Cost-Effectiveness Analysis and Policy Choices: Investing in Health Systems

By Murray, C. J. L.; Kreuser, J. et al. | Bulletin of the World Health Organization, July-August 1994 | Go to article overview

Cost-Effectiveness Analysis and Policy Choices: Investing in Health Systems


Murray, C. J. L., Kreuser, J., Whang, W., Bulletin of the World Health Organization


Introduction

Cost-effectiveness analysis of health sector interventions was first applied in the 1960s based on methods developed to analyse military investments (1). Since 1970, the number of published studies using cost-effectiveness analysis has been steadily rising, reflecting a growing concern for the appropriate use of scarce health sector resources (2). Initially, most cost-effectiveness studies reported results using indicators such as the cost per case diagnosed and treated of a particular disease or the cost per fully immunized child. These studies using outcome or benefit measures that are very disease or context specific have been gradually replaced by studies using more general measures of health outcome. With more widespread reporting of results in terms of costs per quality-adjusted life year (QALY) or other general health measure, comparisons of the cost-effectiveness of interventions targeting different health problems have become possible. League tables of the cost-effectiveness of different interventions are a natural consequence (3-8).

Two landmark policy analyses have provided an impetus to using cost-effectiveness to compare a wide range of health interventions. These exercises provide enough information so that cost-effectiveness analysis for the first time can be used to inform resource allocations across the entire health sector. First, the Oregon Health Services Commission (9-18) examined 714 condition-treatment pairs (called interventions in the rest of the following discussion) and calculated the cost per QALY. The valuation of outcomes from medical intervention and the rankings from cost-effectiveness analysis were then subject to extensive public review through a series of town meetings. The rank list of interventions from this process can then be used for selecting the interventions that Medicaid will finance in the State, which plans to fund (in order of the rank list) each intervention maximally until the budget runs out. This sectoral application of cost-effectiveness is now being implemented (18). The second major policy review was the Health Sector Priorities Review undertaken by the World Bank from 1987 to 1993 (7). Twenty-six major health problems of developing countries were reviewed by teams of economists, public health specialists and epidemiologists. The cost-effectiveness of more than 50 specific health interventions were evaluated using a standard methodology for costs and benefits.(a) These databases provide useful information on cost-effectiveness which will help determine resource allocations across the entire health sector.

Building largely on the Health Sector Priorities Review, the World Bank has promoted in the World development report 1993: investing in health (WDR) the concept of using cost-effectiveness of health sector interventions and the burden of disease of health problems to develop essential packages of clinical and preventive care (23). The WDR also proposes that cost-effectiveness analysis be used to determine the package of services covered by insurance schemes and to inform health research priorities. In this issue of the Bulletin, Bobadilla et al. (24) provide details on the method and rationale for selection and of interventions and their quantities in the proposed package. In brief, estimates of the current burden of disease are combined with a cost-effectiveness rank list of interventions, to derive packages of services that, for a given budget, will purchase the largest improvement in health as measured by DALYs (disability-adjusted life years). Given the considerable attention garnered by the WDR, it is important to examine carefully the implications of this new and more extensive application of cost-effectiveness analysis.

Limitations of sectoral cost-effectiveness

In recent years, the theoretical basis for using cost-effectiveness analysis to guide health sector resource allocations has been discussed: the validity of DALY or QALY maximization as a goal for the health sector (25-30), the nature of individual preferences for health states and how these preferences are incorporated into QALYs (31-35), the importance of marginal costs that change as a function of output (36, 37), the effect of intervention-specific fixed costs (36, 38), and the sensitivity of conclusions to abstract concepts such as discounting (39-51). …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Cost-Effectiveness Analysis and Policy Choices: Investing in Health Systems
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.