07 August 2016

Health funding needs to be more impartial

Priorities for healthcare funding are heavily influenced by factors other than the ratio of benefit to cost.
[A] review by Cancer Australia (pdf) showed that between 2006 and 2011, breast, colon and prostate cancer all received funding greater than their proportional toll on society — measured in years of healthy life lost. By the same measure, research into lung cancer, along with lymphoma, pancreatic cancer and cancer of the brain were underfunded. Lung cancer research underfunded compared to societal impact, ABC news, 12 August 2015
In this graph, taken from the above link, 'DALYs' on the vertical axis means disability adjusted life years lost to the type of cancer on the horizontal axis. Funding is given in millions of Australian dollars.
 Research funding for different types of cancer compared to healthy life lost
Some disparities are striking: "Lung cancer, which takes the heaviest toll on years of healthy life, received less than a quarter of the funding given to breast and colon cancer research."

Governments have to make their resource allocation decisions on the basis of data that are necessarily incomplete and constantly changing. So, by default, health expenditure is influenced by groups of medical specialists with little incentive or capacity to see improvements in the general health of the nation as an objective. As a result, funding of these specialities depends to a great and varying extent, on the strength of their lobby groups or on their public profile rather than on what would best meet the needs of society.

The problem is the same sort of top-down, one-size-fits-all, fossilised systems of funding that bedevil other (well-meaning) attempts by government, or any large organisation, to keep track of multiple variables across any but the smallest geographic area. In health, as in education, housing, crime prevention, or environmental pollution we need diverse, adaptive approaches to solving our problems. Society is just too complex now for simple approaches to work effectively, except in those increasingly rare cases were cause and effect can be readily identified and relatively stable over time and space.

The Social Policy Bond principle can be applied to health. Essentially, under a bond regime, government would target for improvement the health of the entire population as measured by (probably) DALYs in combination with other measures. Resources woudl then be allocated impartially according to where they will yield the most benefit per dollar spent. Any target could be long term: if it were several decades bondholders would have an incentive to investigate numerous approaches, including preventive measures, research and education, on a dynamic basis and always with an eye to cost-effectiveness. For more on this, see my brief piece on Health Bonds.

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