Discounting future health benefits: the poverty of consistency arguments

In economic evaluation of health care, main stream practice is to discount benefits at the same rate as costs. But main papers in which this practice is advocated have missed a distinction between two quite different evaluation problems: (1) How much does the time of program occurrence matter for value and (2) how much do delays in health benefits from programs implemented at a given time matter? The papers have furthermore focused on logical and arithmetic arguments rather than on real value considerations. These 'consistency arguments' are at best trivial, at worst logically flawed. At the end of the day, there is a sensible argument for equal discounting of costs and benefits rooted in microeconomic theory of rational, utility maximising consumers' saving behaviour. But even this argument is problematic, first because the model is not clearly supported by empirical observations of individuals' time preferences for health, second because it relates only to evaluation in terms of overall individual utility. It does not provide grounds for claiming that decision makers with a wider societal perspective, which may include concerns for fair distribution, need to discount Copyright © 2010 John Wiley & Sons, Ltd.

A low tension between individual and societal time aspects in health improved outcomes

OBJECTIVES

To review intertemporal choices, involving decisions with a trade-off between something now and something later. These choices are common in health both at an individual and societal level.

METHODS

The present value of an outcome, for example, the amount of money or the health outcomes in various aspects, is equivalent to the value of a future outcome discounted with the delay of time. The concept of diminishing value over time is positive discounting. Economic forecasts generally use discount rates in which the value of a future dollar is less than the value of a present dollar, and where the discount rates are similar for the individual investor and society. The value of future health is commonly thought of as similar to the value of future money. Yet, the individual may rationally choose a discount rate that is exceedingly low or even negative. This paradox is particularly relevant when considering primary and secondary prevention, where initial and continuing costs may precede beneficent outcomes by decades, making discount rate selections the dominant factor in determining decisions.

CONCLUSION

We suggest that the societal perspective should also recognize that discount rates for health outcomes are largely irrelevant and that even negative discount rates have crucial relevance.

Time-related issues with application to health gains and losses

Time-related aspects of health have attracted increasing interest, and it has become evident that many medical situations concern the exchange of present-day costs for future benefits. Traditional decision analytic paradigms weigh the probability of outcomes and the value of outcomes. Such analyses are incomplete if they do not consider the time of the outcome as well. The concept of diminishing value over time is positive discounting. Time discounting processes and effects have a potentially large impact on clinical decision making. Therefore, characteristics of discounting should be taken into consideration. Discounting processes are variable with individuals and also within different contexts such as gains and losses. No single model can be expected to describe time-related decisions within health. A more diversified use and critical appraisal of these concepts in medicine become more important as we attempt to refine decision models. A summary of valuation factors in medical decision making is presented: (a) long-term decisions are very sensitive to discount rates; (b) discount rates are greater for gains than for losses; (c) discount rates vary by domain, by outcome, by individuals over time, and by level of certainty; (d) individual preferences may reverse themselves over time; (e) the doctor uses expected value; the patient is risk aversive; (f) over a lifetime perspective, a flat or even negative discount rate will result in choices that minimize lifetime disability.

Theoretical arguments for the discounting of health consequences: where do we go from here?

Despite the theoretical arguments presented in the literature regarding discounting over the last 25 years, no satisfactory reply has yet been offered to the question of whether health consequences have to be discounted at the same rate as monetary consequences in the economic evaluation of health programmes or interventions designed to improve health. Against this background, the main objective of this paper was to review and systemise these theoretical arguments, with the aim of determining whether any of the positions identified can be accepted without reservation. Having determined that this is not possible, we investigated the rationality of discounting in the literature and, on this basis, propose a potential way to resolve the problem. Thus, we argue that the relationship between the discount of monetary and health consequences has to be determined in an indirect manner, by reference to the relationship maintained by the individual time preference rates for health and money in the context of private and social choice. Although this proposal moves the debate into the empirical field, its advantages must be weighed against the difficulties associated with the estimation of the time preferences.

Population-based time preferences for future health outcomes

CONTEXT

Time preference (how preference for an outcome changes depending on when the outcome occurs) affects clinical decisions, but little is known about determinants of time preferences in clinical settings.

