A welfare-theoretic model consistent with the practice of cost-effectiveness analysis and its implications

Area of Science:

• Health Economics
• Decision Science
• Public Health Policy

Background:

• Cost-effectiveness analysis (CEA) involves complex debates regarding future cost inclusion, discounting, and welfare-economic consistency.
• These issues are often studied in isolation, leading to confusion and unresolved questions in health economics literature.

Purpose of the Study:

• To holistically address key debates in CEA: future cost inclusion, discounting, and welfare-economic perspective.
• To present a unified welfare theoretic model to inform these CEA debates.
• To clarify implications for societal perspective, distributional CEA, and multi-sectorial budgets.

Main Methods:

• Development of a welfare theoretic model grounded in economic principles.
• Analysis of existing literature on CEA debates.
• Application of the model to provide rationales for established recommendations and explore nuanced implications.

Main Results:

• The proposed welfare theoretic model integrates future costs, discounting, and welfare economics within CEA.
• The model provides a framework to resolve isolated debates and offers clarity on CEA practices.
• It elucidates implications for distributional CEA and multi-sectorial budget considerations from a societal viewpoint.

Conclusions:

• A holistic welfare theoretic approach can unify and resolve longstanding debates in cost-effectiveness analysis.
• The model offers practical guidance for applying CEA from a societal perspective, enhancing its utility in policy and resource allocation.
• This framework supports more consistent and theoretically sound decision-making in health economics.