Global Health Economics

The following sections are included:

• About the Editors
• About the Contributors
• Contents
• Foreword
• Preface
• Acknowledgments
• Editorial — Global Health Economics Research and Policymaking: A Perspective from a Global Health Think Tank

A significant body of literature has examined the impact of public health expenditure on mortality, using a global cross-section or panel of country-level data. However, while a number of studies do confirm such a relationship, the magnitude of the impact varies considerably between studies, and several studies show statistically insignificant effects. In this chapter, we re-examine the literature that identifies this effect using cross-country data. Our analysis builds on the two instrumental variable (IV) approaches applied by key publications in the field — Bokhari et al. (2007) and Moreno-Serra and Smith (2015). Using exactly the same data and econometric specifications as the published studies, we start by successfully replicating their findings. However, further analyses using updated data and “streamlined” econometric specifications, plus statistical data imputation and extensive robustness checks, reveal highly sensitive results. In particular, the relevance of the IVs is seriously compromised in the updated data, leading to imprecise estimations of the relationship. While our results should not be taken to imply that there is no true mortality-reducing impact of public health care expenditures, the findings do call for further methodological work, for instance, in terms of identifying more suitable IVs or by applying other estimation strategies, in an effort to derive more robust estimates of the marginal productivity of public health care funding.

Given the number of priority setting tools available, which should decision-makers use and when? The choice depends critically on the nature of the decision problem. In particular, the decision-maker needs to be clear on what is to be maximized (e.g. health or welfare more generally), whether there is a budget constraint and whether any other factors (e.g. equity) need to be considered. This chapter summarizes the key strengths and limitations of commonly applied priority setting tools with a particular focus on how they differ in terms of the elements of benefit considered, how these are valued or combined, the extent to which budgetary constraints are recognized and the implicit or explicit criteria used to make a decision on adoption of the programmes being evaluated.

The following sections are included:

• Summary
• Part 1: Introduction
• Part 2. Deciding When to Invest in Health Care Interventions — A Guide for Policymakers
• Part 3: Informing Health Care Investment Decisions — A Guide for Analysts
• Part 4. A Summary of the Evidence on Supply-Side Cost-Effectiveness Thresholds
• References

This chapter provides an introduction to methods for using cost-effectiveness analysis (CEA) to address health equity concerns, with applications to different country settings. These methods can provide information about the impacts of health investment decisions on inequalities in health and non-health outcomes, and they provide information about the trade-offs that sometimes arise between improving total health and reducing health inequalities. We distinguish two general ways of using CEA to address health equity concerns: (1) equity impact analysis, which quantifies the distribution of costs and effects by equity-relevant variables and (2) equity trade-off analysis, which quantifies the trade-offs between improving total health and other equity objectives. We hope this chapter will raise awareness of the practical tools of CEA that are now available to help give health care and public health policymakers a better understanding of who gains and who loses when making decisions.

The following sections are included:

• Introduction
• Methods
• Results
• Case Studies
• Discussion
• Acknowledgments
• References

Pay-for-performance (P4P) arrangements, which are fixtures of health systems in high-income countries (HIC), have been deployed across many low- and middle-income country (LMIC) settings as well. P4P programmes in HICs have typically addressed the challenge of over-delivery, controlling costs while maintaining adequate services and getting the best clinical practice, or quality of care. In LMICs, health systems are similarly concerned with issues of quality, but they may also grapple with problems of low demand, lack of resources and poor governance. By revisiting the overall framework for understanding P4P arrangements and their benefits and risks in the context of health care delivery, this chapter draws on experiences with P4P in HIC to assess how the insights from economic theory apply in practice in LMICs. Issues of programme design and unintended consequences are summarized, and LMIC case examples of where these concepts apply and are missing from the evidence of P4P programmes in LMIC settings are also reviewed. The evidence on P4P in LMICs is still in its infancy, both in terms of evidence of impact (especially as far as health outcomes are concerned), and in terms of the attention to potential unintended consequences. However, it is critical to return to the basic economic understanding of how the contractual arrangements and incentives of P4P inform programme design and ultimately impact health outcomes and service delivery.

This chapter provides a summary review of the existing academic literature, both theoretical and empirical, on the contributions of public financial management (PFM) systems and reforms to improving the effectiveness of health service delivery based on a literature review conducted by Goryakin et al. (2017). We consider both population health indicators as well as more proximate process indicators related to health system performance. The existing literature is limited and only 53 articles are reviewed, divided across three subthemes: first, “system quality” studies, on the impact of PFM quality and good governance generally; second, “health system strengthening” studies, including articles on medium-term expenditure frameworks (MTEFs), reforms related to budget transparency and participatory budgeting and decentralization; third, studies on the impact of donor-related reforms such as the introduction of sector-wide approaches (SWAps). The theoretical literature predicts that high-quality PFM systems will have a positive impact on various dimensions of performance; whereas evidence from empirical studies is more limited, though generally positive. Overall, evidence shows good governance has an important role in health service delivery. Increased public funding of health programmes is likely to be more effective in countries with better governance, but what this means in practice is highly context-specific.

