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Center for Policy Research

Policy Brief

Spending Health Care Dollars Wisely: Can Cost-Effectiveness Analysis Help?

Milton Weinstein

C.P.R. Policy Brief No. 30

December 2004

Abstract

Are we getting the most health improvement possible for our money. In other words, are all the things that we do in medicine really worth it? That is where cost-effectiveness comes in. As a nation, we have been unwilling, at least publicly, to look explicitly at the value, in terms of improved health outcome, that we get for our health care dollars. With advances in medical technology putting unsustainable pressure on health care costs, our historical reluctance to measure value for health care may have to change.

The author starts this brief by describing cost-effectiveness analysis as a method of determining the value, measured in Quality-Adjusted Life Years, of medical technologies as they are applied to treat, diagnose, or prevent various conditions. Based on this information, the author then argues that some highly beneficial, low-cost procedures are significantly under-utilized, and that other medical technologies may be over-utilized based on the amount of health benefit they yield in relation to their cost. Next, the author gives examples from current research, his own and that of colleagues, illustrating how cost-effectiveness analysis can be used to guide the use of new diagnostic testing technologies (such as DNA or RNA typing of infectious agents or identification of genomic or proteomic markers in cancer patients).

Sponsored by the The Herbert Lourie Memorial Lecture series, which is jointly sponsored by Syracuse University's Maxwell School of Citizenship and Public Affairs and the Central New York Community Foundation, Inc., and is administered by the Center for Policy Research and The Lerner Center for Public Health Promotion.

The Center for Policy Research Policy Brief series is a collection of essays on current public policy issues in aging; urban and regional studies; education finance and accountability; public finance; social welfare, poverty, and income security; and related research done by or on behalf of the Center for Policy Research at the Maxwell School of Syracuse University.


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