Healthcare systems in low- and middle-income countries (LMICs) face considerable population healthcare needs with markedly fewer resources than those in developed countries. The way in which available resources are allocated across competing priorities is crucial in affecting how much health is generated overall, who receives healthcare interventions and who goes without. Cost effectiveness analysis (CEA) is one tool that can assist policy-makers in resource allocation. The central concern in CEA is whether the health gains offered by an intervention are large enough relative to its costs to warrant adoption. This requires some notion of the value that must be realized by an intervention, which is most frequently represented using a cost-effectiveness threshold (CET). CETs should be based on estimates of the forgone benefit associated with alternative priorities which consequently cannot be implemented as a result of the commitment of resources to an alternative. For most health care systems these opportunity costs fall predominantly on health as a result of fixed budgets or constraints on health systems’ abilities to increase expenditures. However,many CEAs to inform decisions in LMICs have used as pirational expressions of value, such as the World Health Organization’s (WHO) recommended CETs (of 1-3 times GDP per capita in a country)which are not based upon opportunity costs. In contrast, we estimate CETs for a number of countries based upon recent empirical estimates of foregone benefit (from the English NHS) and international income elasticities of the value of health. The resulting CETs are much lower than those previously posited by WHO. There is no intention to provide definitive CETs; rather, the study is intended to provoke further research in this area of crucial policy importance and outlines how more robust estimates of CETs could be generated.
|CHE Research Paper
|Centre for Health Economics, University of York