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Advances in cost-effectiveness analysis of health interventions

In: Handbook of Health Economics

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  • Garber, Alan M.

Abstract

Recent work has clarified the welfare implications of the application of cost-effectiveness analysis to the allocation of health care. Although cost-effectiveness analysis shares many similarities with cost-benefit analysis, it did not develop as an outgrowth of neoclassical welfare economics. Consequently, even though the welfare implications of public decisionmaking based on cost-benefit analysis have long been understood, until recently the conditions under which decisions made on the basis of cost-effectiveness criteria lead to potential Pareto improvement had received little attention.This chapter describes the welfare economic foundations of cost-effectiveness analysis and how such foundations can be applied to resolve controversies in the application of the technique. It also discusses procedures for applying the technique, the circumstances under which decision rules based on cost-effectiveness analysis have desirable welfare economic properties, the appropriate perspective for the analysis, and issues in measuring outcomes. Even when standard welfare economic assumptions are not fully accurate descriptions of the markets and conditions in which health care is delivered, cost-effectiveness analysis can be a useful guide to allocation decisions.

Suggested Citation

  • Garber, Alan M., 2000. "Advances in cost-effectiveness analysis of health interventions," Handbook of Health Economics,in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 4, pages 181-221 Elsevier.
  • Handle: RePEc:eee:heachp:1-04
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    Cited by:

    1. repec:spr:annopr:v:251:y:2017:i:1:d:10.1007_s10479-015-1910-9 is not listed on IDEAS
    2. Hoel, Michael, 2005. "Prioritizing public health expenditures when there is a private alternative," Memorandum 16/2005, Oslo University, Department of Economics.
    3. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
    4. Kessler, Daniel & McClellan, Mark, 2002. "Malpractice law and health care reform: optimal liability policy in an era of managed care," Journal of Public Economics, Elsevier, vol. 84(2), pages 175-197, May.
    5. Hoel, Michael, 2007. "What should (public) health insurance cover?," Journal of Health Economics, Elsevier, vol. 26(2), pages 251-262, March.
    6. Jena, Anupam B. & Philipson, Tomas J., 2013. "Endogenous cost-effectiveness analysis and health care technology adoption," Journal of Health Economics, Elsevier, vol. 32(1), pages 172-180.
    7. repec:ebl:ecbull:v:9:y:2005:i:7:p:1-8 is not listed on IDEAS
    8. Anirban Basu & Bhakti V. Arondekar & Paul J. Rathouz, 2006. "Scale of interest versus scale of estimation: comparing alternative estimators for the incremental costs of a comorbidity," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1091-1107.
    9. Nissim Ben-David & Tchai Tavor, 2011. "Measurement of the social loss of wrong public budget allocation," International Journal of Social Economics, Emerald Group Publishing, vol. 38(3), pages 209-217, February.
    10. Sharma, Rajiv & Stano, Miron & Haas, Mitchell, 2004. "Adjusting to changes in health: implications for cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 23(2), pages 335-351, March.
    11. Carmen Herrero & Juan Moreno-Ternero, 2008. "Opportunity analysis of newborn screening programs," Review of Economic Design, Springer;Society for Economic Design, vol. 12(4), pages 259-277, December.
    12. Michal Jakubczyk, 2016. "Choosing from multiple alternatives in cost-effectiveness analysis with fuzzy willingness-to-pay/accept and uncertainty," Working Papers 2016-006, Warsaw School of Economics, Collegium of Economic Analysis.
    13. Toshiaki Iizuka & Katsuhiko Nishiyama & Brian Chen & Karen Eggleston, 2017. "Is Preventive Care Worth the Cost? Evidence from Mandatory Checkups in Japan," NBER Working Papers 23413, National Bureau of Economic Research, Inc.
    14. Anupam Jena & Tomas Philipson, 2009. "Endogenous Cost-Effectiveness Analysis in Health Care Technology Adoption," NBER Working Papers 15032, National Bureau of Economic Research, Inc.
    15. Fuhmei Wang & Jung-Der Wang, 2017. "Telehealth and Sustainable Improvements to Quality of Life," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 12(1), pages 173-184, March.
    16. Bengt Liljas & Göran S. Karlsson & Nils-Olov Stålhammar, 2008. "On future non-medical costs in economic evaluations," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 579-591.

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    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

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