SHIFTING TO THE SUPPLY SIDE: ESTIMATING CHINA'S HEALTH OPPORTUNITY COST THRESHOLD VIA EXPENDITURE ELASTICITY
Author(s)
Peisong Dong, MA, Xiaoning He, PhD, Jing Wu, PhD.
School of Pharmaceutical Science and Technology, Tianjin University, Tianjin, China.
School of Pharmaceutical Science and Technology, Tianjin University, Tianjin, China.
OBJECTIVES: China still lacks an empirically grounded health opportunity cost (HOC) threshold expressed in cost per quality-adjusted life-year (QALY). This study aimed to estimate a supply-side cost-effectiveness threshold for China by linking health expenditure, population health loss, and marginal QALY gains.
METHODS: We quantified provincial health burden via age-standardized years of life lost rate (SYLLR), drawing on multi-source adjusted 2021 mortality data and UN World Population Prospects 2024 life tables. To mitigate endogeneity between health expenditure and SYLLR, the annual per capita revenue of the Urban and Rural Resident Basic Medical Insurance was adopted as an instrumental variable. A Post-Double-Selection Instrumental Variable (PDS-IV) regression was utilized to filter high-dimensional confounders and identify causal expenditure-health elasticity. The estimated elasticity was then applied to national health expenditure and total YLL. Avoided YLL was converted into QALY gains using China-specific EQ-5D-5L population utility values, incorporating both mortality- and morbidity-related health gains.
RESULTS: Higher provincial per capita health expenditure was significantly associated with lower SYLLR, with an estimated elasticity of -0.760% (SE = 0.316, p = 0.016). In the base case, a 1% increase in national health expenditure corresponded to 76.692 billion CNY and was estimated to avert approximately 775,500 YLLs, equivalent to approximately 1.28 million QALYs after utility adjustment. Dividing marginal expenditure by marginal QALY gains yielded an HOC-based threshold of 59,976 CNY/QALY, equivalent to approximately 74% of national per capita GDP. Scenario analyses showed that the threshold was 43,492 CNY/QALY when future health gains were not discounted and 96,941 CNY/QALY when mortality under-reporting was not corrected using model life tables.
CONCLUSIONS: China’s empirically estimated supply-side cost-effectiveness threshold was lower than the commonly used benchmark of one per capita GDP. These findings suggest that threshold setting should be informed by supply-side evidence on the marginal productivity of the healthcare system.
METHODS: We quantified provincial health burden via age-standardized years of life lost rate (SYLLR), drawing on multi-source adjusted 2021 mortality data and UN World Population Prospects 2024 life tables. To mitigate endogeneity between health expenditure and SYLLR, the annual per capita revenue of the Urban and Rural Resident Basic Medical Insurance was adopted as an instrumental variable. A Post-Double-Selection Instrumental Variable (PDS-IV) regression was utilized to filter high-dimensional confounders and identify causal expenditure-health elasticity. The estimated elasticity was then applied to national health expenditure and total YLL. Avoided YLL was converted into QALY gains using China-specific EQ-5D-5L population utility values, incorporating both mortality- and morbidity-related health gains.
RESULTS: Higher provincial per capita health expenditure was significantly associated with lower SYLLR, with an estimated elasticity of -0.760% (SE = 0.316, p = 0.016). In the base case, a 1% increase in national health expenditure corresponded to 76.692 billion CNY and was estimated to avert approximately 775,500 YLLs, equivalent to approximately 1.28 million QALYs after utility adjustment. Dividing marginal expenditure by marginal QALY gains yielded an HOC-based threshold of 59,976 CNY/QALY, equivalent to approximately 74% of national per capita GDP. Scenario analyses showed that the threshold was 43,492 CNY/QALY when future health gains were not discounted and 96,941 CNY/QALY when mortality under-reporting was not corrected using model life tables.
CONCLUSIONS: China’s empirically estimated supply-side cost-effectiveness threshold was lower than the commonly used benchmark of one per capita GDP. These findings suggest that threshold setting should be informed by supply-side evidence on the marginal productivity of the healthcare system.
Conference/Value in Health Info
2026-11, ISPOR Europe 2026, Vienna, Austria
Value in Health, Volume 29, Issue 12S
Code
HTA69
Topic
Health Policy & Regulatory, Health Technology Assessment
Topic Subcategory
Decision & Deliberative Processes
Disease
No Additional Disease & Conditions/Specialized Treatment Areas