The central concern of economics is how best to allocate scarce resources among competing uses. The same concern applies to the scope of health care. As a result, pharmacoeconomics, which compares the value of one pharmaceutical drug or drug therapy to another, became a prominent issue by the mid 1980s. There are several types of pharmacoeconomic evaluations, one of which is cost–utility analysis (CUA).
CUA focuses on quality of a health outcome produced or forgone by different health programs or treatments. CUA is a form of cost-effectiveness analysis (CEA) that attempts to capture timing and duration of disease and disability by comparing the utility (person’s preference) associated with different health outcomes. (see Figure 1) It was originally called “Generalized Cost-Effective Analysis” as it is used to narrow the restrictiveness of traditional cost-effectiveness analysis. In 1972, it was renamed “Utility Maximization” and then “Healthy Status Index Model” in 1976.
Since 1982, it has been referred to as CUA in many countries, although the United States still called it CEA. Even though these two terms are used interchangeably, there are still several distinguishing features between the two. Such differences include integration of multiple outcomes, , quantification of outcomes based on desirability, and measurement of relative desirability of outcomes with von Neumann-Morgenstern utility theory.
A cost-utility analysis describes the additional cost of the new intervention per unit of health gain and assesses health in terms of length and quality of life using the quality adjusted life year (QALY). QALYs were invented in 1956 by two health economists, Christopher Cundell and Carlos McCartney. The concept of QALY was f...
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The United States (U.S.) has a health care system that is much different than any other health care system in the world (Nies & McEwen, 2015). It is frequently recognized as one with most recent technological inventions, but at the same time is often criticized for being overly expensive (Nies & McEwen, 2015). In 2010, President Obama signed the Patient Protection and Affordable Care Act (ACA) (U. S. Department of Health & Human Services, n.d.) This plan was implemented in an attempt to make preventative care more affordable and accessible for all uninsured Americans (U.S. Department of Health & Human Services, n.d.). Under the law, the new Patient’s Bill of Rights gives consumers the power to be in charge of their health care choices. (U.S. Department of Health & Human Services, n.d.).
It is very important that we utilize cost control methods in the health care field. The reason being is that about 10% of the population, usually with chronic to severe problems, use approximately 70% of the total spending (Shi, & Singh, 2008). If we didn’t monitor the costs and spending we wouldn’t be using the money efficiently. To avoid potential problems we frequently use six different cost control methods to monitor what medical services are necessary, the most cost efficient way for these services to be provided, and keep an up to date chart of the patient’s condition to offer only treatment deemed necessary.
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U.S health care delivery system aims to provide cost effective, and quality health care services to all the citizens (Shi & Singh, 2015, p. 16). There are several characteristics that differentiate the U.S health care system from other countries. One of the characteristics is the use of new technology that enables the implementation of quality care in efficient way (Shi & Singh, 2015, p. 16). The functions of the health care system are also influenced by various external factors. Social values and culture is one among them (Shi & Singh, 2015, p. 10). The Affordable Care Act (ACA) signed by president Barak Obama in March 2010 aims at increasing the quality and affordability of health care services to the public (Robert, 2012).
Budgeting Assignment A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of a manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496)
After the inception of ACA that is Affordable Care Act on March 23, 2010 various policies and regulations has been proposed which has more controversy (www.healthcapital.com, 2013). Affordable health act has impact on the stakeholders in different manner. The main concern in the medical field is the input cost which is increasing continuously. This is the biggest challenge for the US government as the increasing cost makes it impossible for the government to allocate appropriate resources in managing the requirements of the ACA public policy. There are more initiatives taken by the US government in implementing the ACA in an appropriate manner by continuously improving the quality of health care at affordable lower costs (www.healthcapital.com, 2013). According to Kaiser Health Tracking Poll conducted in March 2013, about 40% of the public are against the ACA and 37% are supporting the ACA which satisfies the legislative requirements (www.healthcapital.com, 2013). Key issue in health care industry is the quality of doctors and the number of doctors available, this ACA mainly aims to address the issue of all citizens especially poor. The constituency of the act makes the US government to think about the Supreme Court Judgement about emphasising all citizens should have health insurance (NYTimes, 2014).
risk, for drugs and medical devices, weighing risks against benefits is at the core of
Over the last few decades, various laws have been established with the main purpose of making the system equal and more efficient for all. The U.S. hospital system has become more complex and less efficient due to significant political and monetary interference along with the passage of these laws. The most recent amongst those laws is the Affordable Care Act (ACA), which was signed into legislation by President Obama in 2010. Various provisions in the ACA includes universal health insurance coverage, significant changes in the payment for health services and changes in the health care organization delivery and workforce policy. Thus, ACA has a significant influence on the current U.S. healthcare system.
Cost-benefit analysis is an economic approach decision making that compares the strengths and weaknesses of each choice in order to determine which option will provide the most amount of benefits and the least amount of costs. This method is often applied to decisions that concern the environment as an attempt to determine the value of the environment before following through with decisions to preserve or utilize the environment for resources. Although many economists believe that cost-benefit analysis is an efficient way to make most decisions, some philosophers suggest that certain things, including the environment, have innumerable values, therefore, cost-benefit analysis may not be a reliable method to make decisions regarding these things.
A quality-adjusted life year (QALYs) is one of the most widely used measures for measuring the quality of life and is used for the assessment of health outcomes. Health is a function of length of life and quality of life (Prieto and Sacristán, 2003) and this measure serves as composite indicator which allows quantity and quality of life in a single ind...
The cost of US health care has been steadily increasing for many years causing many Americans to face difficult choices between health care and other priorities in their lives. Health economists are bringing to light the tradeoffs which must be considered in every healthcare decision (Getzen, 2013, p. 427). Therefore, efforts must be made to incite change which constrains the cost of health care without creating adverse health consequences. As the medical field becomes more business oriented, there will be more of a shift in focus toward the costs and benefits, which will make medicine more like the rest of the economy (Getzen, 2013, p. 439).