"Discounting is a mathematical procedure for adjusting future health care costs and outcomes to 'present value,'" say Johan L. Severens, PhD and Richard J. Milne PhD, authors of an editorial published in the July issue of Value in Health . This economic process allows comparison of healthcare programs with immediate benefits, such as renal dialysis, with those that have longer-term benefits, such as screening and pediatric vaccination for hepatitis B.
The method that is generally used, which discounts health benefits at the same constant rate as costs ("uniform discounting"), gives high priority to health interventions that have immediate benefits at the expense of interventions where benefits are not experienced until many years in the future. Relatively low value is attributed to health interventions with benefits that occur in the distant future.
According to the literature summarized in their editorial, the magnitude of individuals' preference to gain health outcome as soon as possible and to postpone expenses, reflected by the so called 'time preference,' varies widely. Individuals also report higher time preferences regarding the near future, which suggests that discount rates for health benefits should decline with time. Little evidence supports uniform discounting.
No empirical evidence exists to determine an optimal and final solution regarding the methodology for discounting in economic evaluation. This overview suggests that the current method of discounting should be reconsidered. Different countries may need to set up their own methodologies according to their local economies and healthcare
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Contact: Sharon Agsalda
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Blackwell Publishing Ltd.
3-Aug-2004