In: Economics
The per-patient increase in costs due to the program were estimated to be $3,000. Quality-adjusted life years were calculated to be 8.5 years for those in the program and 8.2 years for those not in the program. A year of perfect health is felt to be worth $50,000.
(a) Perform a cost-benefit analysis of the program. What do you conclude? i.e is the program worthwhile or not ? (Hint MB Vs MC)
(b) Perform a cost-utility analysis of the program. What do you conclude? i.e is the program worthwhile or not?
a) On performing Cost - Benefit Analysis we know per patient cost ( MC) or marginal cost = $ 3,000
Quality life adjusted for those in program = 8.5 years
Quality life for those not in the program = 8.2 years
Marginal benefit of the intervention = 8.5 - 8.2 = 0.3 years
A year of perfect health is felt to be worth = $50,000
Marginal benefit interms of money from program = 0.3 * $50,000 = $ 15,000
Comparing the marginal cost versus the marginal benefit ( MC ($3,000) < MB ( $15,000)) , we can say participants of program enjoy more marginal benefit thus the program is worth while.
b) Cost - Utility analysis is a financial assessment used to guide procurement decisions applicable in health technology assessment.
Quality life adjusted for those in program = 8.5 years
Quality life for those not in the program = 8.2 years
the net benefit of the intervention = 8.5 - 8.2 = 0.3 years for participants
Thus the program is worthwhile from CUA perspective as it gives participants an increase in the quality adjusted life years.