Abstract
BackgroundAustralian governments are increasingly mandating the use of cost–benefit analysis (CBA) to inform the efficient allocation of government resources. CBA is likely to be useful when evaluating preventive health interventions that are often cross-sectoral in nature and require Cabinet approval prior to implementation. This study outlines a CBA framework for the evaluation of preventive health interventions that balances the need for consistency with other agency guidelines whilst adhering to guidelines and conventions for health economic evaluations.MethodsWe analysed CBA and other evaluation guidance documents published by Australian federal and New South Wales (NSW) government departments. Data extraction compared the recommendations made by different agencies and the impact on the analysis of preventive health interventions. The framework specifies a reference case and sensitivity analyses based on the following considerations: (1) applied economic evaluation theory; (2) consistency between CBA across different government departments; (3) the ease of moving from a CBA to a more conventional cost-effectiveness/cost-utility analysis framework often used for health interventions; (4) the practicalities of application; and (5) the needs of end users being both Cabinet decision-makers and health policy-makers.ResultsNine documents provided CBA or relevant economic evaluation guidance. There were differences in terminology and areas of agreement and disagreement between the guidelines. Disagreement between guidelines involved (1) the community included in the societal perspective; (2) the number of options that should be appraised in ex ante analyses; (3) the appropriate time horizon for interventions with longer economic lives; (4) the theoretical basis and value of the discount rate; (5) parameter values for variables such as the value of a statistical life; and (6) the summary measure for decision-making.ConclusionsThis paper addresses some of the methodological challenges that have hindered the use of CBA in prevention by outlining a framework that is consistent with treasury department guidelines whilst considering the unique features of prevention policies. The effective use and implementation of a preventive health CBA framework is likely to require considerable investment of time and resources from state and federal government departments of health and treasury but has the potential to improve decision-making related to preventive health policies and programmes.
Highlights
Australian governments are increasingly mandating the use of cost–benefit analysis (CBA) to inform the efficient allocation of government resources
The aim of this study is to develop a CBA framework for preventive health decision-making by Australian federal, state and territory governments, which balances the need for consistency with the requirements of central government agencies and other line agency guidelines and the guidelines and conventions of traditional health economic evaluations, whilst considering the impact of these specifications on the evaluation of preventive health interventions
The titles and short descriptions of 5234 website documents were screened, and an additional six documents were identified by New South Wales (NSW) Health and Treasury staff
Summary
Australian governments are increasingly mandating the use of cost–benefit analysis (CBA) to inform the efficient allocation of government resources. To ensure efficient use of limited government resources, policy-makers need to consider the costs and benefits of proposed government action against key comparators. Cost–benefit analysis (CBA) is a type of economic evaluation where the costs and benefits of a proposed policy action are considered in monetary terms. The use of a CBA framework for policy appraisal is likely to be useful for Cabinet decision-making, for several reasons. CBA is the most common tool for policy appraisal across various sectors, such as transport and the environment [7, 8] and given that the Cabinet consists of government ministers from diverse sectors, an evaluation framework that is familiar to Cabinet members may assist decision-making. The CBA framework facilitates the capture of multiple benefits in a consistent analytical framework and allows evaluation of policies with intersectoral impacts [10]
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