The rising cost of healthcare is a global phenomenon. Why? Because the relative productivity of labour intensive industries inevitably – and inexorably – declines. Computers get cheaper; healthcare doesn’t. It’s a simple idea, now proven by historic data and in need of appreciation. The cost disease allows – encourages, even – affordable increases in spending on health. Though incisive, Baumol’s book inevitably labours this central argument. But to understand trade-offs in public spending you need a firm grasp of the cost disease. This book provides a means to that end, and delivers important context for any discussion about healthcare, education, economics and politics.
Amazon / Wikipedia / Yale University Press
The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t
Paperback, 288 pages, ISBN 9780300198157, published 18 October 2013
I’ve just released a new working paper, along with my co-authors Profs Marilyn James and David Whynes. You can access it through RePEc here. The paper discusses the (somewhat obvious) relationship between a person’s risk of developing a disease and the cost-effectiveness of screening them. This is important because publicly-funded screening interventions will, in the future, I suspect, have to discriminate based on risk.
Here’s the abstract:
Advancements in our understanding of the causes and correlates of disease mean that we are now able to estimate an individual’s level of risk. This, and the ever-increasing need for healthcare interventions to be cost-effective, has led to calls for the introduction of risk-based screening. Risk-based screening would involve the use of information about an individual’s risk factors to decide whether or not they should be eligible for screening, or the frequency with which they should be invited to attend screening. Evidence is emerging that targeted screening, towards those at higher risk, can increase the cost-effectiveness of a screening programme. The relationship between individual risk and the cost-effectiveness of screening an individual is implicitly recognised in current population screening programmes in the UK. However, the nature of this relationship, and its implications for cost-effectiveness analysis, has not been presented in the academic literature. In this study we propose that an individual’s risk of developing a disease has a consistent and quantifiable relationship with the cost-effectiveness of screening them. We suggest a simple modification to standard methods of cost-effectiveness analysis that enables the incorporation of individual risk. Using numerical examples we demonstrate the nature of the relationship between risk and cost-effectiveness and suggest means of optimising a screening intervention. This can be done either by defining a minimum level of risk for eligibility or by defining the optimal recall period for screening. We suggest that methods of decision modelling could enable such an analysis to be carried out, and that information on individual risk could be used to optimise the cost-effectiveness of population screening programmes.
I’d really appreciate any comments you might have on this paper. Feel free to post below or alternatively please send me an email.
A collection of 21 abridged essays summarising Tony Culyer’s most important contributions. Fellow health economists may have already read the book’s constituent parts, but much can be gained from digesting them in this form. The book presents Culyer’s work as a cohesive set of ideas, woven together in his unmistakable style and approach; best characterised by the book’s title. For non-economists interested in health research, the book disarms economics of its alienating features that lead to confusion and misunderstanding about what economists actually do and why they do it. For economists, herein lies an exemplar approach to your discipline.