Health Economics and Development - Assignment Example

? Health Economics and Development Assignment (PHD Public Health) By due: Question One a.Column 3? Net cost= (cost of program+ cost of side effects) – cost of adverse health outcomes averted =?10,000,000 b. Column 4? Net cost= (cost of program+ cost of side effects) – cost of adverse health outcomes averted =?600 c. Column 5? Average cost per discounted QALY = Total Cost (?)/ Total Benefit (discounted QALYs) =10,000,000/600 =?16,666.67/QALY Therefore the Average cost per discounted QALY (c) =?16,666.67/QALY Average cost per discounted QALY = Total Cost (?)/ Total Benefit (discounted QALYs) = 20,000,000/ 1000 =?20,000/QALY Therefore the Average cost per discounted QALY (c) =?20,000/QALY d. Column 6? Marginal cost effectiveness= difference in total costs/ difference in effectiveness (total output) =?16,666.67 =?40,000 Question 2 The quality- adjusted life year (QALY) is a quota of the routine of medical treatments that focus on the extent of health improvement and period over which the improvement takes place. QALY is applicable in the assessment of money to be used in a treatment plan. A year in excellent health is ascribed the rate of 1.0 death is assigned the value of 0.0. QALY is regarded as a statistical term defining the value of reducing the average number of deaths by one. Willingness to pay (WTP) refers to the maximum amount a consumer is willing to pay for a good or service; which in this case is the quality and quantity of life. The strength of WTP is it is a superior reflection of individual preferences. It can be used to acquire data on fair pricing and demand predictions from a marketing medical viewpoint. WTP is useful in cost- benefit analysis in the field of medical economics (Guinness, Wiseman, & Wonderling, 2011). The strength of QALYs first and foremost is its essence in the allocation of healthcare resources and individual preferences in policy evaluation if the restrictive factors are met. This result to a health care preferential treatment with a lower cost to QALY saved ratio over an intervention with a higher ratio. Another advantage of QALYs is; it can be combined with information on the prices of substitute treatment plans and medical programs to evaluate the economic effectiveness (Mcculloch, 2002). Given that QALY weights are founded on responses to hypothesis, they are prone to weaknesses as value measures based on contingent valuation. The weakness of this measure is that it is controversial. Some individuals will fail to receive treatment because they cannot afford it. Another con of QALYS is risk neutrality over longevity. This implies that an individual is indifferent to any natural risks that do not affect his life expectancy. The weakness of WTP is mortality risk reduction does not exist as abruptly with declining lifetime, and might even upsurge as life expectation deteriorations over some assortment of ages. WTP to reduce mortality risk does not happen in percentage to life expectation, for the reason that the chance price of spending on peril discount also falls with lessening lifetime expectancy; as the individual has a smaller amount to save for. The weakness of WTP measurements is on its reliability and validity. For the reason that QALYs impose restrictive expectations on preferences; the ranking of fitness interventions using QALYs may differ systematically from the ranking using WTP. QALY weights are more reliable than estimates of WTP; making QALY a more valid representation over WTP. What makes QALY acceptable in the United Kingdom is it can be used to contrast the effectiveness of various types of medical involvements and treatments for a particular disease. More resources can be allocated to other programs for instance WTP that show lower cost per QALY relative to other programs. QALYs are viewed as more equitable than WTP; due to the fact that, they treat longevity equally regardless of the individual’s wealth (Jones, 2011). Question 3 i. Disagree Zero money prices at the point of consumption will ensure equal access to health care. This will deal with the issue of social class, which brings about inequity in health care and poor health. Health care services discriminate against types of people in various ways. The evidence is examined by the extent to which services are given to these groups. ii. Agree According to the principles of equity in health and health care, equal access to healthcare will ensure equity for persons in need of medical attention. Equal access in this case is the need to use health care services. The opportunity to use health care services exists when acceptable and affordable services are availed to clients (Mcintyre & Mooney, 2007). iii. Agree In reference to the principles of equity, equal utilization of healthcare must be available for those in need of health care. iv. Agree Equal access to health care will ensure equal health outcomes for instance quality adjusted life expectancy; whereby the equal needs will have equal opportunities to health care. Question 4 Program budgeting and marginal analyses are strengthened by the economic principles of opportunity cost and the margin. These two factors are essential in the management of inadequate resources. It is possible to improve the total provision of benefits without any additional injection of resources into the healthcare budget plan. This action will result to the relocation of resources between the two health care programs. The margin defines the transformation in a small percentage increases (Smith, 2005). Opportunity cost refers to the lost benefit during the making of a decision amid two contending uses of scarce resources. Diminishing marginal returns refers to a situation whereby one of the factors of production is held