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Feasibility, Effectiveness & Efficiency in Health Policy Analysis

Instructor: Daniel Murdock

Daniel has taught Public Health at the graduate level and has a Ph.D. in Behavioral Sciences & Health Education.

In this lesson, we'll examine key criteria that are used in health policy analysis to compare different policy alternatives. We'll discuss issues of effectiveness, economic efficiency, equity, and political feasibility.

Goals, Objectives & Criteria

It's the beginning of the year and Erin has decided to make a New Year's resolution. Her goal is to lose weight this year. Specifically, Erin wants to lose 20 pounds by the end of the year. She plans to accomplish this by jogging for 30 minutes every day before work. Erin considered a few different weight loss strategies before committing to a jogging routine. She ultimately decided on a jogging routine because it was easier, more affordable, and more effective than the other weight loss strategies she considered.

Erin's New Year's resolution can help us understand some important concepts related to health policy analysis. Every health policy establishes goals, which are broad statements about desired long-term achievements. While Erin's goal is to lose weight, a health policy goal might be to expand health insurance coverage, for example.

Goals are then translated into objectives, which are more concrete statements about desired end states. Erin's objective is to lose 20 pounds by the end of the year. A corresponding objective for our health policy goal would be to reduce the uninsured rate by 10% over 5 years.

Criteria are the measurable dimensions of objectives. We use criteria to compare different strategies for meeting our objectives. Erin uses three criteria to compare different weight loss strategies: ease, affordability, and effectiveness. There are many different criteria that we can use to compare health policy strategies. Let's examine some key criteria involved in health policy analysis.

Policy analysis helps policymakers choose between alternative policy directions.
Pathway with a fork in the road

Effectiveness

One of the reasons why Erin commits to a jogging routine is because jogging is a highly effective weight-loss strategy. Erin is using a criterion that is commonly applied in health policy analysis.

Effectiveness measures the degree to which a policy option addresses or responds to a problem. In other words, effectiveness is a measure of how well a policy achieves its goals.

If our health policy goal is to increase health insurance coverage, then a policy option that increases coverage by 10% would be more effective than a policy option that only increases coverage by 5%.

Economic Efficiency

Another reason why Erin commits to her jogging routine is because jogging is an affordable weight loss strategy. Economic criteria also play an important role in health policy analysis. Health policies can have a major impact on government spending, government revenues, and the overall economy. In fact, health care spending accounts for nearly a fifth of the total U.S. economy.

Economic efficiency measures the ratio of economic costs to economic benefits of a policy option. The most economically efficient health policies maximize benefits for society while minimizing costs. Policies that achieve more of a desired goal at less cost are more efficient than policies that achieve the same goal at greater cost. Similarly, policies that achieve less of a desired goal at the same cost are less economically efficient.

Let's go back to our health insurance policy example to demonstrate this concept. A policy option that expands insurance coverage by 10% at a cost of $10 billion a year is less economically efficient than a policy option that expands coverage by 10% at a cost of $8 billion a year.

Equity

The basic principle of fairness is another important consideration that comes up in health policy analysis. Equity is a criterion for assessing the degree to which a health policy distributes services and economic benefits fairly across society. Equity measures the degree of disproportionate impact that a policy option has on some social groups or regions.

Measuring equity is not as straightforward as measuring the other criteria that we've discussed so far. There is no universally agreed upon answer for how the costs and benefits of health policies should be distributed across society. Typically, however, policymakers measure equity by considering how much of a needed benefit different target groups receive.

For example, Americans living in rural areas are more likely to be uninsured than Americans living in urban areas. So, a health policy that expands insurance coverage more in rural areas than in urban areas would be considered more equitable than a policy that expands coverage by the same amount in both rural and urban areas.

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