Understanding the value of chronic disease care is critical to confronting the challenges of aging societies. In a new ebook published by the Centre for Economic Policy Research, APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston provides a framework for assessing the social value of health spending.

The world population is aging faster than ever before and governments must confront the increasing burden of healthcare spending on their economies. At a time when the economics of aging is inseparable from the economics of healthcare, successful adaptations to older population age structures necessitate better understanding of the value of medical care. Policymakers, in particular, must incorporate value into considerations of healthcare cost growth, so they can determine the extent to which average health improvements offset added cost, reduce cases in which health spending rises without sufficient corresponding health outcomes, and reward those in which “we are getting what we pay for.”

A new book chapter, authored by APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston, provides a framework for assessing the social value of health spending. Titled “Understanding ‘value for money’ in healthy aging,” the chapter is part of an ebook, Live Long and Prosper? The Economics of Ageing, published by the Centre for Economic Policy Research (CEPR).

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Quality-Adjusted Cost of Care

How do health economists incorporate value into measurements of health spending and how do they measure the social value of medical care? First they assume each additional year of life brings a given monetary value. Then they measure the growth in value to patients as monetized gains in “quality-adjusted life-years,” a metric that includes increases in life expectancy and quality of life. The difference between the change in health spending and the change in monetized gains on improved survival is the net change in quality-adjusted health spending or the net value of medical care.

Understanding the value of chronic disease care is especially critical in aging societies, as governments must transform their health systems to support patients who will live with chronic diseases for decades. Health benefits of medical care, however, are difficult to aggregate across disparate services and diseases, and hence focusing on management of a single important chronic disease allows researchers to develop metrics of quality improvement and value that are linked to rigorous clinical studies. Eggleston describes a recent international research collaboration, which she was part of, that did just that. The researchers studied quality adjustment for one disease of growing global prevalence, type 2 diabetes, in four different health systems: one in Europe (the Netherlands) and three in East Asia (Japan, Hong Kong, and Taiwan).

Results of the study suggest that, in each health system, the value of improved survival outweighs the increase in health spending. For example, in the case of Japan, Eggleston and her colleagues found a positive value net of $2,595 for $100,000 value of a life-year. They also compared net value across the four health systems and different patient samples, finding mean net value that ranged between $600 and $10,000 for a $100,000 value of a life-year. Moreover, net value was positive for all age groups and remains positive and significant for individuals well beyond traditional retirement ages. These results, says Eggleston, indicate “the importance of continuing investments in medical treatments and services that deliver health outcomes of commensurate or higher value.”

Policy Implications

Confronting the challenges of aging societies requires careful thinking about the value of investments in new technologies for managing chronic conditions. To promote healthy aging governments must be “resiliently persistent in measuring the value of innovations for healthy aging and rewarding those that deliver high net value,” argues Eggleston. The goal should be improving the “value for money” of medical care rather than applying largescale cost controls that might stifle important breakthroughs.

The four-system study by Eggleston and her colleagues provides a framework for developing methods for assessing quality improvement and the net value of chronic disease spending and, more broadly, for measuring the value of healthy aging.

Download Eggleston’s chapter as part of the entire ebook >>

Learn more about Dr. Karen Eggleston’s research agenda seeking to assess net value in diabetes management and to identify and analyze innovation for healthy aging.

Nearly 30 years after the fall of the Berlin Wall on November 9, 1989, historian Timothy Garton Ash spoke at the Freeman Spogli Institute for International Studies about the long-term consequences of the revolutions and transitions that followed the end of Communist rule in countries such as Poland, Hungary and the Czech Republic.

Garton Ash, a senior fellow at the Hoover Institution and professor at Oxford University, spoke first about the “mixture of reform and revolution” in Hungary, which culminated on June 16, 1989, with the ceremonial reburial of Hungarian politician Imre Nagy.

A young student named Viktor Orbán gave a now-famous speech at that event, which thrust him into the political spotlight after he demanded the withdrawal of Soviet troops from the country, Garton Ash said. Today, Orbán is Hungary’s prime minister.

“The most electrifying moment was the speech of Viktor Orbán, who was totally unknown at the time,” Garton Ash said. “The scene was a bright hope of liberalism and democracy. He gave an electrifying speech, I’ll never forget it.”
 

Many of the problems facing East Central European countries today stem from the difficulties that surrounded those countries’ transitions from communist states to democratic institutions, Garton Ash said. It’s not surprising that democratic institutions in those countries are more fragile than they are in Britain or in the U.S., he added, because they’ve only had 30 years to establish themselves.

“The joke at the beginning of the transition in early 1990 was, ‘We know you can turn an aquarium into fish soup — but the question is, can you turn fish soup back into an aquarium?’” Garton Ash said. “The revolutionary transformation of communism had liquidized the aquarium. It had destroyed the rule of law, and it had destroyed democratic institutions, independent courts, and independent civil society.”
 

One of the biggest problems in East Central Europe today is not immigration — it’s emigration, Garton Ash said. Since the fall of the Berlin Wall, nearly 2 million people out of a population of 17 million have left the former territory of East Germany, he said, and countries such as Latvia and Bulgaria have also seen staggering numbers of their citizens move elsewhere.

“Because of the freedom of movement granted by the European Union, there has been massive emigration of the most dynamic energetic younger people from these countries,” Garton Ash said. “But at the same time, populists win [East Central European] countries’ support by talking about the dangers of immigration as if these countries did not need immigration. There’s a kind of demographic panic in which the knowledge that the native population is being thinned out out under a very low birth rate is complemented by a paranoia.”