HEALTH AND ECONOMICS
Other British Association for the Advancement of Science books published by Macmillan SERIES EDITOR: David Reisman Alan Williams (editor) HEALTH AND ECONOMICS R. D. Collison Black (editor) IDEAS IN ECONOMICS Kenneth Boulding (editor) THE ECONOMICS OF HUMAN BETTERMENT Roy Jenkins (editor) BRITAIN AND THE EEC R. C. 0. Matthews (editor) ECONOMY AND DEMOCRACY Jack Wiseman (editor) BEYOND POSITIVE ECONOMICS? Lord Roll of Ipsden (editor) THE MIXED ECONOMY Series Standing Order If you would like to receive future titles in this series as they are published, you can make use of our standing order facility. To place a standing order please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address and the name of the series. Please state with which title you wish to begin your standing order. (If you live outside the UK we may not have the rights for your area, in which case we will forward your order to the publisher concerned.) Standing Order Service, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire, RG212XS, England.
HEALTH AND ECONOMICS Proceedings of Section F (Economics) of the British Association for the Advancement of Science, Bristol, 1986 Edited by Alan Williams Professor of Economics University of York M MACMILLAN PRESS
The British Association for the Advancement of Science 1987 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright Act 1956 (as amended), or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 33-4 Alfred Place, London WClE 7DP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. First published 1987 Published by THE MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 2XS and London Companies and representatives throughout the world Typeset by Wessex Typesetters (Division of The Eastern Press Ltd) Frome, Somerset British Library Cataloguing in Publication Data British Association for the Advancement of Science. Section F (Economics). Meeting (1986: Bristol) Health and economics: proceedings of Section F (Economics) of the British Association for the Advancement of Science, Bristol, 1986. 1. Social medicine 2. Medical economics I. Title II. Williams, Alan, 1927-362.1'042 RA418 ISBN 978-0-333-43735-3 ISBN 978-1-349-18800-0 (ebook) DOI 10.1007/978-1-349-18800-0
Contents Acknowledgement Notes on the Contributors Introduction Alan Williams vi vii xi 1 Health Economics: The Cheerful Face of the Dismal Science? Alan Williams 1 2 The Measurement of Inequality in Health Raymond Illsley and Julian Le Grand 12 3 The Geography of Poverty and Ill-Health Peter Townsend 37 4 Distributive Justice with. Special Reference to Geographical Inequality and Health Care Gavin Mooney and Alistair McGuire 68 5 Transforming the Geography of Health Care: Spatial Inequality and Health Care in Contemporary England John Mohan 82 6 Suicide, Selection and Unemployment Hugh Gravelle 106 7 Economic and Health Consequences of Reduced Smoking Joy Townsend 139 8 The Economic Evaluation of High Technology Medicine: The Case of Heart Transplants Martin Buxton 162 9 Economic Analysis and Medical Research Michael Drummond 173 10 Markets and Health Care Alan Maynard 187 Index 201 v
Acknowledgement I should like to acknowledge how much of the work in the organisation of the Bristol conference and in the preparation of this book was done by Dr David Reisman, editor of the Section F Series, and by his colleagues on the Section F Committee. A.W. vi
Notes on the Contributors Martin Buxton is a Senior Research Fellow and Director of the Health Economics Research Group at Brunei University where he was responsible for the major study of the costs and benefits of hearttransplant programmes in the UK. Prior to that he was an Economic Adviser at the Department of Health and Social Security. Michael Drummond is Professor of Health Services Management and Director of the Health Services Management Centre, University of Birmingham. He is author of a number of books on the economic evaluation of health care programmes, including Principles of Economic Appraisal in Health Care (1980), Studies in Economic Appraisal in Health Care (1981) and Methods for the Economic Evaluation of Health Care Programmes (1986). He has also undertaken many empirical studies in this field. Hugh Gravelle is Reader in Economics at Queen Mary College, University of London. He is the author (with Ray Rees) of Microeconomics (1981). In addition to health economics, his research interests include the economics of law and public sector economics. Raymond Illsley is a Professorial Fellow at the University of Bath. From 1981-1985 he was Chairman, Social Affairs Committee, Economic and Social Research Council; and he has held a number of other positions in public service and at universities in Britain and abroad. His many publications include The Health Burden of Social Inequalities (1986) (with P.-G. Svensson). Julian Le Grand is a Senior Research Fellow at the Sun tory-toyota International Centre for Economics and Related Disciplines, London School of Economics, where he is co-director (with A. B. Atkinson) of the Centre's Welfare State Programme. He previously taught at the University of Sussex and the London School of Economics Department of Economics, of which he is still a member. He is the Vll
Vlll Notes on the Contributors author of many journal articles, and several books on the welfare state, including The Economics of Social Problems (with Ray Robinson, 1984) and The Strategy of Equality (1982). Alistair McGuire is a Research Fellow at the Health Economics Research Unit, Department of Community Medicine, University of Aberdeen. He has worked in the areas of regional and energy economics as well as in the area of health care economics. He has also acted as a consultant for the World Health Organization. He is a graduate of Heriot-Watt and Aberdeen Universities. Alan Maynard is Professor of Economics and Director of the Centre for Health Economics at the University of York. He has written widely on many topics in social economics and the economics of human resources. John Mohan is an ESRC Postdoctoral Research Fellow in the Health and Health Care Research Centre, Queen Mary College, London. His research interests are in geographical aspects of health-service provision and he is currently working on spatial implications of restructuring in the health sector in England. Gavin Mooney is Professor of Health Economics at the Institute of Social Medicine, University of Copenhagen. He has worked as an Economic Adviser in the Department of the Environment (1969-72) and the Department of Health and Social Security (1972-4). He was Director of the Health Economics Research Unit, University of Aberdeen, from 1977 until1985. He is a member of the Copenhagen Collaboration Center for the study of regional variations in health care. Joy Townsend is an economist and research scientist at the Medical Research Council's Epidemiology and Medical Care Unit, Harrow. She is widely known for her work on the epidemiology and economics of smoking. Peter Townsend is Professor of Social Policy at the University of Bristol and visiting Professor of Sociology at the University of Essex. He is author of Poverty in the United Kingdom (1979) and co-author of the Black Report: Inequalities in Health (1980). His recent and current research deals predominantly with two themes: the relationship of ill-health to deprivation, and national and international theories of poverty.
ix Notes on the Contributors Alan Williams is a (part-time) Professor of Economics at the University of York, mainly working on the appraisal of public expenditure in various fields. His interests in health care have been reflected in his membership of the DHSS Chief Scientist's Research Committee, the Royal Commission on the NHS, and the SSRC Panel on Health and Health Services Research, and in his publications on the application of economic analysis to medical care systems. Besides his interests in health and medical care, he has also worked on problems of water resource development (he was a member of the Yorkshire Water Authority and of the National Water Council) and on evaluating the effectiveness of police and criminal justice systems for the Council of Europe (he was formerly a member of the SSRC's Social Science and Law Committee).
Introduction ALAN WILLIAMS Economists, like doctors, are seeking to extend life and relieve misery. In the case of doctors, the premature mortality and the misery is due to disease. In the case of economists, it is due to scarcity. Health economics stands at the interface between those two important fields of human endeavour. It is a relatively young sub-discipline of economics, not really amounting to any significant volume of work until about 1970, and at that time mostly concentrated in the USA. British health economists drew, and still draw, on the work of American colleagues, but the political and institutional frameworks within which health care is provided in the USA are so different from those in the UK (and in many other European countries), that it was necessary for the subject to develop along rather different lines in order that it could offer ideas, and empirical results, that are relevant to the much more egalitarian ideologies, and much heavier reliance on tax funding, which characterise health care provision in most European countries. In such a rapidly developing field it is difficult to know just when to offer your wares to the public for appraisal and comment, but the enormous interest in public policy suggests that anyone with something useful to contribute should not hold back. We health economists think we have something useful to contribute, so in this volume we have offered up some of our wares for public inspection and discussion. In this enterprise we have been joined at one point by a medical sociologist, and at another by a social geographer, features which emphasise the undoubted fact that other disciplines, besides economics, will also have something to say on the topics addressed in this volume. We neither seek nor claim an exclusive franchise! The volume opens with my own presidential address, which attempts to sketch out the whole territory in which health economists Xl
Xll Introduction operate, even though only a selection of their work can be included here. Those who want a much more comprehensive picture of the scope of the subject should consult C. A. Blades et a/., An International Bibliography of Health Economics (1986), which contains annotations on over 5000 published works in the English language going back as far as 1914! It should satisfy even the most voracious appetite! The principle adopted for selecting topics for inclusion here was to span a wide range of topics, and to show that there is more to health economics than the economics of health services. The broadest issues addressed are those concerned with inequality and injustice (Illsley and Le Grand; Peter Townsend; Mooney and McGuire; and Mohan), since these place health and health care in the context of socio-economic inequalities more generally, and pose fundamental questions about the potential role of the health-care system as a countervailing force. It is an important area of debate in which even the underlying facts, and the causal mechanisms at work, are in dispute. No-one familiar with the literature can seriously doubt that there is a major social problem to be addressed. The differences show up when one tries to decide exactly what notion of justice we are seeking to put into effect, and where it would lead us, and with what effect. It is to be hoped that the contributions offered here will help clarify the issues and put them in perspective. There are also two papers on the relationships between unemployment and health, and on the economics of reduced smoking, both of which deal with issues that go beyond concern with the health care system itself. Gravelle demonstrates the intricacies of establishing causal links between phenomena which, however strongly related they may seem at first glance, may be the result of a variety of complex mechanisms, each of which would have different implications for policy. Joy Townsend works her way through the implication of reduced smoking showing the various ramifications of that trend, which seems currently to be the specific behavioural change which would do more than anything else to improve people's health. She shows that many of the claimed deleterious side-effects on the economy, and on the public finances, are, at the very least, exaggerated, and quite probably non-existent. It is a challenging analysis. Thus, coming closer to the health service and its problems, we have the papers by Buxton, Drummond and Maynard. Drummond's contribution concentrates on the general methodological stance that
Alan Williams xiii underlies the economists approach to evaluative work, and argues in favour of a more significant role for the discipline of economics in both the formulation of problems and in the range of data collected when controlled clinical trials are being planned. This will make the findings much more relevant to the world in which health services operate. Buxton's work on the economics of the heart transplant programme is an excellent example of this kind of evaluative work. It also illustrates the role of health economists in a multi-disciplinary enterprise, where they are able to play a significant role in both problem formulation and data collection and analysis, but are nevertheless sensitive to the interests, expertise and knowledge of non-economists, and, at the end of the day, have to interpret their findings so as to address a public policy issue in terms that make sense to the policy-makers themselves. Finally, Maynard considers the incentive structure generated by the manner in which health services are financed, and suggests that many of the more persistent problems (and conflicts) which seem to be so intractable within the NHS might be more readily resolved with the more imaginative use of 'internal' markets (so that the time costs of different activities are made visible to the decision maker - often a doctor - and that person has an appropriate incentive to seek to minimise them). All in all, it is a varied menu, but one which certainly does not exhaust all the possibilities. The potential of health economics to improve the lot of struggling humanity has so far scarcely been tapped, and if this volume enables non-economists to come to a better appreciation of its scope and methods, I shall be well satisfied.