Posting date: May 19, 2004

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Health Affairs, 10.1377/hlthaff.w4.284
Copyright © 2004 by Project HOPE

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Cost-Effectiveness And Evidence Evaluation As Criteria For Coverage Policy

¹ Alan Garber is the Henry J. Kaiser Jr. Professor and professor of medicine, director of the Center for Primary Care and Outcomes Research, and director of the Center for Health Policy at Stanford University in Stanford, California.

^*Corresponding author.

Abstract

Private health plans and government health insurance programs in the United States base their coverage decisions on evidence criteria, rather than explicit cost-effectiveness criteria. As health spending continues to grow rapidly, however, approaches to coverage policy that ignore costs fail to meet the needs of consumers, employers, health plans, and federal and state governments. I describe the role of evidence-based criteria in formal coverage decision making and contrast the ways that these criteria differ from cost-effectiveness criteria. Finally, I discuss options for incorporating considerations of cost-effectiveness into coverage policy and other aspects of benefit design.

Key Words: Business of Health, Consumer Issues, Health Spending, Managed Care - Medicare, Managed Care, Managed Care - Consumers, Managed Care - Physicians, Quality of Care

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