fixed in supply, consecutive additions of supplementary factors will result to an increase in returns up to a point; away from this position returns will reduce. The law of diminishing marginal returns helps us to comprehend that rising populations often occur in less income per capita; except that there is also an increase in the quantities or quality of capital. With reference to opportunity costs, the individuals who are making decisions in the health care program are considered, the choices made, and what they could have had. This helps in the allocation of resources between the competing programs. This makes it possible to improve the total provision of benefits without the use of any additional resources into the healthcare budget plan. An opportunity cost in the health care resources is the best option to the given action. In this given case, an opportunity cost will ensure the improvement of total provision of benefits in the health care resources. In regard to diminishing marginal returns, in the short term one factor may lead to a decline in the, marginal productivity. Diminishing marginal returns is present when one factor is present. In this given case, marginal cost is fixed. Additional inputs result to a production of smaller outputs and offer a revelation to more medical situations. The law of diminishing provides an excellent framework for rational prioritization. The law of diminishing is very useful when determining concepts concerning costs constraints as per the given case; where there is the improvement of the total provision of benefits without any additional injection of resources into the healthcare budget plan. This law aids economic medics to make rational decisions about obtainable interventions. Development of health care resources is an essential component of policy making in health. Basic assessment scheme for intervention costs and consequences is a complex approach that focuses on the efficiency of the intervention, and costs. Therefore, it is possible to improve the total provision of benefits without additional injection of resources into a health care budget. When a healthcare budget is prepared, costs inclusive of direct outlays, productivity, and intangible are regarded. The final cost made is a fixed cost which is computed after all the steps have been considered. Improvement of the total provision of benefits will lead to additional resources into the budget. When preparing a budget, the resources required for the intervention must be accessed; this includes fixed, variable, and total, as well as unit costs (Tulchinsky, & Varavikova, 2009). Development of health care resources involves careful examination of costs and consequences. Lack of consideration of costs and consequences lead to health is budgeting not being regarded as an economic evaluation. When developing a healthcare budget plan, economic evaluation must be done. Questions which must be considered in the development process; includes the efficiency, effectiveness, policies, economics, and availability. An economic analysis must be done so as to identify the probable alternatives; costs, decisions, and comparisons must be considered. This comes hand in hand with opportunity costs. The total of expenditures for a health care system and how the funds are spent are the most fundamental aspects in health economics and planning. Allocation of the resources requires a dexterous planning process, so as to balance spending on dissimilar sub-sectors of the system, and to guarantee equity amid regions and various socioeconomic groups in society. Therefore for an effective health care budget plan, cost containment measures must be integrated. Cost containment measures are associated with greater precision in care and more correct usage of resources in health care. This is essential in the aspect of diminishing marginal returns. Question 6 The quality adjusted life year is a measure developed in an attempt to conglomerate the values of length of life and quality of life. QALY is very useful in the allocation of health care resources. A main facet of QALYs is the use of life weights in the estimation of the benefit of various health policies. Healthcare services must, by nature, be assessed by economic principles because it is a service which requires a considerable economic input. A social value judgment can be described as the social requirement of a healthcare body to provide a service to the population; the ‘ought’ or ‘should’ of the situation. In this sense, a cost-benefit analysis of a scenario may not seem to be that beneficial to the population, but could be seen as a requirement in a moral or legal reason because of its perceived importance within a social context. It is important to take into consideration that all lives are of equal importance. This is irrespective of age, gender, and or health condition. All individuals are correspondingly eligible to life saving treatment plans, notwithstanding their quantity of life or life expectancy. This is applicable if all the individuals have an interest in continued life that is with the same passion. This means that if a person wants to go on living he or she is entitled to a lifesaving treatment plan regardless of their quantity of neither life nor life expectancy. This decision demonstrates the fact that the individual has an intense will to live. This promotes the principle of equitable healthcare (Shemilt, Mugford, & Vale, 2010). The assumption, “QALY is a QALY is a QALY” suggests that the value of a QALY is not continuous. Thus, maximizing cumulative QALY gains across the population is not an excellent use of limited resources according to the community preferences. This assumption is a reflection that all QALY gains are valuable equally. There is evidence