Money, principles and prioritization | Journal of the Norwegian Medical Association

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Health care costs are constantly increasing. Is this increase problematic? Why do we use cost and impact analyzes to prioritize health services?

Healthcare cost per capita increased from NOK 58,300 in 2011 to NOK 64,600 in 2021 at constant 2015 prices (1). What is the reason for this increase?

increasing of demands

Increasing income increases the demand for healthcare services. As we get richer, we want more of the so-called ordinary goods: a slightly nicer house, a slightly better car, and slightly better quality health and care services. Moreover, technological development broadens the basis for who receives health services. For example, we are now scanning more than before. With population screening, a large, healthy population is screened to find a small number of people with the disease. More people are being screened, diagnosed and treated than ever before, and costs are rising. The demographic changes and aging of the population will also increase the need for nursing and care services and hence the demand will increase even more. The number of people with dementia is expected to double by 2050 (2) (Fig. 1).

Baumol cost disease

Even if the demand for health services had been constant, the costs of health services would have risen as a proportion of the entire economy due to this phenomenon Baumol cost diseaseIn the same way that a symphony orchestra does not become more productive by playing faster, a comfortable conversation does not become more effective by speaking faster. Both health – and care in particular – are sectors in which quality is closely linked to the workforce employed. On the other hand, in other sectors, new technology will make production more efficient (such as the production of cars, bicycles, and telephones) and will lead to higher wages. In order to avoid workers being discharged from the health service, wages there must also be increased, even if productivity does not increase dramatically: the conversation still takes the same amount of time (3).

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Problem with increased cost?

Is it problematic that costs are increasing? Basically no. But it depends on the preferences of residents. In order to cause an increase in cost, either public sector revenues must be increased or spending on other public sectors must be reduced. If any of these choices align with the population’s preferences, evolution is not a problem.

The most difficult factor is the scarcity of resources. And resources are not the same as money, but instead, for example, rooms, beds, and people. With the wave of seniors, the carrying capacity of aging, which shows the ratio of working people ages 16 to 66 for every person over 67, will drop from 4 now to about 2.5 in 2050 (4) (Fig. 1). We will then have fewer people to do more tasks.

Therefore, a lot of money does not relieve us of the need to prioritize.

Opportunity cost and the silent loser

Priorities are set continuously at different levels: patient level, group level, and population level. It is easy to prioritize at all levels. The problem is that resources have an alternative use – opportunity cost: if you use a resource in one way, you also choose not to use it in another way. One loses the value that resource would have produced in its second best use. A widely used example of this is the policy priority to reduce the waiting time for breast reconstruction for women with breast cancer. This uptick resulted in priority being given to young people with cleft lip and jaw, who had to wait longer for their last operation. The reason was the scarcity of resources in the plastic surgery department (5, 6).

Norway has long wanted to move from implicit (hidden) prioritization to explicit (transparent) prioritization in order to reduce the risk of people becoming “silent losers” because they do not speak up in society (7).

Cost effectiveness analytics

Some groups will be more likely to become ‘silent losers’ than others, for example children, single older adults and people with mental health challenges. Implicit prioritization, where the strongest groups win, is likely to lead to an unfair distribution of resources that is not in line with the principle of egalitarianism (equal treatment for equal needs), which is strong in Norway. With the help of cost-impact analyses, we elevate the debate about prioritizing scarce resources into a frank discussion based on specific criteria.