Life in the Time of Fiscal Austerity: What Role for Economists and Outcomes Researchers?
t would be an understatement to say that Iwe live in challenging economic times. The
economic downturn experienced throughout the developed world over the last 3 years has, for many countries, been the most severe since the 1930s. This was precipitated in part by a crisis in the financial sector the like of which few of us will have experienced in our lifetimes. Economic slowdown has impacted negatively on government tax revenue and put upward pressure on welfare expenditure, increasing public sector deficits. In some countries, particularly in the Euro Zone, this pressure has led to a sovereign debt crises as
jittery financial markets take a pessimistic view about those states’ ability to generate growth to ameliorate deficits in the future and to service current debt. A widespread implication is that governments across the world are seeking to reduce deficits by reducing expenditure. In the United States (US), and some other countries, there are signs of economic recovery, but a fiscal squeeze is likely to continue for some time. Indeed, as the changing demographics in many developed countries put further pressure on public sector budgets through pensions and health care, it may not be overly pessimistic to speculate that we may be in a permanent state of fiscal ‘belt-tightening’ for the foreseeable future.
This is likely to have some profound implications for health care systems given that many receive their funding directly or indirectly from governments. This will perhaps most clearly be the case for tax-funded universal systems such as the National Health Service in the United Kingdom, but government fiscal austerity is also likely to also affect pluralistic systems with a large public sector payer role (e.g. Medicare in the US), as well as social insurance systems with major government funding responsibilities. These fiscal pressures will compound other factors that are putting pressure on health care budgets such as the development of new medical technologies.
Facing continued fiscal pressure, governments and other payers are likely to seek guidance from the research community about the future of health care. Health economists and outcomes researchers can provide important input into this process. Indeed, it can be expected that the key principles driving ISPOR’s mission will be at the heart of health care policy over the next decade: to increase the efficiency, effectiveness, and fairness of health care to improve health. At one level, researchers in this field will promote these policy objectives by continuing their existing activities. This research includes the evaluation of medical technologies, interventions and programs regarding their impact on health outcomes which matter to patients and their cost-effective use of resources.
There are some major policy and methodological challenges, however, which ISPOR members will be able to help address and indeed, are beginning to do so. One of these challenges centers around how to maximise the efficiency with which health care is financed and delivered whilst reflecting
differences in characteristics between individuals. In part, this relates to, personalised medicine, and ISPOR has made important contributions in this area through plenary sessions and issues panels at various meetings and a Value in Health Special Issue, “Personalized Medicine and the Role of Health Economics and Outcomes Research: Applications, Emering Trends, and Future Research” (in development). Much of this work has been stimulated by new technologies, including genetic testing which offers the possibility of establishing which intervention is most suitable for a given patient. While this has great potential, it is only one part of capturing gains in effectiveness and efficiency through recognising the heterogeneity between individuals in the nature of disease, the effect of interventions, the prognostic implications of health events and preferences regarding health. We need to identify ways in which we can maximise, what Basu and Meltzer have termed ‘the expected value of individualised care” .
As discussed during the Third Plenary Session (http://www.ispor.org/congresses/spain1111/ program_110811.asp#plenaryiii) at the ISPOR 14th European Congress in Madrid, November 2011, maximising the value of individualised care can be partly achieved by using existing information about patients more carefully. Developing prognostic risk models which use data on patients’ baseline clinical and socio-demographic characteristics to explain (as fully as possible) variation in outcomes can provide a means of stratifying patients according to their absolute risk of clinical events. This offers a way of identifying a key driver for cost-effectiveness: the intervention generating the greatest absolute risk reduction for a patient with a particular set of characteristics. Data from routine administrative datasets will provide a valuable resource for prognostic modelling. There is also scope for methodological developments in the design of randomised trials to provide a reliable means of quantifying sub-group effects of treatments.
Another important area for methodological and policy development relates to how health systems define ‘adequate evidence’ with which to reimburse/recommend new technologies in a health system. This is important for the payer because limitations in the evidence base result in uncertainty about the value of a new technology. This uncertainty imposes costs on the system in terms of wasted resources and health outcomes forgone because there is a chance a wrong decision is made about the use of the technology. It is also important from the manufacturer’s viewpoint as the investment required to generate evidence is costly, so there needs to be a clear signal regarding the system’s definition of sufficiency in evidence.
Even with clear signals, evidential uncertainty is common place when decisions are made about the reimbursement of new interventions. There has been much interest in policy responses to evidence limitations such as coverage with
evidence development, risk sharing and only in research decisions. The ISPOR Task Force on Performance-based Risk Sharing (http://www.ispor.org/Taskforces/performance-based-risk-sharing-arrangements.asp) will make an important contribution to this area. Other work has developed a conceptual framework for establishing the role of these different policy responses given the characteristics of the health system and the technology . This area of research is just beginning, however, and this will be an important area of work for a number of years.
These are just two areas that seem likely to continue to hold the research attention of ISPOR members for some years. In the face of continued (and probably yet more severe) resource constraints in health care, there is also likely to be a need for further research into broad policy themes such as the role of competition in health care financing and delivery, appropriate regulatory arrangements for private and public systems and how to meet
efficiency and equity objectives in public policy. For these and many other priority research areas, ISPOR will continue to play a key role as a forum for communication, training and research.
- Basu A, Meltzer D. Value of information on preference heterogeneity and individualized care. Med Decis Making 2007;27:112-27.
- Walker S, Sculpher M, Claxton K, Palmer S. Coverage with evidence development, only in research, risk sharing, or patient access scheme? A framework for coverage decisions. Value Health (In press).