Should Economic Costs Be of Interest in a National Health Scheme? Or Costs, Fairness and Reverse Order Analysis

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 23.02.2006, 12:15 - 13:30


Presentation by 

Jeff Richardson (Monash University)


In this paper we argue that the standard framework used for evaluating health services may need modification in the context of a National Health Scheme (NHS). Some costs and benefits may need to be ignored or discounted, others included at face value, and some transfer payments included in the decision algorithm. In contrast with the standard framework, we argue that economic evaluation in the context of a NHS should focus on ‘social transfers’ between taxpayers and beneficiaries, and that the nature and scope of these transfers is determined by the level of social generosity and the principles of fairness in a society. A revised framework might alter some notions of efficiency, including Pareto efficiency. Some of the implications of a modified framework are illustrated with a re-examination of (i) costs and transfer payments, (ii) unrelated costs, and (iii) moral hazard.

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