Healthcare Economics

Question 1

Health care systems are very significant in promoting, restoring, and or maintaining better health. Different countries use different health systems. For example, Australia has a different model from that of Cambodia. In reference to the class lecture three, it is argued that the US healthcare system, mixed systems, is the best system as it caters for different segments of the population.

The U.S. model is very unique from other countries in that it comprises different models adopted in other countries. First, the U.S. system covers the veterans through the adoption of the National Health Services Model. This model helps the U.S. government to remain dominant in the provision of health services. This helps eliminate the private investors from dominating and controlling health prices. In aIDition, it makes it possible to finance health services through the use of taxes. Finally, this approach is very instrumental as it ensures universal access to health because the government is involved helping cater for the needs of the different citizens (Lameire, Joffe, & Wiedemann, 1999).

The US system has also gone further to consider the needs of the working population. This consideration has been achieved through the adoption of the Bismarck model of Germany. The model enhances the use of a private insurance in which the employees contribute their payments through their employer. As a result, the model encourages universal access as it is supported by law and policies relating to employees belonging to a certain health insurance.

The U.S. mixed system is also significant for it also considers the needs of the other population that cannot afford a health insurance. In particular, 15 percent of the U.S. population lacks the ability to pay for a health insurance. The adoption of the out of pocket model in the U.S. healthcare system has made it possible to cater for this population. This model does not have the pooling of risk indicating that payment is not made in organized way.

The U.S. healthcare system has also adopted other models in its operations such as the National Health Insurance Model to cater for the Americans who are aged 65 and above. This model is highly practiced in the United Kingdom (Reid, 2009). The model is significant as it does not require marketing for it is not profit oriented in nature. This model is very cheap as it considers the elements from Bismarck and Beveridge models. Precisely, the US system adopted this model as a way of providing health services for individuals who cannot afford expensive healthcare services like the elder members of the society.

To sum up, the US healthcare system is the best system. What makes this system outstanding is that it has adopted different models being used by other countries such as Germany, India, and Australia. This has helped the individuals of US enjoy the strength of each model. Furthermore, it has provided an opportunity to cater for different members for different classes in the society such as employees, veterans, and the elderly. Therefore, the success of this system is realized through bringing together different models with their strengths.

Question Two

The cost utility analysis is very significant as it helps in the measurement of outcomes through the use of health years to attach value. One way in which it compares outcomes basing on utility is through the quality-adjusted life years, QALYs. This methodology is vital in measuring equity in healthcare. However, while weighting QALYs, there are different concerns associated with equity.

The first equity concern relating to QUALYs is that when one is constructing the equity weights, they should be dependent on the equity selected definition. This vital because there are other weights like age which usually reflect on individual contribution social value to the entire society. However, majority of the economic discourse covering weights touches on society’s concern on equity and the way these resources are shared between individuals. This calls for the need to understand the equity components that need to be incorporated into weight, and the magnitude each should contribute to (Ong, Kelaher, Anderson, & Carter, 2009).

The second concern is that while weighting QALYs, the individuals who contribute highly due to their higher productivity, they need to be weighted higher in comparison to the ones contributing less. This is vital in encouraging to societal productivity that helps control a richer society. In aIDition, the argument of efficiency can be extended to age.

The other concern is that when weighting equity by QALYs, focus is usually placed on justice and the weights placed on benefit or outcome basing on the economic side. In aIDition, QALYs usually consider a narrower perspective in issues like mortality and morbidity. This means that distributing QALYs fairly cannot be fair to all groups in case they do not value QALYs. Therefore, in such a case, what becomes more relevant is justice.

The other concern is that the outcome size is usually based on weights that are derived from theoretical judgments as they relate to inequity degree. For instance, when using the World Bank ages, they are usually obtained using the exponential equation. The different dimensions on equity are valued differently by the society. This makes it hard to have a common concept that can be used as a weighting measure. Furthermore, there is a concern of whether the inequity magnitude needs to be measured to indicate the resources level. Finally, the theoretical derivations for this weighting is challenging especially when arriving at the non-economic decision (Whitehead & Ali, 2010).

Finally, there are different equity concerns that are associated with weighting QALYs. From the above paragraphs, it is apparent that QALY maximization is insensitive to the benefits distribution. An intervention that has been found to improve the life of one person may not be the same intervention that improves the lives of other individuals. In aIDition, equity weighting is insensitive to culpability. Therefore, such concerns make this quantitative approach of weighting equity debatable.

Question Three

  1. Patients that could be treated = Total budget of purchasing thromboltics/Drug cost per patient for Thrombase

= 200,000/200

= 1000 patients could be treated

  1. AIDitional lives that could be saved

Out of 100 patients, total number of deaths = 32 patients

Therefore, out of 1000 patients total number of death = 10 x 32 = 320

Therefore, the lives that could be saved = 1000 – 320 = 680

  1. Incremental cost effectiveness ratio (ICER) = Total cost new – Total cost comparator

Total benefit new – Total benefit comparator

= 680/1000

= 0.68

For Thrombase = 2 lives could be saved. For Klotagon 8 lives could be saved. With no treatment, 15 lives could be saved.

  1. Incremental cost effectiveness = 1000/200

= 5

  1. Incremental cost per life = 1000/1000

= 1

  1. I will recommend to the committee that Thrombase to be adopted in treatment because it saves more like than Klotgon
















Lameire, N., Joffe, p., & Wiedemann, M. (1999). Healthcare Systems – An International Review: an Overview. Nephrology Dialysis Transplantation, 14(6), 3-9.

Ong, K. S., Kelaher, M., Anderson, I., & Carter, R. (2009). A cost-based equity weight for use in the economic evaluation of primary health care interventions: case study of the Australian Indigenous population. International Journal for Equit in Health, 8(34).

Reid, T. R. (2009). The Healing of America: A Global Quest for Better, Cheaper and Fairer Health Care. Penguin Press.

Whitehead, S. J., & Ali, S. (2010). Health outcomes in economic evaluation: the QALY and utilities. Br Med Bull, 96(1), 5-21.





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