Cost-effectiveness analysis and policy choices: investing in health systems

The role of health systems infrastructure in studies of cost-effectiveness analysis and health resource allocation is discussed, and previous health sector cost-effectiveness analyses are cited. Two substantial difficulties concerning the nature of health system costs and the policy choices are presented. First, the issue of health system infrastructure can be addressed by use of computer models such as the Health Resource Allocation Model (HRAM) developed at Harvard, which integrates cost-effectiveness and burden of disease data. It was found that a model which allows for expansion in health infrastructure yields nearly 40% more total DALYs for a hypothetical sub-Saharan African country than a model which neglects infrastructure expansion. Widespread use of cost-effectiveness databases for resource allocations in the health sector will require the cost-effectiveness analyses shift from reporting costs to reporting production functions. Second, three distinct policy questions can be treated using these tools, each necessitating its own inputs and constraints: allocations when given a fixed budget and health infrastructure, or when given resources for marginal expansion, or when given a politically constrained situation of expanding resources. Confusion concerning which question is being addressed must be avoided through development of a consistent and rigorous approach to using cost-effectiveness data for informing resource allocations.