The European Journal of Public Health Advance Access originally published online on September 8, 2006
The European Journal of Public Health 2007 17(2):122-123; doi:10.1093/eurpub/ckl074
Viewpoints |
Economics and public health: engaged to be happily married!
Werner Brouwer1, Job Van Exel1, Pieter Van Baal2 and Johan Polder2
1 Department of Health Policy & Management and Institute for Medical Technology Assessment, Erasmus University Rotterdam/Erasmus MC Rotterdam, The Netherlands
2 National Institute for Public Health and the Environment, Bilthoven The Netherlands
Correspondence: Werner Brouwer, iBMG/iMTA, Erasmus MC, PO Box 1738, 3000 DR, Rotterdam, The Netherlands; tel: +31 10 4082507; fax: +31 10 408 9094; e-mail: w.brouwer{at}erasmusmc.nl
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Engagement |
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 Top Engagement Wealth is healthHealth is wealthEmbracing health and wealthMarriageReferences |
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The public concern with the health of nations has increased sharply in the past decades. Yet at the same time, the awareness grew that the resources to meet this concern are limited and inherently insufficient to fulfill all needs. Many countries thus find themselves struggling to improve their population's health and lower health inequalities, while simultaneously trying to control ever-increasing health care expenditures. In that struggle, however, it often remained unclear whether chosen policies and resource allocations have led to optimal outcomes. Therefore, in recent years economists entered the field of public health, and their role appears to be growing rapidly. This may be unsurprising, since in essence, economics is about improving the wealth of nations, especially by improving the allocation of scarce resources over alternative uses. Apparently, economics can help health policy makers to overcome the problems they face. With economics as a seemingly natural partner of public health, one might say a marriage seems obvious.
Many, however, will question whether this marriage is for better or for worse. Those relatively unfamiliar with economics may distrust its methods and intentions, supposing that economists are more concerned with saving money rather than lives. Such feelings may be strengthened by the work of some economists who have shown to be ignorant of the special ‘market’ characteristics of public health. The marriage between economics and public health may then be perceived to be a forced rather than a happy one. And with the Earl of Suffolk towards the end of the first part of Shakespeare's Henry VI, one might ask: ‘For what is wedlock forced but a hell, an age of discord and continual strife?’ Isn't it for the better if economics and public health break up and forget about each other? We argue it is not. The application of economic principles in the field of public health may be complex, but the attraction between the two is too obvious to ignore and the potential benefits of going hand in hand are too great to squander. Wealth is health, and health is wealth. The marriage may be the opposite of forced and the Earl of Suffolk indeed continues: ‘Whereas the contrary bringeth bliss, and is a pattern of celestial peace’.
We will highlight the potential bliss of cooperation between economics and public health in the following three areas: (i) the optimal mix between prevention and care; (ii) the value of health (gains); and (iii) economic incentives to promote public health. These examples will also show that the wedding ceremony has already started.
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Wealth is health |
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Firmly rooted in welfare economics, economic evaluation is a practical tool for deciding whether a policy intervention will enhance social welfare or not, taking into account all (incremental) costs and benefits of that policy. Economic evaluations are increasingly employed in the field of health care to evaluate a range of interventions, varying from pharmaceuticals to lifestyle campaigns. These evaluations often take the form of a cost-utility analysis, comparing the costs of an intervention with the health gains it generates, expressed in terms of quality adjusted life years (QALYs). Health economic evaluations of health care interventions thus especially facilitate policy decisions that maximise (public) health within the limits of available resources. This supposedly is an important goal of health care decision-makers, albeit not the complete or only goal, as increasingly recognised also in health economic research. Health economic evaluations have shown their value in the field of health care by now, which is underlined by the establishment of institutes such as NICE in the UK.
