Governments are under continuous pressure to make difficult trade-offs about the use of scarce public resources. This applies to the budget as a whole, but also within sectors like health. The ongoing transition away from aid, along with a growing burden of non-communicable diseases, have put pressure on health budgets in recent years. Political commitments by most countries to universal healthcare coverage exacerbate these pressures, making investment decisions even harder.
Is there a “right” way to make such decisions? Deliberative democratic political theory claims that important public decisions with distributive consequences should be based on public reasons that are acceptable to the public who must live with the consequences. This notion is based on the Rawlsian idea of what is owed to free and equal moral citizens who live together in a pluralistic society.
What makes a reason publicly acceptable?
This is a challenging question. Part of the answer is procedural. In the context of health, procedural views have built on Norman Daniels and James Sabin’s concept of “accountability for reasonableness,” which assumes that we cannot agree on outcomes, but we can agree on a fair process. Such a process must meet four conditions: relevance, publicity, appeals, and enforcement. Loosely, this requires that the reasons that people offer in a process are relevant to the decision of how to allocate scarce resources; that they are transparent and accessible; that there are ways to challenge or appeal decisions; and that these key conditions are all enforced by some agent. These ideas have informed actual practice: the English National Institute for Heath and Care Excellence (NICE), which makes decisions about technologies and services the country’s National Health Service ought to pay for, adopted a procedural fairness approach during its early years (more on such approaches below).
Does this exhaust what one can say about public reasons? While this procedural guidance is useful, it includes only one substantive requirement for reasons, which is that they must be relevant. This is arguably slightly more rigorous than saying that reasons must be “acceptable” to others, but the question of how to judge a reason remains vague. Some would argue, as Daniels did in 2000, that this is a virtue of accountability for reasonableness, as in diverse societies we cannot agree on our reasons. But it remains an open question whether in practice we can further define public reasoning in ways that can guide government toward more legitimate justifications for its actions.
Some governments have introduced rigorous processes for health technology assessment (HTA) that utilize evidence and logic in ways that are intended to strengthen their claims to base their decisions on public reasons. These approaches include the use of cost-effectiveness analysis, often combined with other considerations in multicriteria approaches. These procedures clearly attempt to produce relevant reasons that take into account the benefit to society of treatments, relative to costs, and that also may consider equity issues, such as the age of the group most affected by a disease, whether the affected population is poor, the severity of the disease, and so on. Some agencies also utilize at least some form of stakeholder deliberation to decide how to make trade-offs among arguably incommensurate principles. These deliberations can and perhaps should be guided by accountability for reasonableness, but this takes us back to the matter of how we define acceptable public reasons once we have agreed that there a large number of valid criteria.
There are no easy answers. But with WHO and the UN endorsing HTA processes, and with a growing number of national governments across low- and middle-income countries setting up HTA agencies for making tough trade-offs, the legitimacy of such agencies and processes becomes all the more important if the promise of universal health coverage is to be realized.
Can we apply judicial standards for reasonableness to health budgeting?
Health budgeting trade-offs are not the only difficult choices governments must make. Those concerned with such decisions might wish to consider how governments make decisions outside of the health sector while also adhering to rigorous standards that can help ensure that these choices are defensible and that government officials are accountable for justifying them.
One approach to such standards emerges from the way that “reasonableness” has been defined through the evolution of administrative review by the judiciary. This area of the law ensures that government agencies do not act arbitrarily in exercising their mandates. The requirement for governments to avoid “arbitrary and capricious” behavior has been codified in statute and in case law around the world. The United States and Germany, which have very different legal systems, both have laws, like the US Administrative Procedure Act, which set limits on “unreasonable” government behavior. South Africa and Kenya have statutes on “administrative justice” and “ fair administrative action” that try to do the same. In other cases, standards have emerged through case review and are not codified in separate laws.
One of us (Jason) has discussed some of these standards and how they apply to public finances elsewhere. While the principles at stake were not developed specifically to guide health budget decision-making, they are clearly relevant. For example, an emerging norm across a number of countries is that governments must exercise proportionality when making trade-offs. Proportionality requires a balancing of interests such that if a policy will undermine the rights or interest of one party, it should do so only as far as necessary, and must generate a proportionate social gain.
In the context of healthcare allocation, this means that a decision to deny funding for a particular treatment must be justified in terms of how the resources from that decision will generate at least a proportionate gain for others. It also applies to situations where a decision to invest in a service or technology benefiting one population subgroup disadvantages another group. In the context of HTA, this is very much reflected in the notion of opportunity cost and the use of thresholds as decision rules (reflecting opportunity cost). By applying a cost-effectiveness cutoff aligned with the overall budgetary constraint and taking into account the potential health benefits of competing demands on the budget, the decisionmaker can meet the principle of proportionality. Indeed, the use of opportunity cost in HTA analyses helps accommodate these hard-to-contextualize trade-offs that come with allocation decisions, both when new technologies are rejected but also when they are adopted, in the latter case if the inclusion displaces more cost-effective interventions.
Reasonable public administrative action also requires countries to maintain a documentary record of the evidence they considered and how they used it to make a final determination. For a decision to be reasonable, it must not only be claimed that it is based on evidence, but there must also be a demonstration of actually having considered evidence in the final decision. This can be captured in a documentary record, but also requires meaningful engagement with the facts. This important point was captured in a recent US court decision related to access to health insurance, where the court wrote: "[s]tating that a factor was considered ... is not a substitute for considering it."
Reasonableness increasingly also includes a requirement for at least some level of public participation in administrative decisions. This is apparent not only in administrative law, but also in statutes related to specific sector policies, such as those developed for environmental decision-making and land-use policy, in the United States, Kenya, Hong Kong, Germany, and other nations. Evolving standards on participation require not only that stakeholders be heard, but that their inputs be given due consideration.
While courts have played an important role in setting and enforcing standards for reasonable decision-making, it is important to recognize that they have not always adhered to these principles themselves. Sometimes, governments that fail to properly justify their decisions have found them overturned, which is consistent with the need for acceptable public reasons. But in other cases, courts have failed to fully consider what makes for an acceptable reason, overturning rationing decisions that are reasonable under existing budget constraints.
We believe that the right role for courts is not to make budget allocation decisions, in health or any other sector, but to require that governments make such decisions in a reasonable way. An important recent decision that forces the US Internal Revenue Service to comply with the Administrative Procedures Act is a vital example. When courts force other agencies to adhere to the standards of reasonableness review, and do so themselves, they ensure that difficult decisions are made in ways that are as legitimate as possible, allowing for the fact that there will never be consensus on reasons.
Rigorous approaches to HTA are one way that the government partially adheres to Administrative Procedures Act-type standards in the field of health budgeting. But we can also judge the way that agencies undertake HTA against these standards. The use of cost effectiveness is one way to meet standards related to proportionality, but agencies must also justify their decisions in terms of the available evidence (which goes beyond any single study of cost effectiveness) and must publish documentation supporting their decisions. They must also meaningfully engage with the public before publishing a decision. Even those HTA agencies that employ rigorous approaches to make difficult coverage decisions can likely do more to justify these decisions in ways that are accessible and acceptable to the broader public. Asking whether the decisions these agencies take would meet the standards of administrative law for reasonableness review is one way to assess this.