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Should Health Economic Evaluations Undertaken from a Societal Perspective Include Net Government Spending Multiplier Effects?

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  • Jonathan Karnon

    (Flinders Health and Medical Research Institute)

  • Brita Pekarsky

    (South Australian Ambulance Service)

Abstract

The fiscal multiplier represents the ratio of the change in national income to an associated increase in government spending. Fiscal multiplier effects are commonly estimated to justify options for government spending. Multiplier effects are not considered in economic evaluations of healthcare, but alternate forms of healthcare spending are expected to have varying multiplier effects. This paper describes the estimation and application of net government spending multiplier effects to two published economic evaluations. Negative net multiplier effects are estimated for an evaluated pharmaceutical for the treatment of stable cardiovascular disease, with a resulting increase in the published incremental cost per quality-adjusted life-year (QALY) gained from AU$31,244 to 47,311. Positive net multiplier effects are estimated for an evaluated healthcare delivery model for frail older people, with a resulting decrease in the published incremental cost per QALY gained from AU$8129 to 7669. The inclusion of net multiplier effects in economic evaluations undertaken from a societal perspective can have important effects on the estimated value of evaluated health technologies and services. The potential for government spending on healthcare to crowd out existing spending is considered low, but further investigation of crowding-out effects is warranted.

Suggested Citation

  • Jonathan Karnon & Brita Pekarsky, 2020. "Should Health Economic Evaluations Undertaken from a Societal Perspective Include Net Government Spending Multiplier Effects?," Applied Health Economics and Health Policy, Springer, vol. 18(4), pages 467-475, August.
    • Handle: RePEc:spr:aphecp:v:18:y:2020:i:4:d:10.1007_s40258-020-00556-x
    DOI: 10.1007/s40258-020-00556-x
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    References listed on IDEAS

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    1. Nicoletta Batini & Luc Eyraud & Lorenzo Forni & Anke Weber, 2014. "Fiscal Multipliers; Size, Determinants, and Use in Macroeconomic Projections," IMF Technical Notes and Manuals 14/04, International Monetary Fund.
    2. Simon Walker & Susan Griffin & Miqdad Asaria & Aki Tsuchiya & Mark Sculpher, 2019. "Striving for a Societal Perspective: A Framework for Economic Evaluations When Costs and Effects Fall on Multiple Sectors and Decision Makers," Applied Health Economics and Health Policy, Springer, vol. 17(5), pages 577-590, October.
    3. Nicoletta Batini & Mr. Luc Eyraud & Lorenzo Forni & Miss Anke Weber, 2014. "Fiscal Multipliers: Size, Determinants, and Use in Macroeconomic Projections," IMF Technical Notes and Manuals 2014/004, International Monetary Fund.
    4. Productivity Commission, 2008. "Modelling Economy-wide Effects of Future Automotive Assistance," Research Reports, Productivity Commission, Government of Australia, number 30.
    5. Jonathan Karnon & Hossein Haji Ali Afzali & Gregorius Virgianto Arpuji Anggoro Putro & Phyu Win Thant & Ameline Dompok & Ingrid Cox & Owen Henry Chikhwaza & Xian Wang & Mercy Mukui Mwangangi & Matahar, 2017. "A Cost-Effectiveness Model for Frail Older Persons: Development and Application to a Physiotherapy-Based Intervention," Applied Health Economics and Health Policy, Springer, vol. 15(5), pages 635-645, October.
    6. Commission, Productivity, 2011. "Disability Care and Support," Inquiry Reports, Productivity Commission, Government of Australia, volume 0, number 54.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 27th July 2020
      by Chris Sampson in The Academic Health Economists' Blog on 2020-07-27 11:00:01

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    Cited by:

    1. Wei Jiang & Yadong Wang, 2023. "Asymmetric Effects of Human Health Capital on Economic Growth in China: An Empirical Investigation Based on the NARDL Model," Sustainability, MDPI, vol. 15(6), pages 1-16, March.

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