University of Michigan
School of Public Health
Cost-Effectiveness Analysis and
Ageism
Daniel Eisenberg, PhD
Dept of Health Management and Policy
School of Public Health
University of Michigan
AcademyHealth Annual Research Meeting
2006
Allez Les Bleus!
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Go Blue!
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Background: Economic Methods for
Evaluating Health Interventions
• Cost effectiveness analysis (CEA): $/life-year ($/LY) or
$/disability-adjusted-life-year ($/DALY)
• Cost utility analysis (CUA): $/quality-adjusted-life-year
($/QALY)
• In CEA and CUA, the unit of health, whether it’s a LY,
DALY, or QALY, is typically weighted the same at all ages
(e.g. 1 QALY at age 10 = 1 QALY at age 70)
• Cost benefit analysis (CBA) often uses single “value of a
statistical life” for all ages
• Thus, CEA and CUA account for life expectancy whereas
CBA typically does not
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Background: Economic Methods
(cont’d)
Decreasing
priority for
health of
young
CBA w/ single
value-of-life
Standard
CEA/CUA
Modified
CEA/CUA?
Increasing
priority for
health of
young
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Policy Context
• Debate within federal government about whether
agencies should be doing CEA vs CBA vs CUA
• Who gets influenza vaccines first?
– Recent article in Science (Emanuel and Wertheimer
2006) critiquing priorities of National Vaccine Advisory
Committee (NVAC) and the Advisory Committee on
Immunization Policy (ACIP)
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Key Question
• How can we modify cost effectiveness analysis
(CEA) methods to reflect more accurately our
society's valuation of health improvements by
age?
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Synthesis of Related Theoretical and
Methodological Literature
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Synthesis of Arguments in Literature
on Why CEA Should Be Modified
1. Future health gains should be weighted more
to reflect society’s increase in willingness-topay over time for health
•
1-2 % increase per year
2. Net resource use should be included in costs
•
Consumption minus productivity (Meltzer)
3. Younger life-years should receive priority for
equity reasons
•
“Fair innings” argument: young have not had their
share of life yet
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Evidence on Argument #1
• Value of health gains rises at least in proportion
to income:
– Costa, Dora L. and Matthew E. Kahn (2004) J of Risk
and Uncertainty.
– Hammitt, James K., Jin-Tan Liu, and Jin-Long Liu
(2004). Harvard Univ. mimeo.
– Hall, Robert, and Chad Jones. (2006). Forthcoming in
Quarterly J of Economics.
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Evidence on #2 (Net Resource Use)
• Net resource use (consumption minus
productivity) (Meltzer 1997 J of Health Econ):
– Positive for children and adolescents
– Negative for adults until retirement age
– Positive for adults after retirement age
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Evidence on #3
• Equity concern is supported consistently in a
variety of survey studies
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Survey Evidence on Valuation of
Health by Age
Suppose a choice must be made between two
medical programs. The programs cost the
same but there is only enough money for one.
• Program A will save 100 lives from diseases that
kill 20-year-olds.
• Program B will save 200 lives from diseases that
kill 60-year-olds.
Which program would you choose?
Example from Cropper et al (1994). Journal of Risk and
Uncertainty 8: 243-265.
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Survey Evidence (cont’d)
• Several studies (from a variety of countries) find
that respondents not only place higher values on
younger lives, but they do so more so than can
be explained by differences in life expectancy
• These preferences are consistent for all age
groups of survey respondents
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Translating Survey Evidence Into
Modifications for CEA Methods
Age Weights from World Bank
Guidelines and Rodriguez & Pinto
2000)
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Age Weights
weight
1.5
1
0.5
Standard CEA
0
age 10 19 28 37 46 55 64 73 82
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Implications for CEA Methods
1. Increasing valuation of health over time ->
weight life-years by increasing amount: (1+x)^t
2. Net resource use -> add it to costs
3. Equity concerns -> construct age weights
based on survey data on preferences
Does it make sense to do all of these at once?
That depends on interpretation of survey data.
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Example: Re-analysis of
Recently Conducted CEAs
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CEAs to be Re-Analyzed
• We selected for re-analysis CEAs that:
– Were published within last 10 years
– Evaluated interventions for people of ages under 21
– Yielded cost-effectiveness ratios between $50,000
and $500,000 per LY (i.e. dubious cost effectiveness)
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Two CEAs Identified for Re-analysis
• Jacobs et al (2003). Regional variation in the
cost effectiveness of childhood hepatitis A
immunization. Pediatr Infect Dis J 22: 904-14.
– Universal immunization in low prevalence states
• Kulasingam, S.L. and E.R. Myers (2003).
Potential health and economic impact of adding
a human papillomavirus vaccine to screening
programs. JAMA 290(6): 781-9.
– Vaccine plus screening starting at age 24 versus
vaccine plus screening starting at age 18
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Methods for Re-analyses
We separately applied the following methods:
1) Standard CEA
2) Increasing value of health over time (2% year)
3) Age-weights
4) #2 and #3
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Results: Cost Effectiveness
Under Each Method
Units
(1)
HepA vac.
$/QALY
63,000
HPV vac.
$/LY
96,000
Study
(1) Standard CEA (discount rate = 3%)
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Results: Cost Effectiveness
Under Each Method
Units
(1)
(2)
HepA vac.
$/QALY
63,000
52,000
HPV vac.
$/LY
96,000
46,000
Study
(1) Standard CEA (discount rate = 3%)
(2) Increasing valuation of health effects (2% per year)
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Results: Cost Effectiveness
Under Each Method
Units
(1)
(2)
(3)
HepA vac.
$/QALY
63,000
52,000
49,000
HPV vac.
$/LY
96,000
46,000
72,000
Study
(1) Standard CEA (discount rate = 3%)
(2) Increasing valuation of health effects (2% per year)
(3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting)
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Results: Cost Effectiveness
Under Each Method
Units
(1)
(2)
(3)
(4)
HepA vac.
$/QALY
63,000
52,000
49,000
39,000
HPV vac.
$/LY
96,000
46,000
72,000
37,000
Study
(1) Standard CEA (discount rate = 3%)
(2) Increasing valuation of health effects (2% per year)
(3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting)
(4) Combination of (2) and (3)
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Conclusion
• Standard CEA methods do not reflect societal
preferences related to age
• Modifications grounded in theoretical and
empirical evidence lower CE ratios substantially
for interventions targeted at young people
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Implications
• CEA practitioners can use adjustments for
increasing value of health over time and age
weights to reflect these concerns
• Readers of CEAs should bear in mind that the
technique, as currently practiced, does not
reflect societal preferences with respect to age
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Acknowledgements
• Gary Freed, MD, MPH
• R. Jake Jacobs, MPA and co-authors on Jacobs
et al (2003)
• Shalini L. Kulasingam, PhD and Evan R. Myers,
MD, MPH
• R. Douglas Scott, PhD
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