Health is generally regarded as a highly valued good. In countries all over the world, the value of health and life is rising faster than the respective gross domestic product (GDP). Higher income has boosted demand for health care services at the individual level and provision through national health services and national health insurance schemes, contributing a substantial share to rising costs.
An adequate benefit-cost ratio required
A series of countries have therefore begun tightening their population’s access to new medical treatments, insisting that health services must deliver an adequate benefit-cost ratio. This gives rise to questions about whether special weight should be given to the severity of the illness in patients who benefit from a new treatment, or to their mortality rate.
In the United Kingdom, for example, cancer drugs are covered at the end of life even though they are relatively expensive. Conversely, the UK’s national health service is stricter when it comes to meeting the costs of medical treatments when patient mortality is low.
Two classical models
In a general theoretical model of the benefits of medical treatments for society as a whole, Felder examined whether the British health care strategy to prioritize high-mortality groups is justifiable. He analyzed regulatory decision-making in the context of two classical models of medical decision making under uncertainty: namely, the diagnostic risk (where it is uncertain whether the disease is actually present) and the therapeutic risk (where it is not certain that the treatment is always successful).
This approach reveals that the willingness to treat a disease – or to cover the treatment costs via a national health insurance scheme – increases in line with rising initial mortality. This is also true if the affected patient group’s average state of health is poor, albeit only in the case of therapeutic risk. With diagnostic risk, on the other hand, it is not possible to reach a clear recommendation. Furthermore, the propensity to treat diseases should rise as the population gets wealthier.
Higher value of life
Felder concludes that more decisions in favor of medical treatments are justified when life expectancy is short, as the value of life is higher at this stage. To a somewhat lesser extent, this also applies to very serious illnesses. In Norway and the Netherlands, as in the United Kingdom, a debate is underway about what factors should be considered when deciding on access to medical treatments. “The study offers a new conceptual analysis with a view to structuring this debate and informing how the regulations should be varied according to circumstances,” says Felder.
contact for scientific information:
Prof. Dr. Stefan Felder, University of Basel, Faculty of Business and Economics, phone +41 61 207 32 26, email: firstname.lastname@example.org
The Treatment Decision under Uncertainty: The Effects of Health, Wealth and the Probability of Death
Journal of Health Economics (2019), doi: 10.1016/j.jhealeco.2019.102253