2018

A few years ago we discussed Baumol’s theory of the ‘cost disease’ and an empirical study trying to identify it. In brief, the theory supposes that spending on health care (and other labour-intensive or creative industries) as a proportion of GDP increases, at least in part, because these sectors experience the least productivity growth. Productivity increases the fastest in sectors like manufacturing and remuneration increases as a result. However, this would lead to wages in the most productive sectors outstripping those in the ‘stagnant’ sectors. For example, salaries for doctors would end up being less than those for low-skilled factory work. Wages, therefore, increase in the stagnant sectors despite a lack of productivity growth. The consequence of all this is that as GDP grows, the proportion spent on stagnant sectors increases, but importantly the absolute amount spent on the productive sectors does not decrease. The share of the pie gets bigger but the pie is growing at least as fast, as it were. To test this, this article starts with a theoretic two-sector model to develop some testable predictions. In particular, the authors posit that the cost disease implies: (i) productivity is related to the share of labour in the health sector, and (ii) productivity is related to the ratio of prices in the health and non-health sectors. Using data from 28 OECD countries between 1995 and 2016 as well as further data on US industry group, they find no evidence to support these predictions, nor others generated by their model. One reason for this could be that wages in the last ten years or more have not risen in line with productivity in manufacturing or other ‘productive’ sectors, or that productivity has indeed increased as fast as the rest of the economy in the health care sector. Indeed, we have discussed productivity growth in the health sector in England and Wales previously. The cost disease may well then not be a cause of rising health care costs – nevertheless, health care need is rising and we should still expect costs to rise concordantly.

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