Economic Burden of NCDs and Cost-Effectiveness of Interventions

1. Economic burden of NCDs and cost-effectiveness clinical and public health interventions Jeremy Lauer, PhD Health Systems Financing WHO Geneva

2. Overview

3. Overview – economic burden / cost-effectiveness analysis - • Economic impact (burden to health system and beyond) • costs to whom? - private households, public services, society • scope / range of costs? - health, welfare • implications for government (projections of future impact) • Cost-effectiveness (efficiency of care & prevention strategies) • Comparative intervention cost-effectiveness (across diseases and age groups) • Identifying 'best buys' for key contributors to chronic disease burden • Cost of scaling-up best buys

4. What are the economic consequences of NCDs?Who do the costs fall on?

5. Economic impact of NCDs on households in India(Source: Mahal et al, 2010)

6. Economic impact of NCDs on households in India(Source: Mahal et al, 2010)

7. Macroeconomic / societal impact of NCDs • The cost-of-illness (COI) approach, a commonly used method that sets out to capture the societal economic impact of disease; it focuses mainly on foregone income and personal medical care costs associated with NCDs; • The economic growth approach, which estimates the projected impact of NCDs on aggregate economic output (GDP) by considering how these diseases deplete labour, capital and other factors to production levels in a country (see Figure below). • The value of statistical life (VSL) approach, which reflects a population’s willingness to pay to reduce the risk of disability or death associated with NCDs. By placing an economic value on the loss of health itself, this approach goes beyond the impact of NCDs on GDP alone.

8. Projected economic impact of CVD, diabetes, cancer and respiratory diseases in all low- and middle-income countries (Source: The Global Economic Burden of NCDs, WEF/Harvard)

9. Cost-effectiveness analysis Costs Consequences • Programme-level: • administrative staffing • training • drug supply / distribution • Programme-level / intermediate: • detection • referral • treatment rates / quality Intervention populations: (enhanced care or new treatment) vs Non-intervention populations: (usual care or no treatment) • Individual-level: • treatment (drugs, therapy) • inpatient care • outpatient & primary care • ancillary care • Individual-level / final: • morbidity • mortality • QALY, DALY (composite indices)

10. Approaches to cost-effectiveness analysis • Alongside (long-term) prospective studies • observational • experimental • Modelling • decision analytic methods (e.g. 5-year cohort incidence model) • population-based disease modelling (e.g. WHO-CHOICE)

11. CHOosing Interventions that are Cost-Effective(www.who.int/choice) • CHOICE is WHO's work programme on cost-effectiveness • Use of a common set of tools and methods • enhances comparability between diseases / risk factors • Sectoral, population-level CEA • effectiveness: healthy years gained over the lifetime of a population, with / without intervention • resource costs: patient + programme level (intl $ or local units) • Results summarised in WHO regional C-E databases • available for country-level adaptation / analysis

12. Application of WHO-CHOICE • By disease / risk factor: • Communicable diseases: HIV, TB, malaria, childhood diseases • Non-communicable diseases: cancer, cardiovascular disease, diabetes, respiratory disorders, mental disorders, sensory loss disorders • Risk factors: alcohol and tobacco use, unsafe water, unsafe sex, under-nutrition etc. • By geographical setting • Regional assessments: 14 epidemiologically-defined WHO sub-regions • Country applications: Argentina, Chile, Estonia, Ghana, Guatemala, India, Kyrgyzstan, Mexico, Spain, Sri Lanka, Thailand, Viet Nam

13. NCDs risk factors – identification of 'best buys' • 'Best buy' – an intervention that is: • very cost-effective • low cost • feasible, acceptable and appropriate • 'Good buy' – an intervention that does not meet all of 'best buy' criteria but which offers good value and has other attributes that recommends its use • Policy-makers can consider best buys as a core set of interventions for priority scale-up, and good buys as an expanded set of interventions to be made available when resources allow.

14. NCDs risk factors – 'best buys'

15. NCDs – 'best buys'

16. NCDs – 'best buys'(Source: WHO, 2011 – Global Status Report)

17. Cost of scaling-up a cost-effective NCD package

18. Cost of scaling-up a cost-effective NCD prevention package – all LMIC(Source: Scaling up action against NCDs: how much will it cost? WHO, 2011)

19. Cost of scaling-up population-based 'best buys' – all LMIC(Source: Scaling up action against NCDs: how much will it cost? WHO, 2011)

20. Cost of scaling-up individual-based 'best buys' – all LMIC(Source: Scaling up action against NCDs: how much will it cost? WHO, 2011)

21. Costs and cost-effectiveness - key points • Health & social welfare costs of chronic disease • already large and growing rapidly (ageing populations) • a major challenge for public health and for government policy • economic or financial impact studies can help make the investment case • Economic evidence for policies concerning chronic disease prevention & mgt • Paucity of studies in low- and middle-income countries • Largely a vertical disease approach (vs more horizontal, health platform approach) • Long time lags / slow returns on investment – how to convince ministries of finance • Being 'cost-effective' does not mean an intervention is going to be financially feasible • Implementation of NCD best buys is inexpensive and will produce dramatic health gains

