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Cost-effectiveness analysis in the health sector when there is a private alternative to public treatment

  • Hoel, Michael


    (Department of Economics)

In health economics, cost-effectiveness is defined as maximized health benefits for a given health budget. When there is a private alternative to public treatments, care must be taken when using costeffectiveness analysis to decide what types of treatments should be included in the public program. The correct benefit measure is in this case the sum of health benefits to those who would not be treated without the public alternative and the cost savings to those who would otherwise choose private treatment. In the socially optimal ranking of treatments to be included in the public health program, treatments should be given higher priority the higher are costs per treatment for a given ratio of gross heath benefits to costs.

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Paper provided by Oslo University, Health Economics Research Programme in its series HERO On line Working Paper Series with number 2005:13.

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Length: 16 pages
Date of creation: 07 Jun 2009
Date of revision:
Handle: RePEc:hhs:oslohe:2005_013
Contact details of provider: Postal: HERO / Institute of Health Management and Health Economics P.O. Box 1089 Blindern, N-0317 Oslo, Norway
Phone: 2307 5309
Fax: 2307 5310
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