IDEAS home Printed from https://ideas.repec.org/a/spr/eujhec/v20y2019i5d10.1007_s10198-019-01039-0.html
   My bibliography  Save this article

Estimating the marginal cost of a life year in Sweden’s public healthcare sector

Author

Listed:
  • Jonathan Siverskog

    (Linköping University)

  • Martin Henriksson

    (Linköping University)

Abstract

Although cost-effectiveness analysis has a long tradition of supporting healthcare decision-making in Sweden, there are no clear criteria for when an intervention is considered too expensive. In particular, the opportunity cost of healthcare resource use in terms of health forgone has not been investigated empirically. In this work, we therefore seek to estimate the marginal cost of a life year in Sweden’s public healthcare sector using time series and panel data at the national and regional levels, respectively. We find that estimation using time series is unfeasible due to reversed causality. However, through panel instrumental variable estimation we are able to derive a marginal cost per life year of about SEK 370,000 (EUR 39,000). Although this estimate is in line with emerging evidence from other healthcare systems, it is associated with uncertainty, primarily due to the inherent difficulties of causal inference using aggregate observational data. The implications of these difficulties and related methodological issues are discussed.

Suggested Citation

  • Jonathan Siverskog & Martin Henriksson, 2019. "Estimating the marginal cost of a life year in Sweden’s public healthcare sector," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(5), pages 751-762, July.
    • Handle: RePEc:spr:eujhec:v:20:y:2019:i:5:d:10.1007_s10198-019-01039-0
    DOI: 10.1007/s10198-019-01039-0
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10198-019-01039-0
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10198-019-01039-0?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Karl Claxton & James Lomas & Stephen Martin, 2018. "The impact of NHS expenditure on health outcomes in England: Alternative approaches to identification in all‐cause and disease specific models of mortality," Health Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 1017-1023, June.
    2. Hall, Alastair R & Rudebusch, Glenn D & Wilcox, David W, 1996. "Judging Instrument Relevance in Instrumental Variables Estimation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(2), pages 283-298, May.
    3. Martyn Andrews & Obbey Elamin & Alastair R. Hall & Kostas Kyriakoulis & Matthew Sutton, 2017. "Inference in the presence of redundant moment conditions and the impact of government health expenditure on health outcomes in England," Econometric Reviews, Taylor & Francis Journals, vol. 36(1-3), pages 23-41, March.
    4. Martin, Stephen & Rice, Nigel & Smith, Peter C., 2008. "Does health care spending improve health outcomes? Evidence from English programme budgeting data," Journal of Health Economics, Elsevier, vol. 27(4), pages 826-842, July.
    5. Andrews,Donald W. K. & Stock,James H. (ed.), 2005. "Identification and Inference for Econometric Models," Cambridge Books, Cambridge University Press, number 9780521844413, September.
    6. Croissant, Yves & Millo, Giovanni, 2008. "Panel Data Econometrics in R: The plm Package," Journal of Statistical Software, Foundation for Open Access Statistics, vol. 27(i02).
    7. Gravelle, H.S.E. & Backhouse, M.E., 1987. "International cross-section analysis of the determination of mortality," Social Science & Medicine, Elsevier, vol. 25(5), pages 427-441, January.
    8. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    9. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    10. Gallet, Craig A. & Doucouliagos, Hristos, 2017. "The impact of healthcare spending on health outcomes: A meta-regression analysis," Social Science & Medicine, Elsevier, vol. 179(C), pages 9-17.
    11. Karl Claxton & Simon Walker & Steven Palmer & Mark Sculpher, 2010. "Appropriate Perspectives for Health Care Decisions," Working Papers 054cherp, Centre for Health Economics, University of York.
    12. Small, Dylan S., 2007. "Sensitivity Analysis for Instrumental Variables Regression With Overidentifying Restrictions," Journal of the American Statistical Association, American Statistical Association, vol. 102, pages 1049-1058, September.
    13. Laura Catherine Edney & Hossein Haji Ali Afzali & Terence Chai Cheng & Jonathan Karnon, 2018. "Estimating the Reference Incremental Cost-Effectiveness Ratio for the Australian Health System," PharmacoEconomics, Springer, vol. 36(2), pages 239-252, February.
    14. Stephen Martin & Nigel Rice & Peter C. Smith, 2012. "Comparing costs and outcomes across programmes of health care," Health Economics, John Wiley & Sons, Ltd., vol. 21(3), pages 316-337, March.
    15. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    16. MacKinnon, James G. & White, Halbert, 1985. "Some heteroskedasticity-consistent covariance matrix estimators with improved finite sample properties," Journal of Econometrics, Elsevier, vol. 29(3), pages 305-325, September.
    17. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    18. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-1580, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Opportunity costs, marginal productivity, and cost-effectiveness thresholds: what are they and how are they related?
      by Rita Faria, Jessica Ochalek, jameslomas88 in The Academic Health Economists' Blog on 2020-09-23 06:00:00

