Innovation and Impact
Over the past two decades, HEPL has developed innovative approaches to health equity and efficiency, establishing a novel approach to health policy that has achieved high impact. HEPL continues to build on and seize opportunities our research has created to bring new ideas to achieve health and well-being worldwide.
Economic theory offers the theoretical foundation for valuing costs in assessing medical and public health interventions. In a perfectly free market economy, for example, without market failures or distortions, the price of resources can be used as real resource costs—the opportunity costs—of a given intervention or program. Medical and public health programs, however, do not operate under ideal market conditions; therefore, prices cannot be used to value resources, and costs must be empirically estimated.
An exceptionally problematic stumbling block in health economics has been inaccurate conflation of prices, charges and costs, indeed many health economic evaluations use charges, prices, or payments as proxies for cost. However, using these measures, rather than the true costs of resources, results in inaccurate estimates, even cost-to-charge ratio adjustments, significantly miscalculates costs. This is because US health care market prices or charges do not reflect the opportunity costs to society of resources used to produce services and goods due to market failures and inclusion of profits in excess of actuarially fair allowances of risk and return on investment. This only occurs under perfect competition (price = marginal cost), which does not exist in US health care or insurance markets. Solving this problem is significant, it is a $3.5 trillion or 18% of the US economy proposition, vital to the nation’s economic well-being.
Our lab successfully initiated a number of innovative pathways and established pioneering approaches in health economics, principally costing techniques and economic evaluation. We established groundbreaking methods for measuring costs founded in the theory and process of identifying, estimating, and valuing resource costs, work that opened up new avenues of research in economic evaluation and new possibilities for addressing cost escalation and control in the health sector for health policy. We developed a novel micro-costing methodology and protocol for the first check list to standardize and provide guidelines for conducting, reporting and appraising micro-costing studies, enhancing the consistency, transparency, and comparability of such studies. Our micro-costing technique has been included in one of the two leading textbooks in health economics (Folland, Goodman and Stano 2017) and the definitive second panel on Cost-Effectiveness in Health and Medicine (Neumann et al 2017) as well as the US Agency for Health Care Research and Quality (AHRQ 2014).
Micro-costing findings surmount the technical hurdle of reflecting the true costs to health care systems and to society, and are able to provide transparent and consistent estimates. We have empirically tested this novel method in a series of cost and cost-effectiveness studies over several years, including the first cost-effectiveness analysis of a motivational interviewing for smoking cessation and abstinence for low-income pregnant women, which was also the first published study to estimate clinical benefits in terms of life-years and quality-adjusted life-years when low-income pregnant women quit smoking and continue to abstain. Our lab also published the first micro-costing study of the NIDA Cooperative Agreement Standard Intervention and enhanced modules for HIV prevention among drug-using women, advancing the field by developing a standardized and uniform methodology of cost estimation.
Ruger JP, Emmons KM, Kearney MH, Weinstein MC. “Measuring the Costs of Outreach Motivational Interviewing for Smoking Cessation and Relapse Prevention Among Low-Income Pregnant Women,” BMC Pregnancy and Childbirth, 2009; 9: 46.
Ruger JP, Abdallah AB, Cottler L. “Costs of HIV Prevention Among Out-of-Treatment Drug-Using Women: Results of a Randomized Controlled Trial,” Public Health Reports, 2010; 125(Suppl 1): 83-94.
Ruger JP, Chawarski M, Mazlan M, Luekens C, Ng N, Schottenfeld R. “Costs of Addressing Heroin Addiction in Malaysia and 32 Comparable Countries Worldwide,” Health Services Res, 2012; 47: 865-87.
Xu X, Yonkers KA, Ruger JP. “Costs of a Motivational Enhancement Therapy Coupled with Cognitive Behavioral Therapy versus Brief Advice for Pregnant Substance Users,” PLoS One, 2014; 9(4): e95264.
Ruger JP, Reiff M. “A Checklist for the Conduct, Reporting, and Appraisal of Micro-costing Studies in Health Care: Protocol Development,” JMIR Research Protocols, 2016; 5(4): e195.
