Estimating a cost-effectiveness threshold for the Spanish NHS

Abstract

The cost of generating a quality-adjusted life year (QALY) within a National Health Service provides an approximation of the average opportunity cost of funding decisions. This information can be used to inform a cost-effectiveness threshold. The aim of this paper is to estimate the cost per QALY at the Spanish National Health Service. We exploit variation across 17 regional health services and the exogenous changes in expenditure that took place as a consequence of the economic crisis over 5years of data. We conduct fixed effect models and use an instrumental variable approach to test for potential remaining endogeneity. Our results show that health expenditure has a positive and significant effect on population health, with an average spending elasticity of 0.07. This translates into a cost per QALY of between 22,000Euro and 25,000Euro. These values are below the cost-effectiveness threshold figure of 30,000Euro commonly cited in Spain.