Valuing our health

Introduction

Over the next 40 years, Australian Government payments are projected to increase from 24.8% in 2022–23 to 28.6% of gross domestic product (GDP) in 2062–63. Health, aged care and the National Disability Insurance Scheme are the top three fastest growing payments. Commonwealth health spending is projected to increase from 4.2% to 6.2% of GDP with real spending per person increasing from $4,000 in 2022–23 to $8,677 in 2062–63.¹

The ageing of the population—due to longer life expectancy and lower fertility rates—is a main driver with the number of people 65 years and older expected to more than double and more than triple for those 85 years and older. Currently, people in the 65 and older age group account for about 40% of health spending. Other factors contributing to increases in health spending include increasing demand for health services, increases in the complexity of health conditions, and funding new health technologies.¹

These and other factors will challenge the sustainability of the health system and reinforce the importance of providing high value health care. Identifying high value care requires a focus on outcomes, sustainability, and co-design to deliver the outcomes that matter most to patients. Evidence-based decisions should be supported by clear and objective measures of quality and cost. While this section presents quantitative approaches, such measures are only one aspect used to determine value. Overarching principles such as equity, satisfactions, accountability and transparency are also important considerations.

Measuring value

Delivering value for money in healthcare means achieving the highest level of health relative to expenditure. To distribute resources effectively and efficiently, decisions should be evidence informed. With the rapid pace of development in new health technologies, these decisions should be part of continuous quality improvement activities. While a comprehensive list of approaches to determine the value of services relative to individual and population-level health outcomes is beyond the scope of this report, some common approaches include:

• cost-effectiveness analysis (CEA) and cost-utility analysis (CUA) that were developed in the 1970s to determine the cost benefit of treatment options
• disability adjusted life years (DALYs) were developed in the 1990s to support burden of disease analysis and are currently being extended for analysis of health condition costs
• co-designed services and value-based healthcare (VBHC) seeks to incentivise high value care and maximise patient value by focusing on health outcomes that matter to consumers.^2,3

EQ-5D

The EQ-5D is a commonly used health-related quality of life (HRQoL) instrument for health economics analyses that measures the cost and quality of health care services. It consists of questions asking people to rank their current mobility, ability to look after themselves and to do usual activities, physical pain and discomfort, and mental health. To better understand the HRQoL of Queenslanders, the 5-level version of the EQ-5D (EQ-5D-5L) was recently included on the Queensland preventive health survey.

In 2023, the prevalence of Queensland adults who reported no current problems in these broad areas was:

• 75.7% for their mobility
• 93.3% with their personal care
• 81.9% with their usual activities
• 50.2% had no pain or discomfort
• 64.9% for anxiety or depression
• 34.7% reported no impairment across any of the five areas.

Responses to EQ-5D questions varied by age. As age increased, higher percentages reported problems with mobility, self-care, and usual activities. Adults were also more likely to experience pain and discomfort as they aged. Conversely, the prevalence of feeling anxious or depressed decreased as age increased.

EQ-5D scores can also be expressed as a summary index known as a utility score, which is scaled from 0 (death) to 1 (perfect health).⁴ Among adults who completed the EQ-5D-5L in 2023:

• Males reported slightly higher HRQoL than females.
• HRQoL decreased as people aged.
• Queenslanders in socioeconomically disadvantaged areas reported lower HRQoL than those in more advantaged areas.
• People living in remote or very remote areas reported higher HRQoL than those living in other parts of Queensland.
• Daily smokers reported lower HRQoL than those who did not smoke daily.
• Obese adults reported lower HRQoL than those with a healthy body weight.

The 2022 and 2023 Queensland preventive health surveys were combined to calculate utility scores by sociodemographic factors.⁵ This provides a general population benchmark that can be used as an additional comparison group to enhance cost effectiveness studies In addition, utility scores were combined with life tables to estimate quality-adjusted life expectancy for selected modifiable risk factors.

In a hypothetical population in which a modifiable risk factor was absent, from birth on average:

• males would gain 1.8 quality-adjusted life years (QALYs) while females would gain 2.6 QALYs (healthy weight)
• males would gain 2.5 QALYs and females would gain 1.8 QALYs (never smoked)
• 0.7 and 0.8 QALYs for males and females, respectively, would be gained (sufficient fruit consumption)
• 1.0 QALY would be gained for both males and females (sufficient vegetable consumption).⁵

A component of sustainable health care delivery is that gains in life expectancy are accompanied by commensurate extensions to years lived in good health. QALY gains for populations practicing positive health behaviours indicate additional years of good health with hypothetically reduced healthcare expenditure. Results demonstrate relative gains at the population-level and wider health system in addressing modifiable risk factors.

It is important to note that the relationship between modifiable risk factors and EQ-5D utility scores are not causal. For example, lower HRQoL among smokers may not necessarily be because they smoke cigarettes, but rather, the combination of smoking and other lifestyle characteristics in that population that may impact their health status.⁵

Additional information

The EQ-5D is a trade mark of the EuroQoL Group and use of the instrument must be registered.

The EQ-5D is a listed generic patient reported outcomes measure by the Australian Commission on Safety and Quality in Health Care.

References

1. Australian Government. 2023. Intergenerational report 2023: Australia’s future to 2063, The Treasury, Parkes, ACT.
2. Walraven J, Jacobs MS and Uyl-de Groot CA. 2021. Leveraging the Similarities Between Cost-Effectiveness Analysis and Value-Based Healthcare, Value in Health, 24(7):1038–1044, doi:10.1016/j.jval.2021.01.010.
3. Sassi F. 2006. Calculating QALYs, comparing QALY and DALY calculations, Health Policy and Planning, 21(5):402–408, doi:10.1093/heapol/czl018.
4. Norman R, Mulhern B, Lancsar E, et al. 2023. The Use of a Discrete Choice Experiment Including Both Duration and Dead for the Development of an EQ-5D-5L Value Set for Australia, PharmacoEconomics, 41(4):427–438, doi:10.1007/s40273-023-01243-0.
5. Endo T, Lee XJ and Clemens SL. 2024. EQ-5D-5L population norms and quality-adjusted life expectancy by sociodemographic characteristics and modifiable risk factors for adults in Queensland, Australia, Value in Health S1098301524000779, doi:10.1016/j.jval.2024.02.007.