Economic Evaluation of Substance Abuse Treatment and HIV/AIDS Prevention Services for Women
A fundamental problem at the intersection of economics, substance abuse, infectious diseases, and equity is a lack of understanding of the costs and effectiveness of treatment options for vulnerable populations. Building on our discoveries in micro-costing, our lab for the first time developed novel tools for uncovering risks and benefits to substance abusing pregnant women, human fetuses and neonates of behavioral treatments for multiple and co-occurring substance abuse disorders and HIV/AIDS prevention. We discovered cost savings to society for reaching this underserved population offering novel approaches for policy makers.
Ruger JP, Weinstein MC, Hammond SK, Kearney MH, Emmons KM. “Cost-Effectiveness of Motivational Interviewing for Smoking Cessation and Relapse Prevention among Low-Income Pregnant Women: A Randomized Controlled Trial,” Value in Health, 2008; 11(2): 191-8.
Ruger JP, Emmons KM. “Economic Evaluations of Smoking Cessation and Relapse Prevention Programs for Pregnant Women: A Systematic Review,” Value in Health, 2008; 11(2): 180-90.
Ruger JP, Abdallah AB, Luekens C, Cottler L. “Cost-Effectiveness of Peer-Delivered Interventions for Cocaine and Alcohol Abuse among Women: A Randomized Controlled Trial,” PLoS One, 2012; 7(3).
Ruger JP, Lazar CM. “Economic Evaluation of Pharmaco- and Behavioral Therapies for Smoking Cessation: A Critical and Systematic Review of Empirical Research,” Ann Rev of Pub Hlth, 2012: 279-305.
Ruger JP, Abdallah AB, Ng NY, Luekens C, Cottler L. “Cost-Effectiveness of Interventions to Prevent HIV and STDs Among Women: A Randomized Controlled Trial,” AIDS and Behavior, 2014; 18: 1913-23.
Equity and Efficiency in Emergency Department Utilization
Our work with vulnerable populations demonstrated the need to better understand access to and utilization of necessary treatments at the systems level. We redefined frequent utilization, discovering for the first time and contrary to the prevailing view, that frequent users were a heterogeneous, rather than homogeneous, group, with implications for policy makers targeting frequent users to reduce hospital overcrowding and lower costs. Building on our heterogeneity finding, which was key to understanding the mechanisms of utilization behavior, our lab also developed a pioneering method of identifying high-risk patients with greater reliability and validity, improving the accuracy of triage and resource allocation for patients, hospitals and society.
Ruger JP, Richter CJ, Lewis LM. “Association between Insurance Status and Admission Rate for Patients Evaluated in the Emergency Department,” Academic Emergency Medicine, 2003; 10(11): 1285-8.
Ruger JP, Richter CJ, Spitznagel EL, Lewis LM. “Analysis of Costs, Length of Stay, and Utilization of Emergency Department Services by Frequent Users: Implications for Health Policy,” Academic Emergency Medicine, 2004; 11(12): 1311-7.
Ruger JP, Richter CJ, Lewis LM. “Clinical and Economic Factors Associated with Ambulance Use to the Emergency Department,” Academic Emergency Medicine, 2006; 13(8): 879-85.
Ruger JP, Lewis LM, Richter CJ. “Identifying High-Risk Patients for Triage and Resource Allocation in the ED,” American Journal of Emergency Medicine, 2007; 25(7): 794-8.
Ruger JP, Lewis LM, Richter CJ. “Patterns and Factors Associated with Intensive Utilization of ED Services: Implications for Allocating Resources,” American J of Emergency Medicine, 2012; 30: 1884-94.
Health System Financing and Health and Economic Welfare
Another innovative line of research stemming from our lab is our studies on financial protection in health. Moving from the systems to the societal level, our lab created a new paradigm for health system financing grounded in capability theory. Our work led to a revolutionary understanding, at the intersection of health and economic welfare, of the demand for, and health and financial impacts of, health insurance, discovering coping strategies for external health shocks by income status and for the first time studying the impact of medical expenses on the allocation of household capabilities among the poor.
