Whether or not the Abbott Government gets its way on GP co-payments, the sustainability of our health system is likely to remain very much on the political agenda, Dr Agnes Walker, from the Australian Centre for Economic Research on Health, reviews a new book which aims to identify the most cost-effective health system interventions. In line with the recent Senate Committee report on out-of-pocket costs, the book argues for an increased focus on chronic disease prevention and management rather than higher costs for primary health care. Dr Walker writes:
Reducing cardiovascular risks across the Australian population would be much more cost-effective than increasing co-payments, according to a new health economics book. The book Health Policy in Ageing Populations: Economic Modeling of Chronic Disease Policy Options in Australia discusses ‘best value for money’ health reforms and is available as an open access ebook.
The book’s themes reinforce the recommendations of the Senate Inquiry into Out-of-Pocket Costs, in particular that “the Government should not proceed with further co-payments but instead focus on prevention as well as on management of chronic conditions; and search for areas of greatest possible savings (e.g. system, provider and patient-behaviour levels) without negatively affecting health outcomes.
In discussing alternative reform options, the book focusses on chronic diseases – such as diabetes, heart disease, stroke, cancer, arthritis, and mental disorders – because such illnesses are often life-threatening and account for the bulk of Australia’s health expenditures – around 70% of total costs.
The interesting and challenging foreword to the book is by Dr Norman Swan (host of the ABC’s ‘Health Report’ program). The first part of the book presents evidence that Australia’s health system is among the best within the OECD. Life expectancies (82 years at birth) are one of the highest among OECD countries, and this high ranking had been achieved with expenditures consistently below the OECD average. In 2010 Australia’s health expenditure amounted to 8.7% of GDP compared with an average of 9.5% for the OECD.
This exceptional ranking is mentioned by the Senate Committee when it states that for Australia “the challenge is to understand the most appropriate way to contain growth in health spending without undermining what is generally considered to be one of the more efficient health systems in the OECD” (Ref 1, para 6.10). Acknowledging the necessity of broad-based reform, the ebook authors also note that, when developing reform proposals, full account needs to be taken of the ever-changing environment (e.g. ageing population, above GDP increases in health costs, the emergence of the ‘obesity epidemic’ affecting both old and young, and the pressures these place on already high chronic disease costs).
Much of the book is about methods and analyses that quantify the benefits versus costs of potential – or already proposed – health reforms. The complex economic model (Chapter 4) described and its applications to policy relevant health reforms (Chapters 7 and 8) concern chronic disease ‘prevention’ reforms that are in line with the Senate Committee’s recommendation (a) above. The major reform (Chapter 8), concerns a nation-wide vascular risk assessment and management intervention. It focusses on diabetes, cardiovascular disease (CVD) and the risk factors for these and other chronic diseases (incl. blood pressure and sugar levels, cholesterol, smoking, and overweight/obesity). The results indicate that, had that intervention been implemented, then within five years:
– 230,000 less 40-74 year old Australians would be at high risk of CVD and/or diabetes;
– 70,000 less persons would acquire CVD and/or diabetes; and
– 32,000 life years would be gained (i.e. many people would live longer than they would have without the intervention)
The net cost to government was estimated at $7,300 per Quality Adjusted Life Year (QALY) gained, which is considered highly cost-effective in Australia.
In carrying out the above study two cost-saving possibilities emerged. One involved use of practice nurses – rather than GPs – during the screening phase of the intervention, leading to a lower, $3,300/QALY estimate. The second concerned 20% lower unit cost for CVD-related drugs, matching Australian costs with those in the UK (a reduction to $4,600 per QALY).
Another application of the economic model (Chapter 7) estimates that, if Australia’s 2.5 million obese adults could reduce their weight by 10%, then the total cost of treating diabetes and CVD would be reduced by around $500 million over 5 years. Such a scenario could arise, for example, through a ‘healthier lifestyles intervention’ costing, say, up to the beak-even amount of $500 million.
Other studies mentioned (Chapter 9) quantify, for example, the ability of Australians to continue working once preventive interventions improved their health. Also reported are several peer reviewed publications that, in line with Senate recommendation (b), identify health system waste, under-performance and cost savings (Chapter 10).
Overall, there is considerable potential for health cost savings that would be more effective than the 2014 Budget’s copayment proposals.
The book is available at www.eurekaselect.com/118691/volume/1
Senate Community Affairs References Committee report, ‘Out-of-pocket costs in Australian healthcare’, 22 August 2014
1 Walker A, Butler J, Colagiuri, S (eds). December 2013, Health Policy in Ageing Populations: Economic Modeling of Chronic Disease Policy Options in Australia. E-book, open access, athttp://www.eurekaselect.com/118691/volume/1, Bentham Science Publishers.