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Affordability and cost-effectiveness: decision-making on the cost-effectiveness plane
1Institute for Medical Technology Assessment, Erasmus University, Rotterdam, The Netherlands.
Health Economics
|December 18, 2001
Summary
This study introduces the affordability curve to assess health program budgets. It combines cost-effectiveness analysis with budget constraints, offering a practical tool for decision-makers.
Area of Science:
- Health economics
- Decision analysis
- Cost-effectiveness analysis
Background:
- Traditional cost-effectiveness analysis (CEA) struggles with negative Incremental Cost-Effectiveness Ratios (ICERs).
- Existing methods like net-benefit statistics and acceptability curves do not fully address fixed-budget constraints.
- Decision-makers face challenges funding interventions that are cost-effective but exceed budget limits.
Purpose of the Study:
- To introduce a novel 'affordability curve' for cost-effectiveness analysis.
- To address the limitation of fixed budgets in health care decision-making.
- To provide a more comprehensive tool for evaluating health interventions.
Main Methods:
- Development of the 'affordability curve' concept.
- Calculation of the probability that a program is affordable within various budget thresholds.
- Integration of affordability with cost-effectiveness using joint probability.
Main Results:
- The affordability curve reflects the likelihood of a program being affordable across different budget levels.
- The joint probability of affordability and cost-effectiveness provides a more complete decision-making metric.
- This approach better reflects the realities faced by budget holders in health services.
Conclusions:
- The affordability curve is a valuable addition to cost-effectiveness analysis, especially under budget constraints.
- Jointly considering affordability and cost-effectiveness improves decision-making for health service budgets.
- This method offers a practical solution for resource allocation in health care.