In this chapter, we discuss the use of demand-side financing (DSF) mechanisms as a way to increase access to health services and improve health outcomes. The discussion makes use of a range of evidence including a series of systematic reviews focused on low-resource settings and detailed experience of developing DSF for maternal health in Nepal.

This chapter proposes an alternative approach to identify and constraints in countries, based on indicators that are broader than national income and more relevant to assess the stage of national development in health. A conceptual framework of “health coverage” underpins the construction of sub-indices of national performance in the dimensions of access to care, financial risk protection in health and domestic financial constraints, which are then used to construct overall indices of national health development. Country rankings in the health development scale vary substantially when the conditions of access to care, financial protection and domestic capacity to finance the health system are considered, compared to conventional income rankings. Furthermore, the decomposition of our health development indices sheds light on important aspects for health policy, including the identification of cases where there is a need for external support to maintain and expand current health coverage levels, as well as preliminary insights into specific support modalities by donor agencies that may be more efficient to promote health development in a particular setting. This chapter also demonstrates how our proposed indices can inform policy decisions at a higher granularity level subject to the availability of subnational level data.

In many low- and middle-income countries (LMICs), particularly those heavily dependent upon overseas development aid, a major tool for resource allocation decisions over the choice of health care interventions are health benefits packages (HBPs). These are a critical element to achieving Universal Health Coverage, but with no widely accepted method for their development; they have historically promised more than could feasibly be delivered given resource constraints. An analytical framework was developed to guide the design of HBPs and to support the revision of Malawi’s essential health package (EHP). The framework is founded on an explicit and evidence-based assessment of health opportunity costs. This enables metrics of value to be reported which reflect the scale of the potential health impact of including an intervention in the package net of associated health opportunity costs, and of ensuring that it is fully implemented. It can be used to identify interventions that are “best buys” for the health care system. It also provides a method for quantifying the health opportunity cost of including other interventions, whether they achieve some other aims or are included in response to stakeholder or donor demands.

International organizations influence national-level health sector priorities by affecting how much funding is available for health care delivery within countries and how that funding is used. The setting of guidelines for the management of diseases (e.g. for malaria, child health, nutrition) by the World Health Organization (WHO) exerts particular influence. Guidelines typically provide syntheses of evidence on clinical efficacy and effectiveness and make recommendations for health care best practice. However, for the most part, they do not well inform the allocation of limited available health care resources. Consequentially, they risk encouraging national and international decision-makers to divert resources away from areas of greater potential gains in population health. In this case study, we reflect upon efforts to incorporate economic evidence into the development of the WHO HIV Treatment Guidelines. We describe how the WHO has incorporated economic insight into these and other guidelines. However, even in this case, the processes currently followed for guideline development can limit the extent to which recommendations can draw upon economic evidence. Changes in the way WHO Guidelines are developed and interpreted, and how evidence is used to inform decision-making at the country level, is therefore required. We give our thoughts on what these changes could be.

An already large and growing number of countries — both rich and poor — are facing an enormous challenge to curb rising rates of obesity and diet-related ill-health, much of which affects lower socio-economic groups. Fiscal policy has the potential to influence consumption patterns toward healthier options (and raise government revenue for welfare-enhancing purposes), thereby contributing to the prevention of chronic diseases and to the reduction of the associated economic costs. Yet, there is a scarcity of empirical evaluations of diet-related fiscal interventions, and it is still uncertain whether these can be effective in improving population diet and health in a “real-world” context. Chile is one of the very few countries that have thus far implemented an explicit fiscal policy to improve healthier diets. In this chapter, we describe and discuss the results of our impact evaluation of the tax policy (Nakamura et al., 2018). Results were mixed, showing population average results that consistently indicated a decrease in the monthly purchased volume of the higher taxed sugar sweetened beverages (SSBs) (21.6% for the statistically preferred model), but also one that varied considerably in magnitude across different models, thereby reducing the confidence in this overall estimate. The reduction in soft drink-purchasing was most robustly evident amongst higher socio-economic groups and higher pretax purchasers of sugary soft drinks. There was no systematic, robust pattern in the estimates by households’ obesity status.

This suggests that the policy may have been partially effective, though not necessarily in ways that are likely to reduce socio-economic inequalities in diet-related health. A longer term evaluation, ideally including an assessment of the consumption and health impacts, should be conducted in future research.

The following sections are included:

• Appendices
  • Appendix 1. Supply-Side Cost-Effectiveness Threshold Estimates for All Countries
  • Appendix 2. Economic Evaluation of Social Care Interventions and Informal Care in Low- and Middle-Income Countries — Online Survey
• Supplementary Data — A New Approach to Measuring Health Development: From National Income Toward Health Coverage (and Beyond)
• Index