Curbing disease – Economics focus

IN RECENT years, researchers have developed methods to confront a range of diseases—illnesses, in many cases, that put an especially heavy burden on the world’s poor. Across much of the planet, but particularly in sub-Saharan Africa, the costs of diseases such as malaria, tuberculosis and HIV/AIDS are enormous. So it would seem that the opportunities to do good by spending money wisely on treatment and prevention are very promising. A Copenhagen Consensus* “challenge paper” by Anne Mills and Sam Shillcutt of the London School of Hygiene and Tropical Medicine reviews the literature and tries to weigh the costs and benefits of different kinds of intervention.

The article concentrates on approaches that might be taken to control malaria and HIV/AIDS, and in addition on the economics of better basic health services. Malaria and HIV/AIDS cause enormous human and economic harm in developing countries, even though cost-effective methods for controlling them are well understood. There is also a strong case for looking at the broader issue of basic health services. This is because better services would not only directly reduce the burden of many treatable or preventable diseases, but also because some additional investment in these services may be necessary, or at the very least helpful, in improving the cost-effectiveness of interventions aimed specifically at malaria and HIV/AIDS.

The authors explain that the links between illness and economic loss are complicated. In the literature, two main approaches have been taken to study them. The first relies on microeconomic studies. Work of this kind looks at how disease affects individual households or people. One drawback of this approach, though, is that it neglects the broader effects of disease on the economy as a whole. As a result, this method may underestimate both the costs of disease and the benefits of combating it more effectively.

The second approach is to take a macroeconomic view: that is, to measure the influence of a disease on income at the level of the whole economy. This can be done by comparing different economies, to see how far high incidence of disease is correlated with lower incomes, other things being equal. This method is better in principle at capturing all the economic implications of disease, but it has problems of its own. Above all, of course, other things are never equal—so it is often difficult to be sure whether it is differences in the incidence of disease, or other influences, which are determining the differences in economic well-being.

The authors emphasise various shortcomings of the existing research. Differences in data and methods mean that comparing results across studies, countries and different periods is hit and miss. For some diseases, too little useful work has been done. Only two recent macroeconomic studies of malaria have been published, for instance, and thinking on methods and data is therefore at an early stage. Macroeconomic studies of HIV/AIDS are more plentiful, but give wildly differing results, “ranging from minimal impact on per capita income to a massive impact”. Another difficult issue is that, in calculating health costs, it is sometimes necessary to put a value on life: the authors take a year of life to be worth a year’s national income per head for the country concerned, a plausible working figure but nonetheless an arbitrary one. There are particular difficulties as well in expressing costs and benefits that are spread over time in a way that allows useful comparisons to be made.

Healthy and wealthy?

Nonetheless, the paper presses on, drawing where it may on an occasionally sparse and frequently inadequate literature, gleaning results from many different studies using many different methods of research. Despite all the complications and uncertainties, the answer that emerges is pretty clear: the best new investments in the control of communicable diseases would yield huge economic benefits. Across a wide range of interventions, and for all three categories of initiative under review—control of malaria, control of HIV/AIDS and improved basic health services—benefits typically exceed costs by a wide margin.

In some cases, the economic opportunities are simply spectacular. A programme to prevent HIV in Thailand, for instance, achieved a ratio of benefits to costs of 15 to one—a figure that governments could scarcely dream of achieving for typical public-investment projects in other economic sectors. A malaria-control programme in South Africa actually resulted in net cost savings, so that it paid for itself even before the benefits of the initiative were taken into account.

In its World Development Report of 1993, the World Bank proposed a package of health interventions, organised around the idea of scaling up basic health services. It included such efforts as expanding immunisation against measles, poliomyelitis, tetanus, whooping cough, yellow fever and hepatitis-B; AIDS prevention; school health programmes (aimed especially at treating intestinal worms); treatment of TB; treatment of sexually transmitted diseases; family planning; and so on. Considered as a package, the plan would be expensive by the standard of proposals in this area, but not so expensive, you might think, when seen in context: one estimate puts it at $12 per person in low-income developing countries and $22 in middle-income developing countries, for a developing-world average of $15 per person. This spending would, it is argued, reduce the economic burden of disease by some 32%, 15% and 25% respectively, with a net economic benefit on the order of $500 billion, and a ratio of benefits to costs of 2.6.

So far as establishing priorities among different health programmes is concerned, the authors conclude that it is unclear, given the present state of knowledge, whether better results can be gained from a concentrated effort to deal with specific diseases such as malaria and HIV/AIDS or from a strategy based on broader improvements in basic health services. To some degree, however, the two approaches overlap—and they are certainly not, in any case, mutually exclusive. In short, the evidence suggests that efforts to control disease offer an unusually good opportunity to spend aid productively.

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