Using Cost-Effectiveness Analysis to Improve Health Care: Opportunities and Barriers

Using Cost-Effectiveness Analysis to Improve Health Care: Opportunities and Barriers

Using Cost-Effectiveness Analysis to Improve Health Care: Opportunities and Barriers

Using Cost-Effectiveness Analysis to Improve Health Care: Opportunities and Barriers


As health costs in the U.S. soar past $1.5 trillion, much evidence indicates that the nation does not get good value for its money. It is widely agreed that we could do better by using cost-effective analysis (CEA) to help determine which health care services are most worthwhile. American policy makers, however, have largely avoided using CEA, and researchers have devoted little attention to understanding why this is so. By considering the economic, social, legal, and ethical factors that contribute to the situation, and how they can be negotiated in the future, this book offers a unique perspective. It traces the roots of EA in health and medicine, describes its promise for rational resource allocation, and discusses the nature of the opposition to it, using Medicare and the Oregon health plans as examples. In exploring the disconnection between the promise of CEA and the persistent failure of rational intentions, the book seeks to find common ground and practical solutions. It analyzes the prospects for change and presents a roadmap for getting there. It offers pragmatic advice for cost-effectiveness analysts, discussing ways in which they can better translate their research findings into the basis for action. The book also offers advice for policy makersand politicians, including lessons from Europe, Canada, and Australia, and underlines the need for leadership to establish the conditions for change.


Does the world need another book on cost-effectiveness analysis (CEA) in health care?

It already has a number of excellent ones, including widely read how-to manuals (Drummond et al., 1997), a popular "bible" on the topic by the U. S. Panel on Cost-Effectiveness in Health and Medicine (Gold et al., 1996), and numerous volumes that address theoretical and methodological issues and advances (e.g., Johannesson, 1996; Nord, 1999; Pettiti, 2000; Drummond and McGuire, 2001).

Furthermore, does anyone in the United States really use cost-effectiveness analysis? The question has been posed frequently, even (or especially) by analysts themselves but then left hanging, shrugged off like a remark about the weather or the latest impasse in the Middle East.

Despite its promise and the steady stream of analyses conducted and published, policy makers in the United States have shied away from using CEA openly. This experience contrasts markedly with the flourishing application of CEA to coverage and reimbursement decisions abroad.

Why? The usual explanation—that Americans are different, that we are rugged individualists who will not accept explicit rationing—seems too convenient and too simplistic, and anyway not at all helpful. Why are CEAs being published widely in mainstream American medical journals if the technique is hopelessly ineffectual? Are there examples in which American policy makers have successfully applied the approach? What can we learn from them?

CEA offers a powerful tool to help prioritize resources for health care more efficiently. As health spending in the United States soars past $1.5 trillion, CEA lies at the heart of perhaps the ultimate health policy question : how can we get good value for our money?

I have been wondering about resistance to CEA in the United States for many years. A formative experience was a two-year stint in the early 1990s . . .

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