health economics

In response to the following questions you are expected to apply ‘economic thinking’ and you should demonstrate appropriate use of the lecture and reading materials.
Approximate word limits are indicative and points will not be deducted if your answers deviate from these guidelines.
Please answer questions 1-5. Note that some questions (1-5) may have multiple parts or draw material from different lectures. Answer ALL questions.

There is no need for references in the take home exam if you are using material in your own words from the recommended book or the lectures. You should not copy paste but use your own words to explain the concepts.
If you need to copy paste from an external source then reference the source but it is best to avoid this as you should be able to answer using the lecture notes and the recommended books.
Do not copy from each other.
Numerical questions do not require references but you need to  show all calculations.

Question 1 (Total 25 marks)

⦁ A perfectly competitive market is in equilibrium with price PE, as shown in the diagram below. Describe the impact on this market if we increase the price to P1 from PE? (150 words, 6 marks)

⦁ Briefly describe the conditions which must be met for a market to be in equilibrium. (300 Words) 8 marks

⦁ In a market for health care that does not meet the conditions for market equilibrium it leads to a market for health care insurance. Discuss the concept of adverse selection in health care insurance. (250 Words) 6 Marks

⦁ What are the advantages of the Beveridge model of health care? (200 Words) 5 marks

Continue next page
Question 2 (Total 20 Marks)

From an economic evaluation of cervical screening strategies the following information on the total cost and total benefits has been found for both the current screening programme and an expanded screening programme.

⦁ Choose a perspective for this economic evaluation and briefly justify your answer. (150 Words) 4 Marks

(1) (2) (3) (4) (5) (6) (7)
Intervention
Total Cost Total Benefit (QALYS) Added cost (£) Added benefit (QALY) Average cost per QALY Incremental Cost per QALY
Current screening programme (60-69yrs) £75,000,000 10,125 £75,000,000 B C E
Expanded screening programme (55-74yrs) £115,000,000 18,220 A 8,095 D F

⦁ What figures are missing from the table (indicated by A-F) in;
(Please show your calculations)
⦁ Column 4 (box A) 1 Mark
⦁ Column 5 (box B) 1Mark
⦁ Column 6 (boxes C and D) 2 Marks
⦁ Column 7 (boxes E and F) 2 Marks

⦁ Explain why decision making should be based on incremental cost per QALY rather than average costs. (150 words) 4 Marks

⦁ In economic evaluation, costs and benefits are discounted. What are the reasons for discounting and what are the implications of discounting on funding decisions? (250 words) 6 Marks

Continue next page

Question 3 (Total 15 Marks)

⦁ It has been observed that “Quality adjusted life years (QALYs) are the most common way of measuring health benefits in health research”. What are the main reasons for this? (200 Words) 5 Marks

⦁ Why using a generic instrument such as the EQ-5D is useful when compared to condition specific descriptions of health states? (150 Words) 4 Marks

⦁ What are the strengths and limitations of the standard gamble and time-trade off methods for eliciting utility values of health states? (250 Words) 6 marks

Continue next page

Question 4 (Total 20 Marks)
Part 1
⦁ Why do ‘upstream’ public health interventions pose a particular challenge for economic evaluations? (150 words) 4 Marks

⦁ Different viewpoints might be used for economic evaluation. Explain why the choice of perspective matters for public health interventions? (150 words) 4 Marks

Part 2

⦁ What are the two ways we can incorporate equity considerations into economic evaluation? (50 words) 2 Marks

⦁ Briefly describe what is Distributional Cost Effectiveness Analysis (200 words) 4 marks

Part 3

⦁ What are the advantages of WTP compared with ‘narrower’ approaches to the measurement of health benefits such as QALYs? (250 words) 6 Marks