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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. Richard T. Meenan & Somnath Saha & Roger Chou & Karleen Swarztrauber & Kathryn Pyle Krages & Maureen C. O'Keeffe-Rosetti & Marian McDonagh & Benjamin K. S. Chan & Mark C. Hornbrook & Mark Helfand, 2007. "Cost-Effectiveness of Echocardiography to Identify Intracardiac Thrombus among Patients with First Stroke or Transient Ischemic Attack," Medical Decision Making, , vol. 27(2), pages 161-177, March.
    2. Michał Jakubczyk & Bogumił Kamiński, 2017. "Fuzzy approach to decision analysis with multiple criteria and uncertainty in health technology assessment," Annals of Operations Research, Springer, vol. 251(1), pages 301-324, April.
    3. Hoel, Michael, 2005. "Prioritizing public health expenditures when there is a private alternative," Memorandum 16/2005, Oslo University, Department of Economics.
    4. Boone, J., 2013. "Does the Market Choose Optimal Health Insurance Coverage," Other publications TiSEM f7691fbf-f770-4714-b1b4-1, Tilburg University, School of Economics and Management.
    5. 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.
    6. Boone, Jan, 2013. "Does the market choose optimal health insurance coverage?," CEPR Discussion Papers 9420, C.E.P.R. Discussion Papers.
    7. 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.
    8. Iizuka, Toshiaki & Nishiyama, Katsuhiko & Chen, Brian & Eggleston, Karen, 2021. "False alarm? Estimating the marginal value of health signals," Journal of Public Economics, Elsevier, vol. 195(C).
    9. Hoel, Michael, 2007. "What should (public) health insurance cover?," Journal of Health Economics, Elsevier, vol. 26(2), pages 251-262, March.
    10. 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.
    11. Alexander Kuhlmann & J.-Matthias Graf Schulenburg, 2018. "Authors’ reply to Gandjour: “Modeling the cost-effectiveness of infant vaccination with pneumococcal conjugate vaccines in Germany”," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(3), pages 473-481, April.
    12. Fuhmei Wang, 2021. "The Influences of Prevention on the Quality of Life," Applied Research in Quality of Life, Springer;International Society for Quality-of-Life Studies, vol. 16(1), pages 129-139, February.
    13. repec:ebl:ecbull:v:9:y:2005:i:7:p:1-8 is not listed on IDEAS
    14. Ana Aizcorbe & Nicole Nestoriak, 2010. "Price Indexes for Drugs: A Review of the Issues," BEA Working Papers 0050, Bureau of Economic Analysis.
    15. 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, October.
    16. Nissim Ben‐David & Tchai Tavor, 2011. "Measurement of the social loss of wrong public budget allocation," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 38(3), pages 209-217, February.
    17. 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.
    18. 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.
    19. Michal Jakubczyk, 2016. "Choosing from multiple alternatives in cost-effectiveness analysis with fuzzy willingness-to-pay/accept and uncertainty," KAE Working Papers 2016-006, Warsaw School of Economics, Collegium of Economic Analysis.
    20. Andrews, Brendon P., 2023. "Economic Evaluation under Ambiguity and Structural Uncertainties," Working Papers 2023-9, University of Alberta, Department of Economics, revised 31 Dec 2024.
    21. Brekke, Kurt R. & Dalen, Dag Morten & Straume, Odd Rune, 2023. "The price of cost-effectiveness thresholds under therapeutic competition in pharmaceutical markets," Journal of Health Economics, Elsevier, vol. 90(C).
    22. 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.
    23. 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, May.

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    JEL classification:

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

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