At the time of our original observations, the conventional paradigm was based on two primary metrics, catastrophic and impoverished spending. Both methods measure percentage of out-of-pocket health spending in households’ overall spending, differing in how medical spending is deemed problematic: catastrophic spending is above a threshold percentage, impoverishing spending pushes a household below the poverty line. In a paper in American Journal of Public Health, our lab conducted an original study focusing on two revisions of these metrics -- (i) assessing out-of-pocket spending among those with chronic illnesses as opposed to those without such conditions and (ii) estimating out-of-pocket spending burden ratio using household equivalent income from the Organisation for Economic Co-operation and Development Equivalence Scale. We found that lower income groups pay disproportionately more of their incomes on out-of-pocket healthcare spending compared with higher income groups and low-income individuals with multiple chronic conditions are particularly vulnerable. The World Health Organization (WHO) attached importance to this paper as input to its international report on the subject (WHO 2009). This study, along with our earlier study of differences in health care utilization by ability to pay and our Lancet critique of the conventional approach for failing to capture cost barriers to access, were important contributions to knowledge that increased our understanding of the problem, but we were not satisfied because conventional methodologies, too narrow and unidimensional to fully capture detrimental financial consequences of health needs, remained fundamentally unsound.
The field needed a broader, multidimensional framework, and we created a new one. With a unique grasp of underlying theoretical foundations, we critiqued the existing paradigm and developed a novel framework for financial protection in health published in PLoS Medicine. This paper gained recognition by the Lancet Task Force on Non-communicable Diseases and Economics (Lancet 2018) and by the World Bank (World Bank 2015). Health insurance creates important conditions for human flourishing by keeping people healthy and protecting ill individuals and their households from insecurity, vulnerabilities and harmful deprivations in essential capabilities, a more accurate picture of how individuals and households of different income levels fare across dimensions when confronting a health need. The conventional framework fails to addresses these key goals and to expose the harmful health and financial consequences of inadequate health insurance and financial protection, and the distribution of those consequences.
Our original observations triggered an innovative line of studies and the development of original comprehensive household surveys based on my novel framework. For the first time, we empirically studied these dimensions of financial protection affected by health care needs, including health insurance’s direct, health care related effects and its social impact beyond health. It makes sense that the financial and health implications of health needs are interrelated (short term coping strategies, such as borrowing and debt, can damage household economic and health security over time; compromised food consumption and stress caused by economic burdens can undercut health, and poor health weakens one’s ability to work or attend school, diminishing one’s capacity to repay loans and to afford other expenses such as education.) For the first time we studied the effect of health expenses on household capabilities and resource allocation. Conventional methods not only underestimate adverse consequences of inadequate financial protection in health, their inadequate representation of risk protection and of costs has misled the field away from solutions as well as misinformed policy makers who, relying on conventional measures, come up with specious policy prescriptions. Two of our papers were cited by the Philippine Institute for Development Studies and French National Research Institute for Social Development and Vietnam Academy of Social Sciences, respectively.
Ruger JP, Kim H-J. “Out-of-Pocket Healthcare Spending by the Poor and Chronically Ill in the Republic of Korea,” American Journal of Public Health, 2007; 97(5): 804-11.
Nguyen KT, Khuat OTH, Ma S, Pham DC, Khuat GTH, Ruger JP. “Coping with Health Care Expenses Among Poor Households: Evidence from a Rural Commune in Vietnam,” Social Science & Medicine, 2012; 74(5): 724-33.
Nguyen KT, Khuat OTH, Ma S, Pham DC, Khuat GTH, Ruger JP. “Impact of Health Insurance on Health Care Treatment and Cost in Vietnam: A Health Capability Approach to Financial Protection,” American Journal of Public Health, 2012; 102(8): 1450-61.
Nguyen KT, Khuat OTH, Ma S, Pham DC, Khuat GTH, Ruger JP. “Effect of Health Expenses on Household Capabilities and Resource Allocation in a Rural Commune in Vietnam, PLoS One, 2012; 7(10).
Ruger JP. An Alternative Framework for Analyzing Financial Protection in Health, PLoS Medicine, 2012;9..
Governance of Health
At the global level, leveraging international datasets as well as designing original surveys to collect new quantitative and qualitative data, our lab pioneered a mixed-methods approach to better understanding the complex interaction between global governance institutions and domestic health and social policies. We created a new framework of aid effectiveness, uncovering respective roles and improving the social science basis for policy design, enabling enhanced efficiency and equity in development assistance for health.
Baird J, Ma S, Ruger JP. “Effects of the World Bank's Maternal and Child Health Intervention on Indonesia’s Poor: Evaluating the Safe Motherhood Project,” Social Science & Medicine, 2011; 72(12).
