Measuring and Incorporating Financial Protection into Economic Evaluation in Health Care

Each year millions of people suffer financial hardship because of expensive illnesses. In developing countries, paying for care often makes families fall into poverty. This is an important issue also in developed countries. In the UK patients have had their requests for expensive medicines denied by the NHS, having to pay for the whole treatment themselves if they choose to buy them. The NHS justifies such decisions based on cost-effectiveness evidence from the National Institute for Clinical Excellence (NICE). By cost-effective, NICE means that the health benefits for the patient should be larger enough than treatment costs for the NHS to justify taxpayer‘s funding.
While most people would agree that protection against hardship from expensive treatments is a valuable benefit too, such value is not currently considered in cost-effectiveness analyses. The research led by Dr Rodrigo Moreno-Serra at Imperial College London investigates how methods of cost-effectiveness analysis could be modified to include benefits of protection against expensive illnesses. It will use data from different countries to measure risk protection benefits, and assess how cost-effectiveness figures for expensive treatments change when these benefits are included. This research may change the way high-cost treatments are regarded by governments and agencies like NICE.

Despite some recent interest in the topic of financial protection, leading to the 2010 WHO World Health Report on health systems financing and universal coverage, this remains a largely unexplored area in health economics. As one policy result, the lack of adequate risk protection against the financial consequences of costly diseases, affecting hundreds of millions of people each year in developed and developing countries, has received little attention in practice for health care funding decisions. The key aim of this research programme is to investigate the theoretical and empirical implications, for health resource allocation, of incorporating the benefits of financial protection against costly illnesses into the methods of economic evaluation in health care. Three inter-related projects address specific questions forming a coherent and innovative research plan with the potential to make an important contribution to the field. Project 1 will use economic theory to develop a model of individual and government behaviour to provide answers to two main research questions: (1) How can conventional cost-effectiveness analysis be augmented to account for financial protection objectives?; and (2) What are the implications of explicitly valuing and incorporating the benefits of risk protection into the social welfare function, particularly for the profile of services in a statutory health insurance package? The theoretical analysis will inform data collection and the interpretation of the empirical results. Based on household survey data, Project 2 will provide robust estimates of the health and monetary benefits of risk protection for individuals and society, through rigorous econometric analysis of the impacts of health interventions aimed specifically at improving financial protection. Measures of financial protection currently applied in the literature will be augmented by a proposed econometric methodology aimed at obtaining broader estimates of the incidence and magnitude of catastrophic health spending, by also accounting for under-use and non-use of needed health care due to inability to pay. Finally, in Project 3, the theoretical framework developed under Project 1 to augment conventional cost-effectiveness analysis, alongside the quantitative parameters obtained in Project 2, will be used to assess the implied changes in the profile of services included in a statutory health insurance package when financial protection benefits are explicitly accounted for. Simulations will be performed for different national contexts to investigate how the conventional cost-effectiveness ratios for selected interventions-and thus funding decisions under a fixed health budget-change when risk protection is included among the treatment benefits.