There is a realm of public health issues that could be addressed using economic evaluations. For instance, the OECD recently stressed that many health care systems seem to be preoccupied with care for the sick, while there may be much more to gain from disease prevention and health promotion. Smoking remains a major cause of morbidity and mortality, and the anticipated health consequences of increasing levels of overweight and obesity in many high-income countries is one of today's primary public health concerns. Although prevention could help reduce the impact of unhealthy lifestyles, OECD countries still only spend 
3% of their health care budgets on prevention. This low percentage as such, however, is no evidence that prevention should receive more money or even attention. This can only be assessed by comparing how much health would be gained from a specific budget dedicated to preventive interventions, with the effect of spending the same amount of money elsewhere, e.g. on curative interventions. In the troublesome endeavour of coming to a more optimal mix between prevention and cure, economists can help.
Quite some preventive interventions have been shown to be cost-effective. Interventions aimed at quitting smoking, for instance, have shown very favourable cost-effectiveness ratios.1 Still, despite the fact that prevention may offer more value for money, many countries do not reimburse such cessation programmes. With respect to weight reduction, the evidence is less robust, yet still promising. Based on the available evidence, Avenell et al.2 concluded that particular strategies aimed at reducing obesity seem cost-effective, although especially targeting lifestyle interventions towards people at high risk of developing disease and ensuring sustained behavioural change remain crucial. In optimising the allocation of resources available for prevention among appropriate target groups economics can assist as well, at the same time contributing to a reduction in socio-economic differences in health. Also in fields attracting less attention, such as that of dental health promising results were found for a fundamental shift towards prevention.3 Such examples show that investment in prevention could indeed be a cost-effective way to improve the health of nations.
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Health is wealth |
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Health expenditures are often seen as a purely negative phenomenon. Most policy makers appear to be preoccupied with limiting these expenditures. This single focus on inputs, however, is undesirable from a (wider) societal perspective, as it ignores the value of the output of prevention and health care and may consequently lead to underinvestment in these areas. This is both inefficient and bad for public health. Economists have tried to increase the awareness that health is a valuable outcome, which may justify high costs. Economic theory suggests that as long as the benefits of some health care programme outweigh its costs, social welfare increases by implementing that programme. Drawing more attention to the value of health may therefore fundamentally change the perception of health care expenditures, and encourage a shift of emphasis from cost control to efficient health promotion.
But exactly how valuable is health then? This is an important question to answer since it also sheds light on the appropriate cost-per-QALY threshold to be used in decision-making based on economic evaluations. For example, should a programme costing 
40 000 per QALY be considered value for money? Determining such a value is crucial for making optimal decisions. Cutler and McClellan,4 for instance, argued that some costly innovative health technologies (e.g. in the field of heart failure and depression) should be appreciated as offering value for money since they value a QALY at some $100 000. This figure, however, contrasts rather sharply with the costs per QALY thresholds used in most countries, which are much lower yet seem to have been set arbitrarily, also given the wide variation between countries. Reviewing international policies in this area, Taylor et al.5 indicate that the threshold value of a QALY in the decision context of pharmaceuticals seemed to be 44 000 in the UK, whereas it is some 25 000 in Australia. Meanwhile, in the Netherlands the most frequently cited figure is 20 000. While these differences might explain why some have chosen to emigrate from Holland to Australia (although it cannot explain why they did not go to the UK), it also shows that much is uncertain regarding the value of a QALY. In search of a ‘golden standard’, Hirth et al.6 conducted a literature review, only to arrive at a broad range of values varying from $24 777 to $428 286 per QALY, depending on the type of study used to elicit the valuation. While we will not dwell on these differences here, except to say that they should not be mistaken for proof that economics is a ‘dismal science’ anyway, we do stress with Hirth et al.6 that except for the lowest estimate, these figures ‘far exceed’ current threshold values, which they label ‘rules of thumb’. Dranove stated it even more clearly: ‘Regardless of which number is correct, the data all point to the same important conclusion: The cost-effectiveness thresholds used by NICE, Australia's PBS, Canada, and other government payers are too low’.7 (p. 158)
Demonstrating that health is wealth, and much more valuable than acknowledged in current decision-making, economics can contribute to improved decision-making as well as to the promotion of public health. The case for investing in health can be substantiated even further by looking at the effects health gains in one individual can have on others, such as caregivers, family, and friends,8 and by looking at further economic gains that may be associated with a health and productive population.9 Many examples demonstrate that a healthy population is decisive for the wealth of nations.
