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Health Care Cost-Utility Analysis in Germany and the USA

Introduction

From a general economic point of view, Cost-Utility Analysis (CUA) is used to guide procurement decisions. While in health economics, CUA is taken as the ratio between the cost incurred in the course of health intervention and the benefits produced by that intervention and is therefore considered to be a special case of Cost-Effective Analysis (Parkin and Nancy 2004). The CUA usually uses Quality-Adjusted Life Years (QALKYs) as its main output unit of measurement which is very important in as far the allocation of resources is concerned. This is because it’s only the cost incurred that is measured in monetary terms while quality cannot be quantified. Mathematically, QALKY is the product of the number of years the intervention has added to the victim’s life and the weight attached to the quality of life by health analysts. Different countries have different Incremental Cost-Effective Ratios depending on how effective they are in the utilization of their resources and delivery of services. The study compares CUA in Germany and the American context, with regard to the level of efficiency in their health care systems.

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Cost-Utility Analysis; Germany and the U.S

The Act, currently referred to as ‘Statutory Health Insurance Plan’ was originally meant to cover only low-income people and other government employees, but it has been expanded since then and now covers about 85 % of Germans. The insurance plan aims at ensuring that everybody has access to health services despite his/her level of income. In Germany also private insurance does exist but the payment of premium is based purely on an individual’s status of health. The American public insurance covers about 53% of the population (Kaiser 2007).

The government funds about 77% of the total health care system with the private sector left with only 23% (Green et al 2005). American health care is mainly funded by private non-profit hospitals (Reinhardt & Petrosyan 2003). Although there are government-funded hospitals and private for-profit hospitals, the non-profit private hospitals have funded up to 70% of the total health care system for about a decade now. The expenditure on health is the highest among the Organization of Economic Co-operation and Development (OECD), but the use of the services is below the OECD median by most measures.

The major concerns of U.S. health care are questions of access, efficiency, and quality purchased by the high sums spent. The WHO ranked the U.S. health care system 1st in both responsiveness and expenditure, but 37th in overall performance and 72nd by the overall level of health while Germany is ranked 30th in the world in life expectancy and 8th in the number of practicing physicians per 1000 people with a ratio of 3.3 (World Health Organization Report 2004). In the 1980s, the Germans introduced co-payments as a cost-effective measure to reduce over-utilization or over-use of the health facilities.

The Incremental Cost-Effective Ratio (ICER) is the ratio of the differences between the benefits and the costs of interventions being compared. Research on Advanced Breast Cancer in Germany, the costs and benefits were discounted at 3% annually. The second-line fulvestrant in the treatment sequence led to greater estimated health gains (0.021 QALY) and cost savings of €564 ($745, £380) per patient. The prediction of cost savings was robust with respect to variations in all key parameters. “The probability of acceptable cost-effectiveness for the fulvestrant sequence was 72% at ICER of €30,000/QALY ($39,621/QALY, £20,198/QALY)”; the probability was even higher at lower ICER and substantially exceeded 50% for any realistic ICER (Henke KD, 2007). The Americans have a higher ICER of $ 50,000 per QALY as to the Germans (Hall 2003).

Conclusion

The CUA is important in ensuring the efficient use of national resources. From the literature above, we note that Germany is more efficient in the use and distribution of resources than the Americans. It also shows that the efficient involvement of the government in the distribution of public services has a greater positive impact on society than if left to the profit-driven private sector. Large budgetary allocation to the health care system is not an assurance of improvement in the quality of services offered. This is learned from the case of America whose health budget is the largest in the world being ranked 37th (Borger et al 2006).

References

Borger C, Smith S, Truffer C, et al (2006). “Health spending projections through 2015: changes on the horizon”. Health Aff (Millwood).

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Dennis D. Gagnon (Johnson & Johnson Pharmaceutical Research and Development, L.L.C., Raritan, New Jersey, USA).

Devlin, Nancy; David Parkin (2004). “Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis”. Health Economics.

Gerard F., Reinhardt, Hussey and Petrosyan, (2003) “It’s The Prices, Stupid: Why The United States Is so Different From Other Countries”, Health Affairs, Volume 22, Number 3,.

Green, Irvine and Cackett (2005), Health Care in Germany: Civitas.

Hall MJ, Podgornik MN. (2003) National Hospital Discharge Survey.

Henke KD (2007). “External and internal financing in health care” (in German). Med. Klin. (Munich).

Lucy Zhang (2003)(Johnson & Johnson Pharmaceutical Research and Development, L.L.C., Raritan, New Jersey, USA.

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Morris, S., Devlin, N., & Parkin, D. (2007) Economic analysis in health care.

World Health Organization Report, 2004.

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StudyCorgi. (2022, January 1). Health Care Cost-Utility Analysis in Germany and the USA. Retrieved from https://studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/

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StudyCorgi. (2022, January 1). Health Care Cost-Utility Analysis in Germany and the USA. https://studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/

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"Health Care Cost-Utility Analysis in Germany and the USA." StudyCorgi, 1 Jan. 2022, studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/.

1. StudyCorgi. "Health Care Cost-Utility Analysis in Germany and the USA." January 1, 2022. https://studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/.


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StudyCorgi. "Health Care Cost-Utility Analysis in Germany and the USA." January 1, 2022. https://studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/.

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StudyCorgi. 2022. "Health Care Cost-Utility Analysis in Germany and the USA." January 1, 2022. https://studycorgi.com/health-care-cost-utility-analysis-in-germany-and-the-usa/.

References

StudyCorgi. (2022) 'Health Care Cost-Utility Analysis in Germany and the USA'. 1 January.

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