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Francesco Longo & Karl Claxton & Stephen Martin & James Lomas, 2023. "More long‐term care for better healthcare and vice versa: investigating the mortality effects of interactions between these public sectors," Fiscal Studies, John Wiley & Sons, vol. 44(2), pages 189-216, June.
    2. Persson, Emil & Tinghög, Gustav, 2020. "Opportunity cost neglect in public policy," Journal of Economic Behavior & Organization, Elsevier, vol. 170(C), pages 301-312.
    3. Francesco Longo & Karl Claxton & James Lomas & Stephen Martin, 2020. "Does public long-term care expenditure improve care-related quality of life in England?," Working Papers 172cherp, Centre for Health Economics, University of York.
    4. Siverskog, Jonathan & Henriksson, Martin, 2022. "The health cost of reducing hospital bed capacity," Social Science & Medicine, Elsevier, vol. 313(C).
    5. Chris Sampson & Bernarda Zamora & Sam Watson & John Cairns & Kalipso Chalkidou & Patricia Cubi-Molla & Nancy Devlin & Borja García-Lorenzo & Dyfrig A. Hughes & Ashley A. Leech & Adrian Towse, 2022. "Supply-Side Cost-Effectiveness Thresholds: Questions for Evidence-Based Policy," Applied Health Economics and Health Policy, Springer, vol. 20(5), pages 651-667, September.
    6. Francesco Longo & Karl Claxton & James Lomas & Stephen Martin, 2021. "Does public long‐term care expenditure improve care‐related quality of life of service users in England?," Health Economics, John Wiley & Sons, Ltd., vol. 30(10), pages 2561-2581, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. James Lomas & Stephen Martin & Karl Claxton, 2018. "Estimating the marginal productivity of the English National Health Service from 2003/04 to 2012/13," Working Papers 158cherp, Centre for Health Economics, University of York.
    2. Emanuele Arcà & Francesco Principe & Eddy Van Doorslaer, 2020. "Death by austerity? The impact of cost containment on avoidable mortality in Italy," Health Economics, John Wiley & Sons, Ltd., vol. 29(12), pages 1500-1516, December.
    3. Doko Tchatoka, Firmin Sabro, 2012. "Specification Tests with Weak and Invalid Instruments," MPRA Paper 40185, University Library of Munich, Germany.
    4. Claxton, Karl & Asaria, Miqdad & Chansa, Collins & Jamison, Julian & Lomas, James & Ochalek, Jessica & Paulden, Mike, 2019. "Accounting for timing when assessing health-related policies," LSE Research Online Documents on Economics 100038, London School of Economics and Political Science, LSE Library.
    5. Thorsten Beck, 2009. "The Econometrics of Finance and Growth," Palgrave Macmillan Books, in: Terence C. Mills & Kerry Patterson (ed.), Palgrave Handbook of Econometrics, chapter 25, pages 1180-1209, Palgrave Macmillan.
    6. Edney, L.C. & Haji Ali Afzali, H. & Cheng, T.C. & Karnon, J., 2018. "Mortality reductions from marginal increases in public spending on health," Health Policy, Elsevier, vol. 122(8), pages 892-899.
    7. Claxton, Karl & Asaria, Miqdad & Chansa, Collins & Jamison, Julian & Lomas, James & Ochalek, Jessica & Paulden, Mike, 2019. "Accounting for Timing when Assessing Health-Related Policies," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 10(S1), pages 73-105, April.
    8. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    9. Nyakabawo, Wendy & Miller, Stephen M. & Balcilar, Mehmet & Das, Sonali & Gupta, Rangan, 2015. "Temporal causality between house prices and output in the US: A bootstrap rolling-window approach," The North American Journal of Economics and Finance, Elsevier, vol. 33(C), pages 55-73.
    10. Bashiri Behmiri, Niaz & Pires Manso, José R., 2012. "Does Portuguese economy support crude oil conservation hypothesis?," Energy Policy, Elsevier, vol. 45(C), pages 628-634.
    11. Catherine Bruneau & Eric Jondeau, 1999. "Long‐run Causality, with an Application to International Links Between Long‐term Interest Rates," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(4), pages 545-568, November.
    12. Siverskog, Jonathan & Henriksson, Martin, 2022. "The health cost of reducing hospital bed capacity," Social Science & Medicine, Elsevier, vol. 313(C).
    13. Russell Davidson & Victoria Zinde‐Walsh, 2017. "Advances in specification testing," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1595-1631, December.
    14. Hans (J.L.W.) van Kippersluis & Niels (C.A.) Rietveld, 2017. "Beyond Plausibly Exogenous," Tinbergen Institute Discussion Papers 17-096/V, Tinbergen Institute.
    15. Aisha Ismail & Kashif Rashid, 2014. "Time series analysis of the nexus among corruption, political instability and judicial inefficiency in Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(5), pages 2757-2771, September.
    16. Lütkepohl,Helmut & Krätzig,Markus (ed.), 2004. "Applied Time Series Econometrics," Cambridge Books, Cambridge University Press, number 9780521547871, September.
    17. Doko Tchatoka, Firmin Sabro & Dufour, Jean-Marie, 2008. "Instrument endogeneity and identification-robust tests: some analytical results," MPRA Paper 29613, University Library of Munich, Germany.
    18. Mighri, Zouheir & Ragoubi, Hanen & Sarwar, Suleman & Wang, Yihan, 2022. "Quantile Granger causality between US stock market indices and precious metal prices," Resources Policy, Elsevier, vol. 76(C).
    19. Lukasz Lach, 2010. "Application of Bootstrap Methods in Investigation of Size of the Granger Causality Test for Integrated VAR Systems," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 8(2), pages 167-186.
    20. Santos, Carlos Filipe & Fuinhas, José Alberto & Marques, António Cardoso, 2014. "O nexus energia-crescimento e o nível da auto-suficiência na produção de petróleo: análise com macro painel [Energy-growth nexus and oil self-sufficiency: macro panel analysis]," MPRA Paper 57008, University Library of Munich, Germany.

    More about this item

    Keywords

    Opportunity cost; Threshold; Healthcare expenditure; Mortality; Life expectancy; Cost-effectiveness analysis;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:eujhec:v:20:y:2019:i:5:d:10.1007_s10198-019-01039-0. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.