The Lynx Group

Improving Health Economics Research

October 2010, Vol 1, No 5

How would you respond to complaints on the utility of health economics research?
It is true that some branches of academic economics sometimes value theoretical insights and technical details over pragmatic results that can be broadly applied. However, most of the core insights of economic analysis tend to be accessible and have highly pragmatic implications. An important part of the art of being a good economist is being able to crystallize complex ideas down to their essence and then explain them to others. Good teachers have to do this, and so do good researchers and others who wish to see sophisticated economic arguments translated into practice. In all these cases, the key is simplifying the idea to its essence so that the basic intuition behind an insight can be explained. After that, additional complexities can be explored if need be.

Health economics studies often emphasize a long-term time frame for outcomes and return on investment, but managed care organizations [MCOs] and insurers have shorter outlooks—quarterly or yearly. Can these perspectives be reconciled?
Incentive problems are real, and the solution is good public policy. Say there is an operation that is an investment now and saves money in the future (eg, bariatric surgery). Any insurer that pays for that is going to have to charge higher premiums to cover costs, which means that people looking to save money on their premiums will look elsewhere. This puts that plan at a competitive disadvantage, because people will sign up for the expensive policy when they need the expensive treatment, and then switch to the cheaper policy once they’ve got it.

The solution is for the government to mandate coverage. The current market is not a complete market—if that were true, you would have to pay a penalty if you chose an insurance policy that did not cover this sort of treatment that produces long-run savings, and that’s not the case.

Can quality of life [QOL] be quantified better in health economics studies?
I’m sure QOL can be quantified better, and there are important limitations in the current QOL measures, but these are better than the immediate alternative—which is to not consider them at all.

QOL is a hard thing to measure, and it certainly does have an idiosyncratic element to it, but it is also an important area for research. It is the kind of thing that both firms and the NIH [National Institutes of Health] are interested in, and that people are interested in.

Do you see comparative effectiveness research [CER] changing the current practice of comparing placebo studies against one another? Are head-to-head comparisons in our future?
People who make coverage decisions and patients probably really do want these head-to-head trials, because they are the most meaningful. I don’t think they are the only sort of evidence—approvals, for example, should not be based on only head-to-head trials. CER will be an addition to the information available and could leave consumers better off—in some instances, it could lead to lower prices and provide more information for patients. It is going to provide useful information about relative value.

Can studies presenting economic end points be made more relevant? Can more meaningful end points, rather than surrogate end points, be used?
There is a challenge in thinking about economic end points and overall end points. The perspectives of an individual, an MCO, or society are all valid, but no single perspective is relevant to everyone.

The field needs to move to multiple perspective studies—what are the costs and benefits to different parties who might be affected by this? We need to know what must be done in terms of a regulation or a subsidy for it to have the desired effect. Take the example of bariatric surgery. You can say this is going to save healthcare costs, but it’s not going to save them for MCOs, so why would they pay for it? What you want to do is say this has societal benefits, and we need to figure out who wins and who loses so that the desired thing happens

Related Articles

Subscribe to
Value-Based Cancer Care

Stay up to date with personalized medicine by subscribing to recieve the free VBCC print publication or weekly e‑Newsletter.

I'd like to recieve: