Allocating Health Dollars: By Cost or By Benefit?

Given limited healthcare budgets, how should we allocate money for treatment?

One option is to ask how many people are affected.  If problem A affects 1 million people and problem B affects 1000, then we should first spend money on problem A and, if there is any left over, then allocate some for problem B.

Another option is to assess impact.  If problem A is mild dermatitis and problem B is aortic aneurism, then we might make funding problem B more of a priority.

A third option, much practiced recently, is to look at the economic cost of the disorder.  If problem A costs society $10 billion a year (in lost wages, reduced productivity, disability payments, welfare bills, and so on) and problem B costs $100,000 a year, then we might allocate more funds to problem A.

This third strategy has been used a great deal when arguing for increased funding for mental health programs.  When the actual societal costs of depression are added up, for example, the total is enormous – more than for many other problems that we see as essential health priorities. 

But there is a problem with all three systems.  They ignore the question of what you can buy with a health dollar.  A problem might be very costly to society, but it does not necessarily follow that spending money on its treatment will be worthwhile.

The implicit assumption of the cost approach is that we are already paying for the disorder in question, and that by treating it we will actually wind up paying less than we do now.

What if problem A costs $10 billion a year, but spending an additional $10 billion on treatment produces no benefits for those treated?  Perhaps spending $100,000 on problem B will eradicate it.  We need to focus on the effectiveness of the treatment, not just the cost of the disorder.

Imagine that problem A is appendicitis, and problem B is depression.  We do the math and determine that appendicitis, left untreated, would not cost anywhere near as much as depression, nor does it affect as many people.  Maybe we should forget about appendectomies and fund the depression treatment programs.

If we look at effectiveness of treatment, however, another decision might look better.  Left untreated, appendicitis has a high rate of fatality.  The treatment is a relatively simple surgery that, in the grand scheme of things, does not really cost all that much and that has a low risk of complication (at least when compared to doing nothing).  For a few thousand dollars you save a life.  Randomize 100 appendicitis cases into “operate” and “don’t operate” conditions and you get a huge and obvious effect.

What about treating depression?  The cost of pharmacological treatment is relatively low, particularly in jurisdictions where patients pay for their own medications.  The cost of comprehensive nonpharmacological treatment is higher.  (One study in a Veterans Administration Hospital suggested otherwise, but the treatment regime for the pharmacological approach was more elaborate and costly than in most medical practices.)

The question is impact.  Recent meta-analyses suggest that antidepressant medications are relatively weak in their effects, particularly when compared to placebos.  Evidence-based psychotherapy looks like it is about as effective, but with fewer side effects and better maintenance of gains.  But the ratio of benefit to cost is probably not as great as with appendicitis.  (The same could be said of a great many interventions for other physical health problems.)

My point is not that depression treatments are ineffective.  Quite the opposite.  But in order to convince policymakers, we will have to stop focusing solely on the costs of mental disorders and discuss the real benefits – including the economic benefits – of treating them.  This places the ball firmly in the court of science.  In order to make these arguments our treatments must be subject to rigourous scrutiny.  Inevitably, some cherished approaches will be found wanting and funding will be justly denied to them.