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The European Journal of Health Economics
Published in: The European Journal of Health Economics 5/2019

Open Access 01-07-2019 | Original Paper

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

Authors: Jonathan Siverskog, Martin Henriksson

Published in: The European Journal of Health Economics | Issue 5/2019

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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.
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Footnotes
1
In 2016, total revenue from patient fees amounted to SEK 6.3 billion [14], covering 2.3% of total regional healthcare expenditure.
 
2
The council of Gotland, which has special status as both a region and a local municipality, is excluded due to limited data availability. Because of data availability issues for other variables, the panel data analysis is restricted to the period 2003–2015 (N = 20, T = 13).
 
3
We do not wish argue that life expectancy (mortality) depends exclusively on morbidity, but we believe that most of the effect of other variables (including expenditure) is working through it. Any potential direct links with life expectancy are accounted for by our empirical specification, although not included in our conceptual model.
 
4
This variable could act as an instrument for mean age, but since this is not the causal effect of interest to the study, we use it directly as a control, so as not to confound the main results or introduce unnecessary endogenous regressors.
 
5
If the effect of expenditure is heterogeneous across ages, then discounting could of course turn out to be important in an analysis of age-specific mortality rates, by, e.g. tilting health gains towards the future.
 
6
Earlier conference presentations of this work used different measures of mortality and expenditure where cointegration was present; the Granger causality results, however, similarly indicated unidirectional causality from mortality to expenditure.
 
7
At the average exchange rate in 2016, EURSEK = 9.4689, from the European Central Bank.
 
8
New interventions would not have to displace existing personnel, but simply reduce the rate at which new staff is hired.
 
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Metadata
Title
Estimating the marginal cost of a life year in Sweden’s public healthcare sector
Authors
Jonathan Siverskog
Martin Henriksson
Publication date
01-07-2019
Publisher
Springer Berlin Heidelberg
Published in
The European Journal of Health Economics / Issue 5/2019
Print ISSN: 1618-7598
Electronic ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-019-01039-0

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