Page 180 - Effective healthcare cost containment policies Using the Netherlands as a case study - Niek W. Stadhouders

Chapter 8
€260.000 and €280.000. Furthermore, extrapolating the elasticity from Van Baal et al. (2018) using Dutch cost of illness data of 201515, a marginal value to save a life of age 70-74 between €1.7 and €4.6 million is obtained, a relative increase of 113%-450%. This demonstrates the high plasticity of a supply-side threshold.
Opportunity costs do provide valuable information for policy makers with respect to the stringency of the budget. An example would be the Dutch society being willing to pay €50,000 for a QALY. A marginal value of care of €74,000 per QALY would then imply that the budget is too high and that cost containment could improve total welfare. While a new technology of €60,000 per QALY does not lower total welfare at the moment, a first-best solution would be to reject the new technology and reduce health spending. Similarly, if society’s willingness to pay would be €100,000 per QALY, a first-best solution would require both an expansion of the budget and an adoption of all technologies up to €100,000 per QALY. Summarising, we advise policy makers to use a demand-side threshold for new technology assessments and opportunity cost estimates to set appropriate hospital spending limits. Despite opportunity costs being more suited for budget setting than for the use of a cost-effective threshold, they may still provide an argument for rejecting reimbursement of very cost-ineffective treatments, especially until robust demand-side thresholds become available.
The use of cost-effectiveness as a criterion for new technology assessment implies that the hospital sector is inefficient in displacing care with the lowest value in response to budget reductions (Eckermann and Pekarsky, 2014). If it were efficient, cost-ineffective new treatments would not be adopted in practice in the first place. This also implies that displacement effects could be reduced by improving efficiency of decision making at a micro
Reducing opportunity costs
level. Consider figure 8.2, introduced in chapter 1. New technologies require additional funds at the micro level, as the new technology will be adopted by the health professional. A practitioner can obtain funds by reducing existing care (rationing) which, depending on the value of the care reduced, can be considered a displacement. Health professionals may demand extra funds from provider boards and CEOs in response to new technologies, transferring cost pressures to a higher level. This is what these boards often experience in practice. Provider boards in turn may demand extra funds from purchasers, adding to budget pressure on a further higher level, or use prioritisation to distribute budget
15 In 2015, spending on CVA was €1916 (€1365), while mortality rates were 0.59% (0.16%) for males (females) aged 70-74 (RIVM, kosten van Ziekten 2015, www.statline.rivm.nl).
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