Using cost-effectiveness/cost-benefit analysis to allocate health resources: A level playing field for prevention?

K. A. Phillips, D. R. Holtgrave

Research output: Contribution to journalArticle

Abstract

Introduction: Prevention is being promoted as a means to improve health status and to save health care costs. Economic evaluations of prevention (i.e., cost-effectiveness and cost-benefit analyses) indicate that some prevention activities, like many treatments, do not save money, although many are relatively cost-effective. It has been suggested, however, that prevention is held to a higher standard than treatment because prevention programs are expected to demonstrate cost savings, and that the methods of economic evaluation understate the cost-effectiveness of prevention. Although the converse assertion is less commonly made, economic evaluations may also overstate the cost-effectiveness of prevention. The purpose of this article is to examine how the methods of economic evaluation may systematically understate, or overstate, the cost-effectiveness (or net benefits) of prevention. Methods: We examine three key methods: (1) how future costs and benefits are valued ('discounting'), (2) how costs and benefits to people beyond those who are the users of prevention are valued ('externalities'), and (3) how nonmonetary costs and benefits to individuals are valued ('intangibles'). Results: We discuss several recommendations for each key method, and we use a hypothetical example of the cost-effectiveness of a vaccine to prevent human immunodeficiency virus (HIV) to illustrate our points. Conclusions: We conclude that the methods of economic evaluation may both understate and overstate the cost-effectiveness of prevention. Medical Subject Headings (MESH): costs and cost analysis, prevention.

Original languageEnglish (US)
Pages (from-to)18-25
Number of pages8
JournalAmerican journal of preventive medicine
Volume13
Issue number1
StatePublished - Mar 4 1997
Externally publishedYes

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ASJC Scopus subject areas

  • Epidemiology
  • Public Health, Environmental and Occupational Health

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