Saturday, 31 August 2019

The economics of preventive health

I'm at the Big Tent Ideas Festival today talking about public health spending. The blurb for the event is as follows:

There is an old adage, “an ounce of prevention is worth a pound of cure”, however, in the UK we do not seem to practice this. Of the Government’s total Department of Health expenditure, almost 75% goes on funding NHS England (which largely treats people) compared to the 0.2% which goes on funding Public Health England (which aims to prevent people from getting sick). This imbalance between treatment and prevention expenditure highlights a problem - how can we prevent people from getting sick in the first place? This session will explore the prevention/treatment imbalance and ask how we can make an ounce of prevention worth a pound of cure. 

I don't know where the 0.2% figure comes from. I think it might be PHE's operating budget. It's certainly not its full budget which exceeds £4 billion, of which £3.2 billion is sent to local authorities as their ring-fenced public health budgets.

£4 billion is a lot of money, but overall spending on preventive health is even higher. When you take NHS spending into account, the total was £9.6 billion in 2015 (I can't get a more recent figure). The proportion of the Department of Health budget spent on prevention is five per cent, not 0.2 per cent.

Should we spend even more? A lot of outlandish claims are made by people in the 'public health' industry about the efficacy of their interventions. It is often claimed, as the BMJ says, that...

Every £1 spent on public health in UK saves average of £14
Every £1.00 spent on public health returns an extra £14 on the original investment, on average—and in some cases, significantly more than that—concludes a systematic review of the available evidence, published online in the Journal of Epidemiology & Community Health.

The recent cuts made to public health budgets in the UK are therefore a “false economy” and are set to cost an already overstretched NHS and the wider economy “billions,” conclude the researchers, who warn other countries to think again before going down a similar route to claw back cash.

If it were possible to save £14 of NHS spending further down the line by spending £1 today, it would certainly make sense to make a greater 'investment' in public health. Alas, that is not what the evidence shows.

A study published in the Journal of Public Health in 2012 looked at a wide range of public health interventions in the UK and found that only 15 per cent of them save money in the long term. This echoed the findings of a systematic review published in the New England Journal of Medicine in 2008 which found that fewer than 20 per cent of interventions are cost-saving.

People need to abandon the delusion that preventive health interventions cuts costs in the long run. They do the opposite. If you can prevent an 18 year old from falling off a motorbike and spending the rest of his life in a wheelchair, you'll save the health service money. But if you prevent someone dying at the age of 80 so they live to 85, with all the hip replacements, cataract operations and pension payments that requires, it will cost money. The bulk of modern public health work involves the latter.

So what's all this about a 14 to 1 return on investment? That comes from this study published from 2017 (regular readers may be interested to know that one of its authors was Simon 'Caps Lock' Capewell). It is based on two assumptions from health economics:

1. NICE considers a health intervention to be cost effective if it produces one quality adjusted life year (QALY) for less than £20,000.

2. The Department of Health values a QALY at £60,000.

At the £20,000 threshold, Owen et al. (2012) estimated that 85 per cent of public health interventions were cost effective (not cost saving), ie. they cost less than twenty grand for every additional QALY. When the same researchers updated their work in 2018, this had fallen to 63 per cent. Still, not too bad by NHS standards.

The 14:1 ratio comes from comparing the cost of intervention against the £60,000 value of a QALY. So, if an intervention costs £10,000 and produces one QALY, it has a return on investment of 6:1 (£60,000 to £10,000). According to Capewell's study, the average public health intervention costs one fourteenth of £60,000 (14:1).

That's all well and good, but it's not a financial return, nor is it a future saving to the NHS. Unfortunately, the authors of the study portray it as both. The text of the study contains gross misrepresentations like this:

‘First, even with the most rudimentary economic evaluations, it was clear that most public health interventions are substantially cost saving…’

‘Overall, the results of our systematic review clearly demonstrate that public health interventions are cost-saving, both to health services as well as the wider economy… The cuts to public health budgets therefore represent a false economy. They are likely to generate billions of pounds of additional costs to the health services and wider economy.'

They even have the nerve to write this...

‘An ROI [return on investment] of 14.3 implying a cash return of 1430% would sound too good to be true in the financial world.’

Indeed it would. The crucial difference is that the authors' ROI is not a cash return. It sounds too good to be true because it isn't true. It's a common misunderstanding which certain people in the 'public health' industry do nothing to correct.

The only valid use for an ROI in this context is to compare the cost effectiveness of different health interventions. In a world of limited resources, that is worth doing. So is there a case for spending more on prevention and less on healthcare? Possibly - it's difficult to tell from the data - but probably not.

NHS healthcare produces a QALY at an average cost of £13,000. That's a lot of money, as you might expect from something that uses highly trained professionals, expensive technology and a vast, centralised, bureaucracy. £13,000 implies an ROI of 4.6 to 1. If preventive health can produce an ROI of 14 to 1, it would make sense to put more money into it.

But it's not that simple. There are several important caveats.

First, the ROI for prevention provided by local authorities is only 4:1. This is significant because it is local authorities who spend the ring-fenced public health budget in England.

Second, there is no single preventive health intervention. The 14:1 estimate comes from averaging out a wide range of interventions which vary massively in their cost effectiveness. The most recent study found that the cost per QALY ranges from £300 to £82 million!

If 'public health' professionals are competent and rational actors, they will spend their first pound on the most cost effective intervention and spend their last pound on an intervention that is less cost effective but better value for money than any of the remaining alternatives. In other words, the more money they spend, the lower the marginal returns. At some point, it becomes less efficient to spend money on prevention than on healthcare. We cannot tell from the available data where that point is, nor whether it has already been reached.

If, however, 'public health' professionals are not competent and rational actors, the situation will be worse because they will waste money on projects which are relatively inefficient, if not absolutely useless. That, alas, seems to be the case in the UK where Public Health England spends money promoting policies which have no credible evidence of efficacy, such as food reformulation and minimum pricing, while local public health directors pursue policies such as fast food zoning laws that are demonstrably ineffective.

Third, cost-benefit calculations which depend on intangible benefits being bestowed on individuals fall apart when the intervention inflicts intangible costs on the individual. The intangible costs of traditional public health policies are trivial to nonexistent (eg. the slight pain of a TB jab), but they have become more significant since 'public health' turned towards coercive lifestyle regulation.

Assuming individuals understand the health risks of excessive drinking, smoking, sedentary behaviour and over-eating, the intangible costs of a lost QALY are priced in by the individual. They are making a trade off between the private benefits they enjoy from their risky lifestyles and the potential cost to their health. If, for example, I am prepared to take a 50 per cent chance of dying ten years early to enjoy my vice of choice, I am valuing my vice at more than £300,000 - (£60,000 x 10 = £600,000) divided by two - plus the out-of-pocket cost of buying the product.

If the state uses coercion to make me abandon my vice against my will, I will be worse off; I will have lost thousands of pounds of intangible benefits. People in 'public health' may not value those benefits, but you cannot make a cost-benefit calculation on the basis that life years are the only intangible benefits that matter.

In conclusion, it is impossible to tell whether preventive health requires more or less funding in general, but there are certainly areas of 'public health' that should receive zero funding.

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