NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Accounting for Future Costs in Medical Cost-Effectiveness Analysis

David Meltzer

NBER Working Paper No. 5946
Issued in February 1997
NBER Program(s):   HC   PR

Most medical cost-effectiveness analyses include future costs only for related illnesses but this approach is controversial. This paper demonstrates that cost-effectiveness analysis is consistent with lifetime utility maximization only if it includes all future medical and non-medical expenditures. Estimates of the magnitude of these future costs suggest that they may substantially alter both the absolute and relative cost-effectiveness of medical interventions intervention increases length of life more than quality of life. In older populations, current methods overstate the cost-effectiveness of interventions which extend life compared to" interventions which improve the quality of life.

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Document Object Identifier (DOI): 10.3386/w5946

Published: Journal of Health Economics, Vol.16, no.1 (1997): 33-64.

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