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Comparing apples, pears and hips: health rationing at work

In the seventh part of our series Health Rationing, Richard Norman and Rosalie Viney explain the controversial system governments use to decide what will and won’t be covered under Australia’s universal…

Health rationing assessments compare different aspects of health such as pain, anxiety, mobility and social interactions – but what’s more important? Image from shutterstock.com

In the seventh part of our series Health Rationing, Richard Norman and Rosalie Viney explain the controversial system governments use to decide what will and won’t be covered under Australia’s universal health system.


With finite health budgets and the prospect of infinite ways to spend funds, rationing inevitably occurs. But how do policymakers come to decisions about what types of care, medications or services to subsidise, and those that don’t make the cut?

They use a framework called Health Technology Assessment (HTA), which the government describes as a key tool “to deliver a safe, effective and efficient health system that is fiscally sustainable in the longer term”.

But it’s certainly not a perfect system – far from it.

When HTA is used make decisions in a third party-payer system (such as Medicare or private health funds), there is an explicit link between access to care and the cost-effectiveness of the treatment. This leads to the possible denial of access to a potentially effective intervention because it is considered too costly.

The aim of HTA is to identify the set of health services that represent the best buys for society. But the process is far from transparent.

So how does the HTA process work, and what makes it so controversial?

Describing and valuing health

To work out what the best bundle of health services is, policymakers need to be able to compare the health benefits that each service provides. While the costs of interventions can be boiled down to a single dollar value, doing so for their impact on health is much harder.

How can you sensibly judge whether a healthy lifestyle program is more or less valuable for the population than funding hip replacements? Both may have demonstrated positive impacts on health but their benefits manifest in very different ways, to different people and over different time horizons.

How do you compare the value of a hip replacement with a healthy lifestyle program? Image from shutterstock.com

Some interventions improve life expectancy, some improve quality of life, and some improve both. To make these comparisons possible, the solution in HTA is to use a measure that combines quality of life and survival to compare treatments. A common one is called the quality-adjusted life year (QALY).

To make the comparison across diseases and treatments valid, policymakers have to describe health in a way general enough to capture their diverse effects of health and quality of life – for example, thinking about different aspects of health such as pain, anxiety, mobility and social interaction.

However, the description of health in a generic way is fraught with difficulty. There is an alphabet soup of surveys that have been designed specifically for use in HTA (EQ-5D, SF-6D, HUI, AQoL and so on), each of which aims to be general but inevitably places a different emphasis on different areas of health.

If policymakers use a survey which explicitly considers vision, for instance, the effect of a treatment for macular degeneration (an eye disease that causes blindness) may be measured very differently than if they use a survey that focuses on mobility and function. The result could be that the choice of survey affects how effective and cost-effective the treatment ends up being in the HTA process.

In addition to the issue of picking a survey for describing health in this general way, policymakers then have to consider how people value different aspects of health, including life expectancy and the different aspects of quality of life.

Is avoiding pain more or less important than avoiding depression? This is usually explored by asking people to state their willingness to trade off something (often life expectancy or risk of death) to improve their quality of life.

The methodological issues around such a process are considerable, and introduce further uncertainty into the process.

Societal decision-making

If the policymakers manage to pick a survey they believe is capable of capturing changes in health, and can estimate these combined outcomes (like the QALY), they then have to make assumptions about what we as a society should do with this information.

HTA is typically based on the premise that we aim to maximise the total health of the population. While this is a reasonable starting point, there are many aspects of health gain that it doesn’t capture.

Do we not care who gets the health improvement? Do we think that people have a right to a “fair innings”, and resources should be targeted to maximise their chances of doing so?

Studies by researchers at Monash University and the University of Technology Sydney have found Australians generally prefer to target health resources in favour of people with poorer health, even if this means less health gain overall.

Current models of HTA do not consider this, and therefore we rely on decision-makers to informally balance issues of efficiency and equity.

Australians prefer to target health resources in favour of people with poorer health. Image from shutterstock.com

A further issue is that many outcomes we value in the health system are not well captured in conventional HTA. We place a high value on reassurance, such as knowing you don’t have a particular genetic mutation before you have children, but this is not readily captured in the existing measures of quality of life.

There are a variety of non-health outcomes (such as convenience of treatment) which are similarly not well-dealt with. Whether they can be included in HTA remains a live issue, and, in the specific case of genetic mutations, one which is likely to become more important given the medical profession’s understanding of the human genome is likely to open up a range of new risk assessment tools.

There are many limitations to how we, as a society, identify best buys in health care. And the impact of quite abstract concepts on HTA results can be large.

But this should not, and indeed cannot, dissuade us from pursuing a sensible, transparent and consistent approach to evaluating health-care interventions.

This is the seventh part of our series Health Rationing. Stay tuned for more articles in the lead up to the May budget or click on the links below:

Part one: Tough choices: how to rein in Australia’s rising health bill
Part two: Explainer: what is health rationing?
Part three: A conversation that promises savings worth dying for
Part four: Phase out GP consultation fees for a better Medicare
Part five: Focus on prevention to control the growing health budget
Part six: Health funding under the microscope – but what should we pay for?

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2 Comments sorted by

  1. margaret m

    old lady

    Look out there is a push to lower taxes is not to benefit the ordinary citizens we are having this type of debate because we no longer own INCOME GENERATING ASSETS that under pin the providing of health services. The issues are complex but the foundation for good services is owning assets that generate income. Successive govenments have sold them off so private industry / investors can benefits from the profits of those essential services and we the taxpayer just keeps paying paying and the services are shrinking.

    report
    1. rory robertson

      logged in via email @gmail.com

      In reply to margaret m

      Thanks Dr Norman and Professor Viney for your discussion on how we as a society can identify "best buys" in health care. As an economist, I understand that "health rationing" is unavoidable, given finite resources. But what if we could substantially improve public health quite dramatically, while spending almost nothing in terms of public resources. I'm talking about dietary changes, specifically I'm talking about simply removing added sugar from society's typical diets :http://www.nytimes.com/2011/04/17/magazine/mag-17Sugar-t.html?pagewanted=all&_r=0

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