Chapter

Theoretical Foundations of Medical Cost-Effectiveness Analysis

David Meltzer

in Medical Care Output and Productivity

Published by University of Chicago Press

Published in print April 2001 | ISBN: 9780226132266
Published online February 2013 | e-ISBN: 9780226132303 | DOI: http://dx.doi.org/10.7208/chicago/9780226132303.003.0003
Theoretical Foundations of Medical Cost-Effectiveness Analysis

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Increasingly, both private and public health care institutions in the United States are looking toward medical cost-effectiveness analysis as they consider complex resource allocation decisions concerning medical technologies. This chapter investigates the connection between the methods used in the most common form of medical cost-effectiveness analysis — that which utilizes quality-adjusted life years (QALYs) — and principles of welfare economics. It addresses two key issues concerning the link between welfare economics and cost-effectiveness analysis: the measurement of benefits and the measurement of costs, especially future costs, of medical interventions. After reviewing the historical origins and development of cost-effectiveness analysis based on QALYs, the chapter explores the use of revealed preference measures to assess the extent to which QALYs reflect patient preferences.

Keywords: cost-effectiveness analysis; quality-adjusted life years; welfare economics; patient preferences; benefits; costs; medical interventions; health care

Chapter.  8385 words.  Illustrated.

Subjects: Econometrics and Mathematical Economics

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