Johan Polder, PhD | Professor in Health Eonomics

Johan Polder, PhD | Professor in Health Eonomics

Cost of illness - Framework & Data“Measuring education and health volume output”

OECD - Paris, June 6th- 7th, 2007

An economist knows the price of

everything, but the value of nothing.

The value of health

Health Outcome: Dutch evidence• Infectious diseases

- Disability adjusted life expextancy (DALE): +1.7

- Costs per DALY avoided: € 3400

• Cancer- DALE: +0.31 (male); +0.85 (female)

- Costs per DALY avoided: € 15,500

• Cardiovascular diseases- Life expectancy: +2.3 (male); +3.8 (female)

- Costs per DALY avoided: € 2000

• Generic efficiency of the health care system- Meerding WJ, Polder JJ, et al., (forthcoming, september 2007)

Health output: Cost of illness

• Cost of illness (COI) analysis is the main method of providing an overall view on the economic impact of a disease.

• Such studies have been used to set priorities for health care policy and describe resource allocations for various diseases.

© Statistisches Bundesamt, VIII A3

Cost of illness- Approaches -

Cost of illness- Approaches -

Top-Down ApproachTop-Down Approach Bottom-Up ApproachBottom-Up Approach

• health expenditures from

National Health Accounts as

a fixed starting point

• complete disease

• no double counting

• comorbidity (partial)

• no longitudinal analysis

• direct evaluation of patient

specific data

• few special diseases

• double counting

• comorbidity

• longitudinal analysis

GENERAL Cost of illness (COI): What?

• Demographic and epidemiological view on health expenditure

• Health expenditure by demand- Direct medical costs only

• Break down of health expenditures to patient (or demand) characteristics as:

- Disease (categories)

- Age

- Gender

- Function

- Financing

Cost of illness (COI): Why?

• Description- Health expenditure by supply and demand

- All combinations

• Projection- Forecasts of future health expenditure

- Ageing / changing disease patterns

• Comparison- Over time: trends in health care costs

- Between countries: better understanding of cross-country differences in health care systems and costs (for similar or different demography / epidemiology)

General COI: How?• Health care costs are known for each sector and actor

- Statistics Netherlands: 80 actors according HP-classification

• For each actor utilisation data is retrieved

- By diagnosis, age, gender, function, financing

- comprehensive registries and studies in the Netherlands (most of them were used, ± 50 major data sources)

• Key variables represent equal health care use

- contacts, inpatient days, prescriptions, …

- some need weighing: hospital interventions, prescribed medicine

• Costs are broken down using key variables

© Statistisches Bundesamt, VIII A3

Accounting process

health expenditures health expenditures

providers providers

disease-based indicatorsdisease-based indicators

step I:step I:

step II:step II:

step III:step III:

step IV:step IV: cost of illness cost of illness

top-down method top-down method

The Netherlands in the worldShare of health care costs in the GDP (%)

0,0

2,0

4,0

6,0

8,0

10,0

12,0

14,0

16,0

1980 1983 1986 1989 1992 1995 1998 2001

Belgium

Germany

Luxembourg

Netherlands

Sw eden

United Kingdom

United States

Key figures• 16 million inhabitants

• Life expectancy- About 75 for men

- About 81 for women

• Bismarck-based health care system- Social health insurance

- Tax financed care plays a minor role

• GDP- About € 30,000 per head of the population

- (€ 78,000 per worker)

• Health expenditure- About € 3,500 per inhabitant (average)

Three perspectives

• Blue: Dutch health and social care accounts

- € 60 billion

• Yellow: Budget Ministry of Health

- € 44 billion

• Pink: OECD SHA - € 45 billion

• quite different boundaries

Relations between perspectives• Dutch health and social care accounts

- Standard: comprehensive; time series available; SHA-based

• Dutch Ministry of Health- Minus: prevention, personal expenditures on e.g. over the counter

drugs, occupational health, social care

• OECD System of Health Accounts- Minus: homes for the elderly, home care, care and provisions for

people with mental/intellectual disabilities

- Plus: investments

Dutch HA versus SHA / figures

Dutch OECD Difference

HP.1 Hospitals 17,108 16,037 94%

HP.2 Nursing and residential care facilities 13,061 5,313 41%

HP.3 Providers of ambulatory care 12,538 9,980 80%

HP.4 Retail sale and other providers of medical goods 7,555 7,229 96%

HP.5 Provision and administration of public health 772 772 100%

HP.6 General health administration and insurance 1,837 1,837 100%

HP.7&9 Other 1,941 1,726 89%

outside SHA 2,717 0%

57,529 42,893 75%

Capital formation of health care provider institutions 2,220

45,113

SHA provider classification

Total current expenditure on health care

Total health expenditure

COI-2003: Costs by provider (€ mln) <OECD definition of costs>

COI-2003: costs by disease (€ mln)0 4.000 8.000 12.000

Mental and behavioural disorders

Not allocated / Not disease related

Diseases of the circulatory system

Diseases of the digestive systemSymptoms, signs and abnormal clinical and laboratory f indings, not

elsew here classif ied

Diseases of the musculoskeletal system and connective tissue

Diseases of the nervous system

Neoplasms

Diseases of the respiratory system

Injury, poisoning and certain other consequences of external causes

Diseases of the genitourinary system

Pregnancy, childbirth and the puerperium

Endocrine,nutritional and metabolic diseases

Infectious and parasitic diseases

Diseases of the skin and subcutaneous tissue

Certain conditions originating in the perinatal period

Congenital malformations

Diseases of the blood and blood-forming organs

SHA

Dutch HA

COI-2003: per capita costs by age & gender (€)

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000

0 1 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Dutch HA - men

SHA - men

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

50.000

0 1 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Dutch HA - w omen

SHA = w omen

COI-2003: population costs by age & gender

COI-2003: Gender difference explained (€ mln)

-80

40

160

280

0 5 15 25 35 45 55 65 75 85 95

pregnancy andgender specificdiseases

demography(number of personsper age group)

Intensity of healthcare use

w omen higher costs

men higher costs

COI-2003: by age and diagnosisDistribution ICD-9 chapters (%) 0% 20% 40% 60% 80% 100%

Infectious and parasitic diseases

Neoplasms

Endocrine,nutritional and metabolic diseases

Diseases of the blood and blood-forming organs

Mental and behavioural disorders

Diseases of the nervous system

Diseases of the circulatory system

Diseases of the respiratory system

Diseases of the digestive system

Diseases of the genitourinary system

Pregnancy, childbirth and the puerperium

Diseases of the skin and subcutaneous tissue

Diseases of the musculoskeletal system and connective tissue

Congenital malformations

Certain conditions originating in the perinatal periodSymptoms, signs and abnormal clinical and laboratory f indings, not

elsew here classif iedInjury, poisoning and certain other consequences of external causes

Not allocated / Not disease related

0

1-14

15-24

25-44

45-64

65-74

75-84

85+

All results: www.costofillness.nl

Drugs: results by diagnosis

Drugs: results by age & gender

Mental health care: Results by age & gender

International comparisons(Report by Heijink R, Polder JJ, et al., 2006)

Curative care: overall picture comparable

Long term care: large differences

Comparability by age

Conclusions

• Cost of illness studies - value health output

- allow for detailed analyses of health expenditure by aspects of supply & demand

- can be used for projections & comparisons

• Cross-national comparisons should focus on cure

• COI-studies reveal the societal value of health care

• (Health) economists have learned a lot about value (rather than price), but can learn even more…..