Does Cost-Effectiveness Influence Funding Decision in Health. What is the Role of Funding Arrangements? A Review of 245 Australian Health

Abstract

Background Given resource scarcity, not all potentially beneficial health services can be funded. Choices are made, if not explicitly, implicitly as some health services are funded and others are not. Objectives We sought to test whether decisions to subsidize health services are related to their cost-effectiveness and to quantify the influence of a range of other attributes related to the intervention, to broad funding arrangements and to community values. Methods We identified 245 Australian health care interventions for which cost/QALY/DALY or LY estimates had been published. From these studies we collated information on selected attributes related to the intervention, the population target and cost-effectiveness. The status of government subsidy was derived from government documents. We modelled the likelihood of government subsidy, i) yes or no; and ii) level of funding a) complete (meets all clinically indicated need) or b) partial, as a function of cost per QALY(DALY/LY), patient/target group characteristics (such as age group, target disease, whether the condition was contributed to by the patient) and intervention details (such as modality or purpose), using multiple regression analysis. Results We found that higher cost effectiveness ratios (poorer economic performance) was a significant predictor of an intervention not being subsidised, but that the size of impact was not large. Cost effectiveness did not however influence 'level of funding'. Variables related to funding and delivery arrangements - such as status as a pharmaceutical and potentially eligible for listing on the PBS (Pharmaceutical Benefits Schedule), or community values, (such as unable to reduce one's own health risk) were significant predictors of both decision to fund and level of funding. Conclusion/Discussion Our analysis supports the importance of funding arrangements in resource allocation, through its influence on both the decision to subsidize and the 'size of the program'. While cost-effectiveness influences in a small way whether an intervention receives a subsidy or not, it does not influence program level. Our study suggests that where funding arrangements deny a level playing field for health care interventions, but a rigorous approach to health care evaluation and priority setting in one sector (say pharmaceuticals), this rather than contributing to economic efficiency, may well crowd out other modalities, reducing overall health. This suggests partial priority setting processes that do not take into account opportunity cost may have the perverse effect of compounding allocative inefficiencies.