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Prioritizing public health expenditures when there is a private alternative

Cost-effectiveness analysis often plays an important role in prioritization among different types of public health expenditures. Cost-effectiveness is defined as the maximal health benefits for given expenditures on health care. With a private health sector as a supplement to the public sector, the socially optimal ranking of treatments to be included in the public health program is changed. The larger are the costs per treatment for a given benefit-cost ratio, the higher priority should the treatment be given. The more heterogeneous preferences for a particular treatment are, the lower priority should this treatment be given. If the health budget does not exceed the socially optimal size, treatments with sufficiently low costs should not be performed by the public health system if there is a private alternative

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File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2005/Memo-16-2005.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 16/2005.

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Length: 20 pages
Date of creation: 25 May 2005
Date of revision:
Handle: RePEc:hhs:osloec:2005_016
Contact details of provider: Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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  1. Johannesson, Magnus & Weinstein, Milton C., 1993. "On the decision rules of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 12(4), pages 459-467, December.
  2. Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
  3. Culyer, A. J. & Wagstaff, Adam, 1993. "QALYs versus HYEs," Journal of Health Economics, Elsevier, vol. 12(3), pages 311-323, October.
  4. Blomqvist, Ake & Johansson, Per-Olov, 1996. "Economic Efficiency and Mixed Public/Private Insurance," SSE/EFI Working Paper Series in Economics and Finance 110, Stockholm School of Economics.
  5. Olsen, Jan Abel, 1997. "Theories of justice and their implications for priority setting in health care," Journal of Health Economics, Elsevier, vol. 16(6), pages 625-639, December.
  6. 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.
  7. Gafni, Amiram & Birch, Stephen & Mehrez, Abraham, 1993. "Economics, health and health economics: HYEs versus QALYs," Journal of Health Economics, Elsevier, vol. 12(3), pages 325-339, October.
  8. Dolan, Paul, 1998. "The measurement of individual utility and social welfare," Journal of Health Economics, Elsevier, vol. 17(1), pages 39-52, January.
  9. Bleichrodt, Han & Quiggin, John, 1999. "Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?," Journal of Health Economics, Elsevier, vol. 18(6), pages 681-708, December.
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