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The relevance of including future healthcare costs in cost-effectiveness threshold calculations for the UK NHS

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  • Perry-duxbury, Megan
  • Lomas, James
  • Asaria, Miqdad
  • Van Baal, Pieter

Abstract

Background and Objective The supply-side threshold for the UK National Health Service has been empirically estimated as the marginal returns to healthcare spending on health outcomes. These estimates implicitly exclude future healthcare costs, which is inconsistent with the objective of making the most efficient use of healthcare resources. This paper illustrates how empirical estimates of the threshold within healthcare can be adjusted to account for future healthcare costs. Methods Using cause-deleted life tables and previous work on future costs in England and Wales, we illustrate how such estimates can be adjusted. Results While the effect of including future healthcare costs can have substantial effects on incremental cost-effectiveness ratios of specific life-extending interventions, we find that including future costs has relatively little impact (an increase of £743 per quality-adjusted life-year) on the threshold estimate. Conclusions For some life-extending interventions the impact of including future costs on whether an intervention is deemed cost effective may be considerable.

Suggested Citation

  • Perry-duxbury, Megan & Lomas, James & Asaria, Miqdad & Van Baal, Pieter, 2022. "The relevance of including future healthcare costs in cost-effectiveness threshold calculations for the UK NHS," LSE Research Online Documents on Economics 112503, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:112503
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    1. David Meltzer, 1997. "Accounting for Future Costs in Medical Cost-Effectiveness Analysis," NBER Working Papers 5946, National Bureau of Economic Research, Inc.
    2. Appleby, John & Devlin, Nancy & Parkin, David & Buxton, Martin & Chalkidou, Kalipso, 2009. "Searching for cost effectiveness thresholds in the NHS," Health Policy, Elsevier, vol. 91(3), pages 239-245, August.
    3. Meltzer, David, 1997. "Accounting for future costs in medical cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 33-64, February.
    4. Werner Brouwer & Pieter Baal & Job Exel & Matthijs Versteegh, 2019. "When is it too expensive? Cost-effectiveness thresholds and health care decision-making," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(2), pages 175-180, March.
    5. Adrian Towse;Paul Barnsley;Sarah Karlsberg-Schaffer;Jon Sussex, 2013. "Critique of CHE Research Paper 81: Methods for the Estimation of the NICE Cost Effectiveness Threshold," Occasional Paper 000106, Office of Health Economics.
    6. Alan Maynard & Karen Bloor, 2011. "The economics of the NHS cancer drugs fund," Applied Health Economics and Health Policy, Springer, vol. 9(3), pages 137-138, May.
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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