GHME 2013 Conference Session: New directions in cost-effectiveness analysis Date: June 16 2013 Presenter: Dean Jamison Institute: Center for Disease Dynamics, Economics & Policy University of Washington Department of Global Health

1. www.dcp-3.org
info@dcp-3.org
Including Financial Protection and Equity
in Health CEAs
Dean T. Jamison
University of Washington, Department of Global Health
Global Health Metrics and Evaluation Conference
June 16, 2013
17/18/2013

2. Plan for this Talk
• Conceptual background
• Public finance of TB treatment of India
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3. Outcomes of a Policy
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• Health gains (burden of disease averted)
• Financial protection benefits
(“insurance” to households from medical
impoverishment)
• Income consequences for households
• Distributional consequences (across income groups,
ethnic subgroups or between males and female)

4. Evaluation of Policy:
Extended Cost-Effectiveness
Analysis (ECEA)
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• Evaluation of interventions and platforms (CEA)
(e.g. DOTS as an intervention surgical capacity at a district hospital as a
platform)
• Evaluation of Policies

5. Policies
• Taxes and subsidies
(e.g. universal public finance; tobacco taxes)
• Laws and regulation
• Investment in capacity
• Information and education
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6. Financial Risk
Protection 1
• Enthoven (1987) stressed importance of FRP
as a health system objective.
• Metrics include:
• Incidence of impoverishment, excessive spending,
forced borrowing and forced asset sales (Wagstaff
reviews results)
• Money-metric value of insurance
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7. Financial Risk Protection (2)
Insurance
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• Risk aversion
Individuals value protection from the risk of uncertain adverse events
y = individual income
r = coefficient of relative risk aversion
• Approach consistent with recent work
McClellan & Skinner. The incidence of Medicare.
Journal of Public Economics 2006
Smith. Incorporating financial protection into the economic evaluation of
health technologies. Health Economics 2012

8. 7/18/2013 8
Financial Risk Protection (3)
• Money-metric value of insurance provided
Gamble with:
- disease occurs at incidence p (depending on income)
- has treatment cost c
• For 1 individual, money-metric value of insurance
= expected value - certainty equivalent of gamble

9. ECEA Structure
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Policy Instrument
Health
gains
(e.g. TB deaths
averted)
Household
expenditures
(e.g. TB-related costs
averted)
“Insurance”
benefits
(e.g. financial
protection from
TB-related costs)
Poorest 2nd Poorest Middle 2nd Richest Richest

10. Universal public finance of
TB treatment in India
Work undertaken with
Stéphane Verguet and Ramanan Laxminarayan
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11. Tuberculosis in India
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• TB epidemiology
Annual incidence of 100 per 100,000 (sputum smear-positives)
(WHO 2012)
4 times higher incidence among the poor (Muniyandi et al. 2007)
Case fatality rate of untreated case 0.32 (WHO 2012)
• TB treatment (DOTS)
Cost of $100 per patient
Effective at 90% (WHO 2012)
• Current DOTS coverage
- average of 71%
- bottom income quintile: 47%
- top income quintile: 95%

12. UPF for TB Treatment Over
1 Year for 1 Million Indians
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TB deaths
averted
Poorest 2nd Poorest Middle 2nd Richest Richest
Treat TB-infected
with DOTS
DOTS coverage
(~ 90%)
DOTS
effectiveness
(~ 90%)
TB costs
averted for
households
Financial
protection
benefits

13. Benefits over 1 Year with UPF for
90% coverage of TB Treatment
(per million population)
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Outcome Total
Income
Quintile I
(Poorest)
Income
Quintile II
(Poorer)
Income
Quintile III
(Middle)
Income
Quintile IV
(Richer)
Income
Quintile V
(Richest)
1
TB deaths
averted
80 40 25 12 3 0
2
Private
expenditures
crowded out
$29,000 6,000 6,000 7,000 6,000 4,000
3
Money-
metric value
of insurance
$9,000 5,000 2,000 1,000 1,000 0
Total cost of public program of $65,000

14. Coping Mechanisms:
Borrowing
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• Without UPF, when faced with costly treatment, the
poor borrow from peers or sell assets
• 50% of poor households in India borrow money/sell
assets at high interest rates (Kruk et al. 2009)
• Assume the poor take a loan over 10 years at annual
interest rate of 20% to subsidize TB treatment

15. Benefits over 1 Year for 1 Million
Indians with UPF for TB Treatment
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Outcome Total
Income
Quintile I
(Poorest)
Income
Quintile II
(Poorer)
Income
Quintile III
(Middle)
Income
Quintile IV
(Richer)
Income
Quintile V
(Richest)
1
TB deaths
averted
150 100 50 0 0 0
2
Private
expenditures
crowded out
$70,000 0 15,000 25,000 20,000 10,000
3
Money-
metric value
of insurance
$10,000 0 3,000 4,000 2,000 1,000
Total cost of public program of $130,000

16. Comparative
Analysis – Ethiopia
Stéphane Verguet, Zachary Olson,
Joseph Babigumira, Margaret Kruk,
Kjell Arne Johansson, Carol Levin,
Rachel Nugent, Clint Pecenka, Mark Shrime,
David Watkins, Dean Jamison
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17. Ethiopia
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Thank you
Contact Information:
Djamison@uw.edu