Economic evaluation of services for a National Health scheme: the case for a fairness-based framework

In this paper we argue that the usual framework for evaluating health services may need modification in the context of a National Health Scheme (NHS). Some costs and benefits may need to be ignored or discounted, others included at face value, and some transfer payments included in the decision algorithm. In contrast with the standard framework, we argue that economic evaluation in the context of an NHS should focus on 'social transfers' between taxpayers and beneficiaries, and that the nature and scope of these transfers is determined by the level of social generosity. Some of the implications of a modified framework are illustrated with a re-examination of (i) costs and transfer payments, (ii) unrelated future costs, (iii) moral hazard, and (iv) the rule that marginal costs should equal marginal benefits. We argue that an explicitly 'fairness-based' framework is needed for the evaluation of services in an NHS. In contrast, the usual welfare economic theoretic framework facilitates the sidelining of issues of fairness.