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On the welfare theoretic foundation of cost-effectiveness analysis-the case when survival is not affected

Liljas, Bengt LU (2010) In European Journal of Health Economics 11(1). p.5-13
Abstract
This paper develops a welfare theoretic foundation for cost-effectiveness analysis (CEA) when survival is not affected. With this foundation, all costs and their corresponding utility-terms should be included. A key question, though, is whether these utility-terms are consistent with quality-adjusted life year (QALY) (utility) theory or not. The results show that health care costs and changes in the utility of health should be included. However, as QALYs do not capture the utility of changes in consumption (as this utility must be independent of health, according to QALY theory), the corresponding changes in consumption costs should be excluded. Regarding the costs for changes in absence from work, these should only be included if the... (More)
This paper develops a welfare theoretic foundation for cost-effectiveness analysis (CEA) when survival is not affected. With this foundation, all costs and their corresponding utility-terms should be included. A key question, though, is whether these utility-terms are consistent with quality-adjusted life year (QALY) (utility) theory or not. The results show that health care costs and changes in the utility of health should be included. However, as QALYs do not capture the utility of changes in consumption (as this utility must be independent of health, according to QALY theory), the corresponding changes in consumption costs should be excluded. Regarding the costs for changes in absence from work, these should only be included if the utility of changes in the amount of leisure is included. As no QALY theory has been developed that includes this utility, it is unclear how to handle these costs (even if there are arguments for excluding them). For changes in productivity at work, though, there are robust arguments for the inclusion of these costs. Overall, it seems difficult to provide a clear basis for CEA in economic welfare theory when also including non-medical goods such as consumption and leisure. (Less)
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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
QALYs, Cost-effectiveness analysis, Non-medical costs, Welfare economics
in
European Journal of Health Economics
volume
11
issue
1
pages
5 - 13
publisher
Springer
external identifiers
  • wos:000275170000002
  • scopus:76649144190
ISSN
1618-7601
DOI
10.1007/s10198-009-0145-6
language
English
LU publication?
yes
id
90705af3-17bc-4833-bd41-5e7ebdd323c4 (old id 1589620)
date added to LUP
2010-04-20 10:03:40
date last changed
2018-05-29 12:02:28
@article{90705af3-17bc-4833-bd41-5e7ebdd323c4,
  abstract     = {This paper develops a welfare theoretic foundation for cost-effectiveness analysis (CEA) when survival is not affected. With this foundation, all costs and their corresponding utility-terms should be included. A key question, though, is whether these utility-terms are consistent with quality-adjusted life year (QALY) (utility) theory or not. The results show that health care costs and changes in the utility of health should be included. However, as QALYs do not capture the utility of changes in consumption (as this utility must be independent of health, according to QALY theory), the corresponding changes in consumption costs should be excluded. Regarding the costs for changes in absence from work, these should only be included if the utility of changes in the amount of leisure is included. As no QALY theory has been developed that includes this utility, it is unclear how to handle these costs (even if there are arguments for excluding them). For changes in productivity at work, though, there are robust arguments for the inclusion of these costs. Overall, it seems difficult to provide a clear basis for CEA in economic welfare theory when also including non-medical goods such as consumption and leisure.},
  author       = {Liljas, Bengt},
  issn         = {1618-7601},
  keyword      = {QALYs,Cost-effectiveness analysis,Non-medical costs,Welfare economics},
  language     = {eng},
  number       = {1},
  pages        = {5--13},
  publisher    = {Springer},
  series       = {European Journal of Health Economics},
  title        = {On the welfare theoretic foundation of cost-effectiveness analysis-the case when survival is not affected},
  url          = {http://dx.doi.org/10.1007/s10198-009-0145-6},
  volume       = {11},
  year         = {2010},
}