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Cost-effectiveness analysis in the health sector
when there is a private alternative
to public treatment
By Hoel, Michael
HERO Working Paper 13/2005
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Abstract |
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. |
| JEL Classification:
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H42, H51, I18 |
| Keywords:
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Public health, cost-effectiveness |
| ISBN:
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82-7756-159-01 |
| Project:
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4101 Economics of health
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| Financing:
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Research Council of Norway through HERO |
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