Final Exam Health Economics May the luck be in your favor Cheers Cost Effective Analysis Describe how to perform a cost effective analysis Calculate the per LY Life Year o Simply divide the cost of the treatment or drug by the Quality Adjusted Life Year QALY o This equals the Cost Effective Ratio CER See table below Drug B C D QALY 10 12 80 Cost 300 000 200 000 1 000 000 CER 30 000 16 667 12 500 Critique the various methods used to quantify quality of life Three ways to Quantify Quality of Life o Rating Scales Present person with a scenario then rate on scale of 0 10 with 0 death and 10 perfect health This can be done visually with a line plot o Standard gamble Ask question Suppose you were in the state of less than perfect health as described by the scenario Further suppose that there was an operation that would completely cure you or you would die instantly and painlessly on the operating table What probability of death would make you indifferent between having or not having the operation Utility from death is zero U d 0 Math U perfect health 100 o Trade Off You tell your dog That she can live 4 years and never go on a walk or she can live 3 years and go on a walk every day Note the subject must feel indifferent Health Utility Index 3 years 4years 0 75 HUI Distinguish between health improving and cost effective Health Improving Cost Effective o A treatment that increases quality or quantity of life o Cost effectiveness is seen as any treatment costing less than 50 000 per Life Year Discuss the cost effectiveness and health effectiveness of various cancer behavior modifications screenings and treatments Listed were the most Health effective Cost effective per cancer o Behavior Reduced smoking huge effect reduce cancer o Screening Colonoscopy o Treatment Prostate Hormonal therapy and surgery Contribution to reduction in cancer o Behavioral 23 o Screening 35 Most Effective o Treatment 20 Compare cost effectiveness of HIV treatment and prevention methods The most cost effective methods for preventing aids was o Mass Media Campaigns o Peer Education for sex workers prostitutes o Condom Distribution o Diagnosis and Treatment of sexually transmitted infections Cost Benefit Analysis Discuss the distinctions among Cost effective analysis Cost benefit analysis Comparative effectiveness research Cost Effectiveness research Compares the efficacy of two or more diagnostic tests treatments or health care delivery methods with out any explicit consideration of costs o Why ignore the cost Because the federal government programs are forbidden form using Cost Effective Analysis in government programs Critique the various methods used to quantify the value of life VSL VSL Value of a Statistical Life o Human Capital Approach The value of a life is equal tot the market value of the output produced by an individual during his or her expected life time The bad thing about this approach I you will not value volunteers non profits black people or women AND people like Kim Kardiashian would be more valued then Mother Theresa o Willingness to pay approach Based on how much money you are willing to pay to avoid death We can quantify the value of life saving devices by equating the reduced probably of dying times the value of the person s life I E Smoke alarm 10 75 Reduced Prob 1 1000 10 75 1 1000 10 750 The bad thing about this approach is that some people pay to experience risk like Sky Divers o NOTE Willingness to pay gives higher estimates than human capital o Example VSL effect on labor market o Annual Salary of a construction worker is 5 000 more then the teacher o The prob of death to a construction worker is 1 2000 o 5000 1 200 VSL 1 000 000 of the Construction worker Markets for Organs and Blood Compare and contrast the whole blood and plasma markets in the U S Whole Blood Plasma Whole blood donors are not compensated financially in the U S currently although it is NOT illegal to pay someone Plasma donors are being paid money for their donations U S is one of the only countries that allows this Blood stores for about 6 week Plasma stores for years Shortages in the winter No Shortages Surplus after tragedy 9 11 Whole blood donated in the U S stays in the U S to be used Plasma donated in U S is sold to countries all over the world Discuss how organ vending works in Iran Only country to legally permit kidney vending o Only country w o a shortage o Why kidney vending legal o Cadaveric organ donation o Opens between 1989 and 2000 was not very successful Potential recipient o Look for biologically related match o Wait 6 months for cadaveric donor o Meet with Dialysis and Transplant Patients Association DATPA DATPA o Volunteers with End Stage Renal Disease ESRD o No for finding a match Vendors o Must meet strict medical standards o Contact the DATPA directly Iranian Government o Pays 1 200 to vendor o Pays health insurance that covers surgery and any complications to vendor one year o Pays for surgery recovery drugs Recipient or charity pays 2 300 4 500 to vendor Citizens only Pros of vending o No illegal organ trafficking o DATPA no incentive to pressure vendors o Anyone can get an organ no wait list o Altruistic donation still exists Bio donors 12 Cadaveric donation 16 Cons of vending o Who are the vendors Low income Could earn 67x annual income by vending Iranian poverty line 5 per month o What happens to vendors There isn t any data o Survival rate after 10 years Recipient of vended organ 44 Recipient of live donor organ 53 Describe how Becker and Elias estimate the market equilibrium price of donor kidneys and livers Becker and Elias Conclusion Current system many die or suffer while waiting Introduce payments has the potential to eliminate wait times and alleviate suffering Good luck people hope this helps 12 05 2015 12 05 2015