Abstract
Recent research has questioned the rationales of using cost-effectiveness metrics of medical technologies to guide reimbursement. I discuss here the underlying ideas of this research, which argues that reimbursement based on cost effectiveness criteria leads to both static- and dynamic inefficiencies.
Highlights
Growth in health care spending across the world has received much attention, due to its impact on public budgets and national debt levels
The amount of work done on the CE of medical technologies may perhaps be the largest field within health economics, in European countries where such analysis already guides a large share of public technology adoption and reimbursement
CE analysis has so far guided policy decisions in the form of adoption based on CE thresholds, which dictate that a given technology will be reimbursed only if the incremental costs per quality-adjusted life year (QALY) they provide are below a given threshold
Summary
Growth in health care spending across the world has received much attention, due to its impact on public budgets and national debt levels. In order to manage the spending growth induced by new technologies, both public and private payers around the world have increasingly demanded evidence on the combined measures of the benefits and costs of new technologies. These measures include, among others things, cost-effectiveness, cost-utility, and cost-benefit analysis; they are hereafter referred to collectively as CE analysis. While CE analysis has provided a guide to allocating often-scarce health care resources, less is known about the exact degree to which using such procedures results in economically efficient allocations. When utilized in practice by payers, do they lead to the resource allocation decisions that satisfy static efficiency as intended? Second, if CE procedures guided reimbursement as prescribed, would they lead to resource allocations that satisfied dynamic efficiency? Recent research suggests that the answers may be “no” to both questions
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