OBJECTIVES

To determine whether information about mean population time preferences for specific health states can be easily assessed, whether mean time preferences are constant across different diseases, and whether under certain circumstances substantial fractions of the patient population make choices that are consistent with a negative time preference.

DESIGN

Self-administered survey.

SETTING

Family physician waiting rooms in four states.

PATIENTS

A convenience sample of 169 adults.

INTERVENTION

Subjects were presented five clinical vignettes. For each vignette the subject chose between interventions maximizing a present and a future health outcome. The options for individual vignettes varied among the patients so that a distribution of responses was obtained across the population of patients.

MAIN OUTCOME MEASURE

Logistic regression was used to estimate the mean preference for each vignette, which was translated into an implicit discount rate for this group of patients.

RESULTS

There were marked differences in time preferences for future health outcomes based on the five vignettes, ranging from a negative to a high positive (116%) discount rate.

CONCLUSIONS

The study provides empirical evidence that time preferences for future health outcomes may vary substantially among disease conditions. This is likely because the vignettes evoked different rationales for time preferences. Time preference is a critical element in patient decision making and cost-effectiveness research, and more work is necessary to improve our understanding of patient preferences for future health outcomes.

The cost-effectiveness of introducing a varicella vaccine to the New Zealand immunisation schedule

This study examined the cost-effectiveness of adding a varicella vaccine to an existing childhood immunisation schedule relative to a counterfactual where the varicella vaccine is available on a user-pays basis (the current New Zealand situation). The costs and consequences of chickenpox in an annual cohort of 57,200, 15-month old children were simulated for a 30-year period. The cohort simulation design captures the 'phasing-in' effects of routine varicella vaccination on the population. From a health care payer's perspective (medical costs only) every dollar invested in a vaccination programme would return NZ $0.67. However, from a societal point of view (which includes the value of work-loss), a vaccination programme would return NZ $2.79 for every dollar invested. To implement a varicella vaccination programme covering 80% of 15-month old children in New Zealand would add more than NZ $1 million in net direct (health care) costs each year. However, the indirect cost savings from reduced losses of work-time exceed NZ $2 million annually. The net average health care cost per child vaccinated over the 30-year modelling period was $54 whereas the cost-savings from work-loss averted averaged $101 per child vaccinated. Total cost-savings to society of $47 per child vaccinated, on average, could be gained from a vaccination programme. The finding that the addition to vaccination costs resulting from a routine programme (including the cost of complications from the vaccine) were greater than the offsetting health care cost savings from reduced incidence of chickenpox were robust to a sensitivity analysis on all assumptions within plausible ranges. Overall cost-effectiveness estimates were most sensitive to assumptions regarding lost work-time, the discount rate, and the price and efficacy of the vaccine. Estimates were relatively insensitive to changes in assumptions regarding health care utilisation.

Cost-effectiveness of regulations against using a cellular telephone while driving

PURPOSE

To evaluate the cost-effectiveness of regulations that prohibit using a cellular telephone while driving a motor vehicle.

DESIGN

Decision analysis of risks and benefits related to cellular telephones and driving.

SETTING

United States population in 1997.

MEASURES

Health benefits measured as the quality-adjusted life years potentially saved. Financial benefits measured as health care and other services potentially averted. Costs of regulation measured as the lost productivity derived from willingness to pay for cellular telephone calls.

RESULTS

Under base-case conditions, cellular telephone calls in the United States each day accounted for about 984 reported collisions, 1,729 total collisions, 2 deaths, 317 persons with injuries, 99 lost years of life expectancy, 161 lost quality-adjusted life years, $1 million in health care costs, and $4 million in property damage and other costs. This reflected a total of about 35 million telephone calls while driving, 70 million calling minutes, and $33 million in total value to society. The estimated cost-effectiveness ratio for a regulation restricting cellular telephone usage while driving was $300,000 per quality-adjusted life year saved, but ranged from $50,000 to $700,000 under alternative assumptions and interpretations of data. Regulations applied to teenage males could be cost-saving to society if the value of a call fell below 37 cents per minute.