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Embracing health and wealth |
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Economics and health can also be natural partners at the level of individual citizens. It is well established that economic incentives can bring about significant behavioural change, and there is ample room to use that insight in the field of public health. Just to mention two examples: (i) there is a vast body of literature on the price elasticity of health damaging products, most notably cigarettes. The evidence clearly shows that increasing prices of cigarettes reduces both the number of smokers (people stop or do not start) as well as the quantity consumed amongst smokers.10 This goes both for adult smokers as well as for adolescents. Pricing can thus be embraced as a powerful partner in health promotion and probably also in the battle against obesity. (ii) When striving for optimal use of available resources, it is also important to reduce unnecessary use of health care. The RAND experiment for instance showed that co-payments effectively reduce the demand for health care, without significant health losses (the important exception being the ‘sick poor’ who should therefore be exempted from such a measure). Therefore, economic incentives, if administered carefully, help to reduce moral hazard, and save resources. These may subsequently be spent in areas where they produce more health and wealth.
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Marriage |
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TopEngagementWealth is healthHealth is wealthEmbracing health and wealthMarriageReferences |
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We conclude that both the health and wealth of nations gain from a closer tie between economics and public health. Surely, the marriage will not be without conflict and is dependent on the mutual willingness to invest in the relationship—which is a common requirement for any marriage. While the marriage may thus not be painless for either partner, remember that Samuel Johnson in 1759 already indicated: ‘Marriage has many pains, but celibacy has no pleasures’. Indeed, the alternative of breaking up seems to come at the high price of losses in health and welfare. Neither partner will prefer that, we would claim.
The above also shows that the wedding ceremony of economic and public health is already in progress, as indeed much work is already performed and underway. The time has come therefore to officially announce bride and groom to be husband and wife. Any objections? Speak now, or forever hold your peace...
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References |
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1 Ronckers ET, Groot W, Ament AJ. (2005) Systematic review of economic evaluations of smoking cessation: standardizing the cost-effectiveness. Med Decis Making 25:437–48.
2 Avenell A, Broom J, Brown TJ, et al. (2004) Systematic review of the long-term effects and economic consequences of treatments for obesity and implications for health improvement. Health Technol Assess 8:iii–iv 1–182.[Medline]
3 Ekstrand KR and Christiansen ME. (2005) Outcomes of a non-operative caries treatment programme for children and adolescents. Caries Res 39:455–67.[CrossRef][ISI][Medline]
4 Cutler DM and McClellan M. (2001) Is technological change in medicine worth it? Health Aff 20:11–29.
5 Taylor RS, Drummond MF, Salkeld G, Sullivan SD. (2004) Inclusion of cost effectiveness in licensing requirements of new drugs: the fourth hurdle. BMJ 329:972–5.
6 Hirth RA, Chernew ME, Miller E, et al. (2000) Willingness to pay for a quality-adjusted life year: in search of a standard. Med Decis Making 20:332–42.
7 Dranove D. (2003) What's your life worth?(FT Prentice Hall, New York).
8 Brouwer WBF. (2006) Too important to ignore: informal caregivers and other significant others. Pharmacoeconomics 24:39–41.[CrossRef][ISI][Medline]
9 Van Roijen L, Koopmanschap MA, Rutten FF, van der Maas PJ. (1995) Indirect costs of disease; an international comparison. Health Policy 33:15–29.[CrossRef][ISI][Medline]
10 Chaloupka FJ and Warner KE. (2000) The economics of smoking. In Culyer AJ and Newhouse J (Eds.). Handbook of health economics(Elsevier Science, Amsterdam) pp. 1539–1627.
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