Efficiency, Equity, and Budgetary Policies

David Epstein, Zaid Chalabi, Karl Claxton and Mark Sculpher
Additional contact information
Zaid Chalabi: London School of Hygiene and Tropical Medicine, London, UK
Karl Claxton: Centre for Health Economics, University of York, York, UK
Mark Sculpher: Centre for Health Economics, University of York, York, UK, dme2@york.ac.uk

Medical Decision Making, 2007, vol. 27, issue 2, 128-137

Abstract: The standard decision rules of cost-effectiveness analysis either require the decision maker to set a threshold willingness to pay for additional health care or to set an overall fixed budget. In practice, neither are generally taken, but instead an arbitrary decision rule is followed that may not be consistent with the overall budget, lead to an allocation of resources that is less than optimal, and is unable to identify the program that should be displaced at the margin. Recent work has shown how mathematical programming can be used as a generalization of the standard decision rules. The authors extend the use of mathematical programming, first to incorporate more complex budgetary rules about when expenditure can be incurred, and show the opportunity loss, in terms of health benefit forgone, of each budgetary policy. Second, the authors demonstrate that indivisibility in a patient population can be regarded as essentially a concern for horizontal equity and represent this and other equity concerns as constraints in the program. Third, the authors estimate the different opportunity costs of a range of equity concerns applied to particular patient populations, and when imposed on all patient populations. They apply this framework of analysis to a realistic and policy-relevant problem. Key words: cost-effectiveness analysis; cost-benefit analysis; mathematical programming; resource allocation. (Med Decis Making 2007;27:128—137)

Date: 2007
References: View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/0272989X06297396 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:27:y:2007:i:2:p:128-137

DOI: 10.1177/0272989X06297396

Access Statistics for this article

More articles in Medical Decision Making
Bibliographic data for series maintained by SAGE Publications ().