Estimating the Incremental Cost Per QALY Produced by the Spanish NHS: A Fixed-Effect Econometric Approach

Area of Science:

• Health Economics
• Public Health Policy
• Econometrics

Background:

• Assessing healthcare funding decisions requires understanding health opportunity costs.
• Empirical estimates of health spending's impact on outcomes are used as proxies for these costs.
• Regular updates and bias assessment are needed for accurate cost estimations.

Purpose of the Study:

• To provide an updated and refined estimate of the causal impact of health spending on health in Spain.
• To translate this impact into an estimate of the incremental cost per quality-adjusted life-year (QALY) for the Spanish national health system.

Main Methods:

• Fixed-effect models were applied to data from 17 Spanish regions (2002-2022).
• The impact of public health spending on health outcomes was estimated.
• Omitted variable bias was explored, and alternative specifications were tested.

Main Results:

• The estimated spending elasticity was 0.061, yielding an incremental cost per QALY of approximately €34,000.
• Bias-corrected elasticity was 0.075, with a corresponding incremental cost per QALY of €27,000.
• Impact estimates decreased with recent data, and omitted variable bias increased, especially with COVID-19 data.

Conclusions:

• An updated incremental cost per QALY for the Spanish national health system was estimated.
• The methodology allows for easy updates with new data.
• The applied methods may be transferable to other healthcare systems.