Why we should not minimise costs per QALY or maximise net value in a context of a national health scheme: Theoretical and Empirical Evidence

Presenter: Jeff Richardson, Monash University

Abstract

Scattered evidence indicated that people will not minimise costs per unit of outcome when they are asked to allocate resources between different people. Rather, they share resources in a way which largely disregards costs.

To further investigate this phenomena we undertook 2 research studies. In the main study we constructed a web based exercise in which individuals were asked to allocate increasing numbers of blocks of resources to individuals who would gain different health benefits per resource block due to different illnesses. This permitted a comparison of the order – priority – of allocation against the order recommended by economic theory and by the perfect egalitarian. Additionally, we conducted logit analysis to predict the likelihood of receiving resources. The “Threshhold” level at which there is a 50:50 chance that an individual will receive the block of resources calculated. A group of 35 professional (academic) economists were included in the study.

Results indicated a clear rejection of cost minimisation/health maximisation. Economists gave similar results. However a weak trading between cost and sharing was demonstrated

The second study carried out focus group analysis to determine whether or not people fully understood the consequence of such choices and if they could justify them.

Brief discussion of the (simple) theoretical reasons for these results indicates that the current theory of economic evaluation is seriously flawed.