that the preferences of individuals in a community context are triggered by a range of theoretically irrelevant factors. This includes the context of the choice, model, and method of elicitation (Culyer et al, 2000). The society cannot support the principle that a “QALY is a QALY is a QALY”. Current evidence suggests “A QALY is not a QALY”. This is due to the nation’s concern for fairness. Areas of disagreement that the society holds include the restriction of QALY method in relation to the health benefits it can detain. Other areas of disagreement include the ignorance toward equal health care opportunities, underlying theoretical hypothesis, and nonspecific portion of convenience. Social value judgments can be a challenge to traditional health economics because they can go against cost-benefit analyses. Despite this fact, social value judgments must be included in most healthcare evaluations because of their importance. The value of a QALY varies according to definite physiognomies. QALY expresses value, in terms of aggregate individual effectiveness. The societal concern is if the health benefits valued in this order sufficiently represent the value of health programs for different categories of people. Because of this, ethical problems have arisen. The initial ethical concern is that no repute for the pretreatment usefulness level of the affected people. Society stresses the point that an intervention is necessary. Society values the need of an intervention. Another ethical issue is that the conventional QALY model favors individuals with more treatable conditions and those with greater wellness potential. According to the societal ethical concerns, the QALY model should not be used against people who have incurable ailments and who have a limited time span. The third ethical concern is the equity of life irrespective of the quantity and quality. According to valuing health gains in QALY terms, life years gained in full health are counted as extra treasured than life years gained by those who are chronically ill or disabled. This contradicts with the idea of fairness in life irrespective of health conditions, so long as the individuals themselves have zeal to live. QALYs can be regarded as more valued by the community if the concerns for equity can be added. The views of the public must be considered in the effect of determining the fundamental parameter values. The parameters of the societal ethical concerns must be identified first and foremost. The relative weight is given to a marginal alteration in the constitution of a population group as compared to another population group. This means that clear and deliberative processes can be practiced so as to determine the variety of cost- per- QALY thresholds as per context. This methodology is applicable in the establishment of priority classes to which treatments are assigned according to the benchmarks rather than charge effectiveness. In the assessment of novel skills, an empirical study is designed. The mission of the study is to acquire QALY weights. This is to elicit public preferences so that the parameter values of societal ethical issues can be determined. Here, the main health concept is the number of expected lifetime QALYs. This study involved a self- completed questionnaire, group discussion session, and a quantitative exercise. This process theoretically eliminates the current preeminence of cost- effectiveness considerations in economic evaluation (Brazier, 2007). There are methods that can be used so as to obtain societal values for different QALYs to different patient groups. These methods incorporate the fairness concerns that are linked to ethical apprehensions. Example of methods used to measure the social value of health states include the equivalence of numbers or person trade-off technique, the standard Gamble, and the Visual analogue scale. Theoretically, the QALY model can be adjusted to incorporate the results for fairness so as to become a model of “equity adjusted QALYs”. One adjustment would be to reckon all gained life years with the integer one, regardless of the health quality. A second adjustment is the placing less concern issues on the period of health benefits as compared to programs for patients with various life expectancies. This can be done by discounting QALYS. A third adjustment for promoting fairness in QALY is the addition of unambiguous equity weights to the quality of life weights as represented on the conventional QALY model (Nord, 1999). Bibliography BRAZIER, J. (2007). Measuring and valuing health benefits for economic evaluation. Oxford, Oxford University Press. CULYER, A. J., NEWHOUSE, J. P., PAULY, M. V., MCGUIRE, T. G., & BARROS, P. P. (2000). Handbook of health economics. Amsterdam, Elsevier. GUINNESS, L., WISEMAN, V., & WONDERLING, D. (2011). Introduction to health economics. Maidenhead, Berkshire, England, Open University Press. JONES, A. M. (2011). The Elgar companion to health economics. Cheltenham, Edward Elgar. MCCULLOCH, D. (2002). Valuing health in practice: priorities, QALYs, and choice. Burlington, VT, Ashgate. MCINTYRE, D., & MOONEY, G. H. (2007). The economics of health equity. Cambridge, Cambridge University Press. NORD, E. (1999). Cost-value analysis in health care: making sense out of QALYs [...] [...]. Cambridge [u.a.], Cambridge Univ. Press. SHEMILT, I., MUGFORD, M., & VALE, L. (2010). Evidence-based Decisions and Economics Health Care, Social Welfare, Education and Criminal Justice. Chichester, John Wiley & Sons. http://public.eblib.com/EBLPublic/PublicView.do?ptiID=514411. SMITH, S. (2005). Health care evaluation. Maidenhead, Berkshire, England, Open University Press. TULCHINSKY, T. H., & VARAVIKOVA, E. (2009). The new public health. Amsterdam, Elsevier / Academic Press. Read More