CONCLUSIONS

Regulations restricting cellular telephone usage while driving are less cost-effective for society than other safety measures. Nevertheless, regulations may be justifiable because the benefits and harms do not always involve the individual who has the cellular telephone. Increasing the price of a call (or adding a supplementary tax) might decrease the number of discretionary calls, be cost-saving for society, and be life-saving for individuals.

Preventing Mycobacterium avium complex in patients who are using protease inhibitors: a cost-effectiveness analysis

BACKGROUND

Practice guidelines recommending Mycobacterium avium complex (MAC) prophylaxis for patients with HIV disease were based on clinical trials in which individuals did not receive protease inhibitors.

OBJECTIVE

To estimate the cost-effectiveness of strategies for MAC prophylaxis in patients whose treatment regimen includes protease inhibitors.

DESIGN

Decision analysis with Markov modelling of the natural history of advanced HIV disease. Five strategies were evaluated: no prophylaxis, azithromycin, rifabutin, clarithromycin and a combination of azithromycin plus rifabutin.

MAIN OUTCOME MEASURES

Survival, quality of life, quality-adjusted survival, health care costs and marginal cost-effectiveness ratios.

RESULTS

Compared with no prophylaxis, rifabutin increased life expectancy from 78 to 80 months, increased quality-adjusted life expectancy from 50 to 52 quality-adjusted months and increased health care costs from $233000 to $239800. Ignoring time discounting and quality of life, the cost-effectiveness of rifabutin relative to no prophylaxis was $44300 per life year. Adjusting for time discounting and quality of life, the cost-effectiveness of rifabutin relative to no prophylaxis was $41500 per quality-adjusted life year (QALY). In comparison with rifabutin, azithromycin was associated with increased survival, increased costs and an incremental cost-effectiveness ratio of $54300 per QALY. In sensitivity analyses, prophylaxis remained economically attractive unless the lifetime chance of being diagnosed with MAC was less than 20%, the rate of CD4 count decline was less than 10 x 10(6) cells/l per year, or the CD4 count was greater than 50 x 10(6) cells/l.

CONCLUSION

MAC prophylaxis increases quality-adjusted survival at a reasonable cost, even in patients using protease inhibitors. When not contraindicated, starting azithromycin or rifabutin when the patient's CD4 count is between 50 and 75 x 10(6) cells/l is the most cost-effective strategy. The main determinants of cost-effectiveness are CD4 count, viral load, place of residence and patient preference.

The cost-effectiveness of mammography screening: evidence from a microsimulation model for New Zealand

Mammography screening currently represents the only means by which the mortality rate from breast cancer can be modified substantially. A national mammography screening programme is being considered for New Zealand, and pilot programmes were established in two regions (Otago/Southland and Waikato) in 1991 to determine the potential costs and benefits of mammography for New Zealand women. The aim of this paper is to explore the cost-effectiveness of mammography screening in New Zealand relative to no screening, and to examine the marginal change in costs and benefits of altering programme characteristics such as the age of women invited and screening frequency. Cost-effectiveness is measured by the net cost (the costs of screening minus the treatment savings averted by the early detection of cancers) per year of life gained, from the perspective of the public health care sector. A microsimulation computer model, MICROLIFE, was developed to facilitate the estimation of mortality reduction and cost-effectiveness. The results show that, while mammography screening does not 'save money' overall, the cost per year of life saved for a range of policies compares favourably with other New Zealand health services, and is comparable to the results from economic evaluations of mammography screening overseas. Of those regimes considered, screening women 50-64 years of age at 3-yearly intervals appears to be most cost-effective.

Valuing the future: temporal discounting of health and money

Normative discounted utility theory specifies that the values of all future outcomes (for example, those related to health and money) should be discounted at a constant rate. Two experiments demonstrated that, contrary to this prescription, decision makers use different discount rates for health-related decisions and money-related decisions. Temporal discountings for health and money were similar in that both demonstrated two biases previously found in monetary decisions: discount rates were inversely related to magnitude of outcome and length of delay. The relatively large discount rates used by the subjects suggest why it is often difficult to implement preventive health measures that improve future health.