Economic Evaluation for Health Interventions: Narrative Review

Costs and benefits should be considered alongside each other so that decisions can be made regarding the efficient delivery of scarce health care resources. So, if costs are high, benefit might also be large. Similarly, no health intervention can be efficient just because it is of low cost. An intervention may be of low cost and have no benefits. So, the important question when informing efficient decision making is how to compare costs and benefits associated with alternative interventions with each other. This is where economic evaluations are used. Types of economic evaluation are: (1) cost effectiveness analysis (CEA) which uses uni-dimensional measures of benefit (expressed in health units) and as such is generally used to address questions of technical efficiency; (2) Cost Minimization Analysis (CMA) which is considered to be a special case of CEA where alternative interventions are equivalent in terms of effectiveness and are compared only in terms of cost; (3) Cost-utility analysis (CUA) in which outcomes are considered in terms of changes in both quality and quantity of life. Here a cost per quality adjusted life years (QALY) ratio is estimated. The advantage of using this broader form of analysis is that it can address questions of both technical and allocative efficiency across various health producing programs; (4) Cost benefit analysis (CBA) expresses benefits and costs in monetary terms. By allowing costs to be compared directly to benefits, CBA is able to address questions of allocative efficiency (both within and beyond the health sector).