RESOURCE ALLOCATION, VALUES AND EQUITY: MAINTAINING EQUITY IN THE FACE OF ANONYMITY

Purpose: Health care budgets are constrained. Funding new health technologies imposes an opportunity cost, since resources cannot then be used for other activities within the health care system. This opportunity cost may be considered in terms of health losses for other patients. A comparison of the expected health gains for the beneficiaries of a new health technology to the expected health losses for other patients is an important consideration when assessing new health technologies for potential reimbursement within public health care systems.

Method(s): We consider how cost-effectiveness analysis can be used to make comparisons between health gains and health losses when assessing new health technologies. The social value positions implied by the use of cost-effectiveness analysis are considered, including the implied horizontal and vertical equity positions. The implications of modifying these equity positions – for example by applying additional weights to the health of individuals with a more severe disease – will then be considered.

Result(s): Cost-effectiveness analysis allows for a direct comparison of the health gains and losses associated with adopting a new technology only in cases where the cost-effectiveness threshold reflects a supply-side estimate of the shadow price of the health system budget constraint. Where a vertical equity position is adopted in which all equivalent health gains and losses are assigned equal value, cost-effectiveness analysis is consistent with the principle of horizontal equity: that is, equal value is assigned to health gains or losses for individuals with similar characteristics of ethical/legal relevance. Where an alternative vertical equity position is preferred – for example, where greater value is placed on health gains for individuals with a more severe disease – maintaining horizontal equity requires that a similarly greater value is placed on health losses for individuals with an equivalently severe disease who bear the opportunity cost of funding the new technology. This, in turn, requires estimates of the severity of disease among patients who bear the opportunity cost.   

Conclusion(s): The social value positions implied by the use of cost-effectiveness analysis depend upon the specification of the cost-effectiveness threshold. The ‘anonymity’ of patients who bear the opportunity cost of funding new health technologies presents substantial practical difficulties for the adoption of alternative vertical equity positions within the assessment of new health technologies.