L07-Heath Economics: Introduction and Overview

Question 1

What are the two types of economic analyses?

Answer 1

Normative = indicate the nature of the resource allocation decision that ought to be followed if certain objectives are to be achieved (includes valued judgment)
Positive = seeks to predict observable factors and so provide information on the likely costs and benefits associated with alternative courses of action (give facts so someone can make a decision)

Question 2

What are the two types of efficiency?

Answer 2

• Technical: producing output in the best way possible without wasting scarce resources. Meeting a given objective at least cost
• Allocative: producing the pattern of output that best satisfies the pattern of customer’s wants/needs

Question 3

What is cost effective analysis?

Answer 3

• Consequences given in most appropriate natural or physical units
• Results in terms of cost per unit effect
  o Lives saved/complications avoided/symptom free days/cancer detected

Question 4

What is cost utility analysis?

Answer 4

-	Cost utility analysis: must consider quality of life 
o	QALYs (quality adjusted life years)

Question 5

What is the difference between marginal and incremental cost?

Answer 5

Marginal = how much cost for extra production
Incremental = against a comparator (comparing cost between 2 options)

Question 6

What is incremental cost effectiveness ratio?

Answer 6

cost per extra unit of benefit
Intervention A = £8000 for 0.5 benefits
Intervention B = £10,000 for 1 benefit

Question 7

What is cost utility analysis?

Answer 7

outcomes measured in QALYs gained (combines life years and QOL)
Result in cost per additional QALY gained