Health Policy Analysis: Applications of Extended Cost-Effectiveness Analysis Methodology in Disease Control Priorities, Third Edition

Multiple criteria are involved in making decisions and prioritizing health policies (Baltussen and Niessen 2006). Potential trade-offs between efficiency and equity are among these criteria and have long been emphasized in the treatment and prevention of human immunodeficiency virus/acquired immune deficiency syndrome (HIV/AIDS) (for example, Cleary 2010; Kaplan and Merson 2002; Verguet 2013). Notably, several mathematical frameworks, including mathematical programming, have proposed incorporating equity into resource allocation decisions in the public sector (Birch and Gafni 1992; Bleichrodt, Diecidue, and Quiggin 2004; Epstein and others 2007; Segall 1989; Stinnett and Paltiel 1996). The worldwide application of benefit-cost analysis provided for “distributional weights” as early as the 1970s.

Protection from financial risks associated with health care expenses is emerging as a critical component of national health strategies in many low- and middle-income countries (LMICs). The World Health Organization’s World Health Reports of 1999 and 2000 included the provision of financial risk protection (FRP) as one criterion of good performance for health systems (WHO 1999, 2000). Reducing these financial risks is one objective of health policy instruments such as universal public finance (UPF), that is, full public finance irrespective of whether services are provided privately or publicly. Indeed, out-of-pocket (OOP) medical payments can lead to impoverishment in many countries, with households choosing from among many coping strategies (borrowing from friends and relatives, selling assets) to manage health-related expenses (Kruk, Goldmann, and Galea 2009; van Doorslaer and others 2006; Xu and others 2003). Absent other financing mechanisms, household medical expenditures can often be catastrophic (Wagstaff 2010; Wagstaff and van Doorslaer 2003), defined as exceeding a certain fraction of total household expenditures. A large literature documents the significance of medical impoverishment, but far less is known about the medical conditions responsible for it. Essue and others (2017), in chapter 6 of this volume, review and extend that literature, and Verguet, Memirie, and Norheim (2016) provide a framework for assessing the global burden of medical impoverishment by cause, applying it to a case study of a systematic categorization by disease in Ethiopia. In the literature on medical impoverishment, attenuating such impoverishment is considered a significant objective of health policy, but surprisingly little analysis has been performed of efficient ways to address the problem. The method of Extended cost-effectiveness analysis (ECEA) was initially developed for DCP3 by Verguet, Laxminarayan, and Jamison (2015).

Traditionally, economic evaluations of health interventions (cost-effectiveness analyses [CEAs]) have focused on improvements in health and estimated an intervention cost per health gain in dollar per death averted or dollar per disability-adjusted life year (DALY) averted (Jamison and others 2006). However, arguments have been developed for some time that CEA in health should be extended to explicitly consider the multiple dimensions of outcome. Jamison (2009), for example, argued that CEAs can be extended to include FRP on the outcome side and use of scarce health system capacity on the cost side (figure 8.1). Specific methods for advancing this agenda were first proposed and applied in assessments of the consequences of two alternative policies—public finance and improved access to credit—for extending coverage of tuberculosis treatment in India (Verguet, Laxminarayan, and Jamison 2015). That study and other early ECEAs (Verguet 2013; Verguet, Gauvreau, and others 2015; Verguet, Olson, and others 2015) supplemented traditional economic evaluation with evaluation of nonhealth benefits (such as FRP and equity), with the broad objective of providing valuable guidance in the design of health policies.

ECEA in this respect builds on the existing frameworks of cost-benefit analysis and cost-consequence analysis that tabulate disaggregated results (Mauskopf and others 1998) and on analytical frameworks that incorporate equity and FRP concerns into economic evaluations (Asaria and others 2015; Brown and Finkelstein 2008; Cookson, Drummond, and Weatherly 2009; Finkelstein and McKnight 2008; Fleurbaey and others 2013; McClellan and Skinner 2006; Sassi, Archard, and Le Grand 2001; Smith 2007, 2013). It enables the design of benefits packages that quantify both health and nonhealth benefits for a given expenditure on specific health policies, based on the quantitative inclusion of how much nonhealth benefits are being bought as well as how much health benefits are being bought with a given investment in an intervention or policy. In this respect, ECEA can answer some of the policy questions raised by the World Health Reports for 2010 and 2013 (WHO 2010, 2013) regarding how to select and sequence the health services to be provided on the path toward universal health coverage. This chapter first describes the ECEA approach and then summarizes findings of ECEAs undertaken in the context of the third edition of Disease Control Priorities (DCP3; http://www.dcp-3.org).