Empirical Estimates of the Marginal Cost of Health Produced by a Healthcare System: Methodological Considerations from Country-Level Estimates

Abstract

Many health technology assessment committees have an explicit or implicit reference value (often referred to as a ‘threshold’) below which new health technologies or interventions are considered value for money. The basis for these reference values is unclear but one argument is that it should be based on the health opportunity costs of funding decisions. Empirical estimates of the marginal cost per unit of health produced by a healthcare system have been proposed to capture the health opportunity costs of new funding decisions. Based on a systematic search, we identified eight studies that have sought to estimate a reference value through empirical estimation of the marginal cost per unit of health produced by a healthcare system for England, Spain, Australia, The Netherlands, Sweden, South Africa and China. We review these eight studies to provide an overview of the key methodological approaches taken to estimate the marginal cost per unit of health produced by the healthcare system with the aim to help inform future estimates for additional countries. The lead author for each of these papers was invited to contribute to the current paper to ensure all the key methodological issues encountered were appropriately captured. These included consideration of the key variables required and their measurement, accounting for endogeneity of spending to health outcomes, the inclusion of lagged spending, discounting and future costs, the use of analytical weights, level of disease aggregation, expected duration of health gains, and modelling approaches to estimating mortality and morbidity effects of health spending. Subsequent research estimates for additional countries should (1) carefully consider the specific context and data available, (2) clearly and transparently report the assumptions made and include stakeholder perspectives on their appropriateness and acceptability, and (3) assess the sensitivity of the preferred central estimate to these assumptions. Supplementary Information The online version contains supplementary material available at 10.1007/s40273-021-01087-6.

Supply-Side Cost-Effectiveness Thresholds: Questions for Evidence-Based Policy

“…Several reviews of the evidence have already been conducted [ 1 , 3 , 8 , 38 – 40 ]. In this section, we consider the evidence base generally, from a global perspective, relating it to the different interpretations of thresholds specified in Table 1 .…”

“…The purpose of an evidence-based supply-side CET is to support decisions that approximate optimal decision-making under such conditions. Several reviews of the evidence have already been conducted [1,3,8,[38][39][40]. In this section, we consider the evidence base generally, from a global perspective, relating it to the different interpretations of thresholds specified in Table 1.…”

“…There are accepted methods for presenting evidence on uncertainty about the cost-effectiveness of a new technology, but not for characterising uncertainty in a CET. Ways of presenting uncertainty relevant to the econometric approaches used are valuable, and researchers have adopted a variety of approaches [40]. Recommendations for parameter uncertainty to be conducted around relevant structural uncertainties in key modelling assumptions-and not just authors' preferred estimates-are also relevant [92].…”

Opportunity cost in healthcare priority setting

“…The first step in the studies that I have briefly reviewed is to estimate an effect of healthcare spending on mortality, and in a second step to incorporate quality-of-life effects. 5 This involves weighting life years gained by appropriate quality-of-life norms, but also making an approximation of pure quality-of-life effects (Edney et al, 2022). In this thesis, I focus primarily on the mortality effect of spending, which forms the backbone of this type of study.…”

A Model-Based Estimate of the Cost-Effectiveness Threshold in Germany

“…Recently, several empirical studies have been conducted to provide a (supply-side) estimate of the incremental cost-effectiveness ratio (ICER) threshold that reflects health opportunity costs. Ideally, these types of analyses include information on individual-level health spending over a lifetime and across all areas of health care as well as individual-level causes of death and health-related quality of life [ 8 ]. Claxton et al [ 9 ] published the first and the most highly cited study in this category based on the theoretical framework described by Martin et al [ 10 ].…”