Final Report on RREF 2001 - Department of Health

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Part B: Development of Options for a Revised RREF • The weight for the Koori population is doubled as the Commonwealth provides double the per capita funding for the Koori population in each state; • The five non-metropolitan regions get a rural weighting of 5%, an arbitrary decision; • The two regions of greatest socio-economic disadvantage, as measured by the IRSED, are weighted by 10%; the decision to give these regions a weighting recognises the effect of socio-economic disadvantage on need for disability services, but the decision to weight only two regions, and both by 10%, is arbitrary. 4.2 PRINCIPAL COMPONENTS ANALYSIS In considering options for relative weighting of the variables, the RREF Review undertook a principal components analysis (PCA). PCA can provide an indication of the contribution that each variable makes to the total variation among all the variables when they are considered together. PCA is especially useful when there are a large number of possible contributory variables and the impact of each is not readily apparent. PCA was carried out to test the relationships between five of the weighting variables. The ARIA was excluded as in preliminary analysis it was found to swamp the effect of all other variables. The residential care shortfall variable was also excluded as it did not correlate with any of the other variables and so did not contribute to any component. Two principal components were identified: 1. The two variables that contributed most to the first component were median household income and life expectancy. High correlation between these two variables indicated a substantial overlap and rather than using this first component in the RREF, the preferred option is to use each separately and to model one option including both variables and one including median household income only. 2. The two variables that contributed most to the second component were Koori population and population speaking a language other than English at home. The contributions of these variables were inversely correlated, and it can be concluded that each contributes to the component in a different way and that including each in the RREF as a separate variable has a similar effect to including the second component. The first component explained 50% of the total variance and the second component 25%. Inclusion of the three variables that contributed strongly to the two principal components - median household income, cultural diversity and Koori population - in the RREF captures a large proportion of the total variance. The component loadings did not however give any clear guidance that any one variable should be weighted more than the others. 4.3 EXPERT ADVICE Expert advice was received from both the Departmental Steering Committee and the wider Reference Group of representatives of provider and consumer groups. These two groups brought together a wide range of statistical skills and practical experience in the field. <strong>Final</strong> <strong>Report</strong> July 2001 44
Part B: Development of Options for a Revised RREF Both groups considered that the range of variables that had been considered had covered the main factors affecting need for HACC services and that inclusion of six variables in the base populations and six need factors for weighting would give appropriate recognition to these factors in the RREF. With regard to grounds for weighting any one of these variables more than another, the expert opinion was that options should be modelled to illustrate the effects of weighting, with the unadjusted variables providing the basis for comparison. 4.4 EFFECTS OF WEIGHTING OF VARIABLES There are a variety of options for weighting variables and it was considered useful to model some options for the RREF without adjusting the weighting of need variables and to provide examples with adjusted weightings to demonstrate the impact of such adjustments. With unadjusted weighting, the contribution that each variable makes to the overall outcome reflects the distribution of scores across LGAs. For all variables, the highest need LGA gets a score of 9, and the lowest get a score of 0, but variable A on which a large number of LGAs get a low score and a few get a high score will have less impact overall than variable B on which a large number of LGAs get a high score and a few get a low score. If it is considered that variable A has a markedly stronger impact on the need for HACC services than variable B, there may be grounds for adjusting the weighting for variable A to take account of this relationship. Reasons that might be considered for varying the weighting of different variables were canvassed in the Consultations and are noted below. Modelling of options with and without adjustments to the weighting of the need variables is useful for illustrating the effects of varying the weighting between variables. It should however be noted that the effects of changing the weighting of any one variable are constrained as the weightings for all variables have to total 100%. Increasing the weighting of one variable thus reduces the weighting of others; for example, in a five variable model in which each variable happened to contribute 20%, doubling of one variable would increase that variable to 33% and reduce the other four to 16.6% each. 4.5 OPTIONS FOR CONSIDERATION FOR WEIGHTING OF NEED VARIABLES The Options Paper illustrated two sets of options for adjusting the weightings of the need variables, by way of (1) reducing the number of variables to be included in the RREF from 6 to 4, and (2) by doubling the weighting of some variables. The Consultations sought views on these options. What are the options for weighting the variables? • Should all variables evenly weighted? • Which if any of the variables should be weighted more than others, and for what reasons? <strong>Final</strong> <strong>Report</strong> July 2001 45
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FINAL REPORT REVIEW OF THE RELATIVE
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STEP 3: OPTIONS FOR SCALING NEED VA
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ABBREVIATIONS AND NOTE ON TERMINOLO
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ACKNOWLEDGEMENTS An exercise as ext
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DACS • 2.5% of children in the 0-
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LGA Median H’hold Inc. YLD Lang o
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Department of Human Services 1999b.
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Final Report on RREF 2001 - Department of Health

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