22. Funding health systems and public health interventions Jeremy Lauer, PhD Dept of Health Systems Financing, WHO Geneva

23. Health systems financing – a road map

24. Health system financing and goal attainment

25. Health Financing Mechanisms Financing mechanisms Financing sources Tax-based financing 1. General tax or other revenue External resource 2. Payroll tax Social health insurance Health care services Household Other prepayment schemes 3. Contribution or premium Natural resource revenue Out-of-pocket payments 4. Direct payment

26. Characteristics of different health insurance mechanisms 26

27. WHR 2010 on financing for universal coverage - story Line - • What do we mean by universal coverage? All people have access to needed services without the risk of financial catastrophe linked to paying for services (or being too ill to work). • Where are we? Data on service coverage; extent of financial catastrophe and impoverishment; health insurance coverage, sickness benefits. Richer countries also moving further away from it either with increases in cost-sharing or as a result of financial crisis. • What are the determinants of fast and slow progress? determinants of coverage, financial catastrophe etc. • What can be done? Based on the analysis of 2 and 3, and sharing country experience

28. Three ways of moving towards universal coverage Universal population coverage Universal population coverage Complete prepayment/ Complete prepayment/ No cost - sharing No cost - sharing Services & Benefits Reduce Reduce Extend Extend out - of - out - of - Essential Essential benefits benefits pocket pocket benefit benefit package package Extend Extend coverage coverage Public expenditure on health Prepayment/ Pooling Population coverage

29. Where are we now? • Heavy reliance on out of pocket payments (OOPs) to finance health in many countries – prevents many from using services and results in financial catastrophe and impoverishment for many who do. • 150 million people face financial catastrophe • 100 million people are pushed below the poverty line • Millions of people do not have access to effective / affordable health care • Inefficient and inequitable use of the resources that are available. • Even if we get this right, simply insufficient funds in may countries, despite large increases since 2000. Even high income countries continually trying to find the resources necessary to keep their systems moving forward and to meet people's expectations.

30. What can be done? • Reducing financial barriers to coverage, and protecting people against financial risks of ill health – how to increase pooling, to protect people against financial catastrophe and impoverishment. How to maintain it and prevent reversals. • Use funds more efficiently and equitably: Analysis of the nature and extent of inefficiencies and inequalities, and what steps have and can be taken to improve them. This will have practical examples of how improvements can be made. • Raise sufficient funds for health – practical suggestions, mix of external (for low income countries) and domestic.

31. Solution 1: Increase or protect prepayment and pooling • User fees are inequitable and inefficient. Only when OOPs as a % of total health expenditure is lower than 10-15% is the incidence of financial catastrophe reduced to negligible proportions. • Increasing prepayment: – taxes and insurance contributions both forms of prepayment. The options each country chooses will depend on its institutions, traditions and values, but some lessons can be gained from experience: • Small pools will not be financially viable - one high-cost illness in a member will wipe out the pooled funds. • Multiple pools are inefficient in terms of duplication of administrative costs, and they can make it more difficult to achieve equity goals • Universal coverage will not be achieved in insurance systems if enrolment is voluntary. Low risk people will opt out - usually the young and healthy. While voluntary participation is seen as a way of getting people used to the idea of insurance and the benefits of it, in the longer run, it will need to be compulsory for universality.

32. Solution 2: Use funds more efficiently and equitably • 10 major causes of inefficiency identified and measured • irrational drug use, inappropriate hospital stays, fraud/corruption etc. • Health financing solutions largely revolve around the incentives for efficiency inherent in • Provider payment mechanisms • Inadequate financial governance • Structure of financing (and health system) – e.g. fragmentation • Message for donors – stop fragmenting systems

33. Main causes of inefficiency / waste

34. Solution 3: Raise sufficient funds • More money is needed for many countries. Even for the rich countries, different ways of raising funds are needed because of ageing populations and lower proportion of population in formal employment (e.g. income taxes and health insurance contributions paid by workers and employers no longer sufficient). • higher government commitment (↑ share of total govt exp to health) • Increase tobacco and alcohol taxes • Other innovative ways – mobile phones, voluntary giving etc.

35. Low-income countries will be unable to finance the levels of spending required to scale up services from domestic sources for many years Despite large increases in external financial assistance since 2000, it remains insufficient, and only a few donors are on track to meet their own international targets Mobilizing additional traditional ODA funds when the global economy is in turmoil is a major challenge Innovative financing mechanisms can complement traditional aid and help deliver urgently needed financing Scope for design of more efficient, more effective funding and uses Innovative Financing?

36. Types of Innovative Financing Mechanisms

37. Health financing for NCDs – key points • Reduce OOPs / increase pre-payment • Systemic rather than disease-specific issue, however OOPs for chronic diseases / conditions particularly regressive and impoverishing because they endure over time (need more research showing the economic impact of NCDs on household budgets/incomes) • Use funds more efficiently and equitably: • Identify 'best buys' for prevention and opportunities for positive synergies re: treatment in PHC • Raise sufficient funds for health • Better articulation of and budgeting for core NCD packages / components • Costing tool for scaling-up (evidence-based advocacy) • Additional funding via sin taxes (e.g. alcohol, tobacco)