Pallas SW, Nonvignon J, Aikins M, Ruger JP. “Responses to Donor Proliferation in Ghana's Health Sector: A Qualitative Case Study,” Bulletin of the World Health Organization, 2015; 93(1): 11-8.
Pallas SW, Khuat THO, Le QD, Ruger JP. “The Changing Donor Landscape of Health Sector Aid to Vietnam: A Qualitative Case Study,” Social Science & Medicine, 2015; 132: 165-72.
Pallas SW, Ruger JP. “Does Donor Proliferation in Development Aid for Health Affect Health Service Delivery and Population Health? Cross-Country Regression Analysis from 1995 to 2010,” Health Policy and Planning, 2017; 32(4): 493-503.
Pallas SW, Ruger JP. “Effects of Donor Proliferation in Development Aid for Health on Health Program Performance: A Conceptual Framework,” Social Science & Medicine, 2017; 175: 177-86.
Our lab was the first to develop a novel theoretical and empirical approach to health capability, beginning with Dr. Prah Ruger’s Harvard PhD dissertation. In this area of our research, we not only challenged existing paradigms but developed and empirically assessed a novel paradigm, the health capability paradigm (HCP), of health promotion that forms the basis for healthy public policies, beginning with two 2004 papers published in Lancet, one of which was later cited by United Nations High Commissioner for Refugees and United Nations Education, Scientific and Cultural Organization (UNESCO).
The HCP is an innovative interdisciplinary theoretical framework integrating diverse sources of information in economics, political science, and ethics, creating new theoretical concepts and methods and producing findings unavailable from the application of only one discipline. We developed the HCP by questioning, indeed critiquing, the conventional health economic approach, challenging economic theory’s foundational principles of rational behavior and expected utility theory.
Standard theory suggests that rational decisions have three qualities: internal consistency of choice, maximization of objectives and pursuit of self-interest. Paul Samuelson’s (1947) Foundations of Economic Analysis defined preference as a binary relation underlying consistent choice revealed through consistency of choices taken. Choice functions also require contraction consistency (chosen alternative, X, must continue to be chosen even if the set of possible options from which X is chosen contracts) and expansion consistency (chosen alternative, X, must continue to be chosen even if the set of possible options from which X is chosen expands). However, choices in health and health care, individual or social, cannot be represented by transitive binary relations, and in fact they are proved to be intransitive. Thus, linking choice to preference is a flawed basis for health economics. Numerous health care and public health choice examples illustrate the problem with these conditions, which fail to account for external objectives, values, or norms, which matter for decision-making. Internal consistency of choice axioms fail to illuminate real behavior in the real world and fail to understand why people make the choices they make; these axioms lack descriptive and predictive reliability and validity in health. Rather, we needed to extend rationality to include external criteria such as norms, values and principles.
A wider set of motivations is included in the HCP as described in two later papers, one of which gained recognition by the U.S. government, Obama Administration, and was cited in multiple US government briefs to support the constitutionality of the individual mandate in the Affordable Care Act litigation in the Supreme Court and lower federal courts in California, Florida, Virginia and Michigan (relying on our paper in support of the argument that healthcare markets are unique and therefore minimum coverage provisions are a necessary and proper means of government regulation). Moreover, the puzzle of uncertainty, as demonstrated by the Ellsberg paradox (people prefer risk in situations where they know probabilities than when they do not) and the Allais paradox (expected utility theory is mistaken in not including mental magnitudes, processes, and counterfactuals) poses a particularly problematic roadblock for expected utility theory because health and health care are replete with uncertainly and incompleteness. A plural evaluative framework was needed, which is what the HCP provides, having a ground-breaking impact on the field.
Ruger JP. “Aristotelian Justice and Health Policy: Capability and Incompletely Theorized Agreements. PhD Dissertation, Harvard University.
Ruger JP. “Ethics of the Social Determinants of Health,” Lancet, 2004; 364(9439): 1092-7.
Ruger JP. “Health and Social Justice,” Lancet, 2004; 364(9439): 1075-80.
Ruger JP. “Health Capability: Conceptualization and Operationalization,” American Journal of Public Health, 2010; 100(1): 41-9
Ruger JP. “The Moral Foundations of Health Insurance,” Quarterly Journal of Medicine, 2007; 100(1): 53-7.