iHEA News is the official newsletter of the International Health Economics Association.
You may have noticed an increasing frequency of newsletters. We started off with one per quarter in 2017, now have one every second month and are working towards a monthly newsletter. The exact timing of releasing a newsletter is sometimes linked to when we have a big announcement to make and wanting to share the news with our members without delay – last time it was the winner of the Student Prize, this time it is the Arrow Award winner and next time it will be the successful bid to host the 2021 congress.
Environmentally Responsible iHEA Congresses
Scientific conferences often generate considerable paper and plastic waste. iHEA has already moved to providing delegates with reusable water bottles and water dispensers at our congresses. In demonstrating our commitment to being environmentally responsible, iHEA will be moving closer to a paperless congress in 2019, given that paper waste remains one of the biggest contributors to landfills in many countries. The mobile app will be improved so that it provides you with all the information you need about the congress in an accessible format and allows you to communicate easily with other delegates. The more traditional format program will also be available on the website to access on your laptop or tablet.
- Di McIntyre, Executive Director
In my circles there is a growing suspicion that publicizing a societal willingness to pay threshold for health technology is hobbling health sector purchasers from ever getting a good deal. It's a simple case of information asymmetry. A publicized threshold allows producers of patented health technology to know the buyers' maximal willingness to pay while the buyer knows quite little about producers' minimal threshold price for willingness to supply. The outcome of these bargains is clear--the producer walks away pocketing most or all of the consumer's surplus. Information asymmetries can kill markets. Just like any Akerlof lemons market, asking buyers with a fixed budget to always pay more than absolutely necessary for health technologies is limiting the total number of health technology introductions. This in turn could dampen the return on investment in new health technology. So the defense that tougher price negotiation for health technology will turn off the research pipeline may not be so strong. More product introductions at prices below maximal WTP and above cost will mean more introductions overall and a broader portfolio in the research pipeline.
It is hard for us not to be complicit as researchers undertaking health technology assessment. In the face of fixed budgets and publicly announced thresholds, estimating any ICER for $/QALY and putting it in the public domain allows producers of a patented technology to set price by solving $/dose = ($/QALY threshold) x QALY/dose. Purveyors of ICERs can wittingly or unwittingly serve as midwives delivering society's consumer surplus from consumer to producer. There doesn't seem to be much of a solution for this. In theory, if purchasers could know as much about a technology's cost of production they could strike better bargains. The regulatory progress towards this disclosure will not come swiftly in many countries. The research community might strive to work even harder to model production costs of new technology and find ways to incorporate fair models of R and D and risk costs borne by producers. Meanwhile we should not be so smug in teaching our students that it is socially optimal for all new health technology to be introduced as long as ICER<=threshold.
What do you think? Let me know on SocialLink?
- David Bishai, iHEA President
Arrow Award Winner
Arrow Award Honours Research on Ex Post Adverse Selection in Health Care
The 26th Arrow Award for the best paper in health economics is awarded to Marika Cabral for her paper “Claim Timing and Ex Post Adverse Selection” Review of Economic Studies 84(1): 1-44, January 2017.
The Arrow Award Committee is proud to acknowledge the author of this innovative and policy-relevant paper which uses detailed U.S. dental claims data from a large multinational manufacturing company to examine the effect of strategic treatment delays – a source of ex post adverse selection – on insurance enrollment and consumer welfare. Reduced-form estimates indicate the importance of strategic treatment delays and structural estimates are used to analyze the effects of this strategic behavior. Approximately 40% of individuals are estimated to strategically delay claims from one year to the next, when they have incentives to do so. The resulting ex post adverse selection is associated with 61% lower insurance enrolment and 15% lower per capita consumer welfare than in an equilibrium with only traditional (ex ante) adverse selection. Reducing the frequency of open enrolment periods could substantially improve welfare and ex post adverse selection is one reason why dental coverage is relatively rare in the U.S., does not cover the largest risks and often limits coverage for pre-existing conditions.
Christopher Ruhm (Chair) & Luigi Siciliani (Co-chair), iHEA Arrow Award Committee
Marika Cabral, Ph.D., is an Assistant Professor of Economics at the University of Texas at Austin and a Faculty Research Fellow at the National Bureau of Economic Research (NBER). She obtained her Ph.D. in economics from Stanford University in 2011 and she obtained her B.A. in economics and applied mathematics from the University of California San Diego in 2006. Her research covers a range of topics in health economics and public finance. Much of her recent research focuses on understanding the role of asymmetric information and the impact of government intervention in health (and health-related) insurance markets.
Join a Special Interest Group
There are now five functioning Special Interest Groups including; Economics of Obesity, Financing for Universal Health Coverage, Health Preference Research, Teaching Health Economics and Economics of Palliative & End-of-Life Care. We encourage members to join a Special Interest Group by visiting our website. Look through each SIG page for more information.
iHEA Google Translate
In an effort to make our website as accessible as possible to members from around the world, we have loaded a translation tool on every page. It will not translate everything perfectly, but we hope that it improves your access to information on the website. We have loaded the languages spoken by the majority of our members, but if there are other languages you would like included, please let us know at firstname.lastname@example.org. We would also appreciate any other feedback you may have.