Health Economics

Homework 3


The following are a few problems to solve related to Economic Evaluation. Please circle numeric answers and show all work to get credit. Please upload it when you are finished.


  1. (40 pts. total) An article in JAMA by Mandelblatt et al (2002) compared the societal costs and benefits of human papillomavirus (HPV) testing, Pap testing, and their combination to screen for cervical cancer. The following table summarizes some of the results (low cost to high cost).  Costs include screening and treatment costs, discounted over the individual’s expected lifetime.


Strategy Cost ($) QALYs Saved Incremental Cost Incremental QALY Incremental CE ratio (ICER)
0. No screening 5,000 26.87
1. Pap every 3 years to age 75 6,825 27.02
2. HPV every 3 years to age 75 6,950 27.02
3. Pap every 2 years to age 75 7,275 27.04
4. Pap + HPV every 3 years to age 75 7,400 27.04
5. HPV every 2 years to age 75 7,450 27.04
6. Pap + HPV every 2 years to age 75 7,925 27.05


  1. (6 pts.) Identify all dominated screening strategies. Recall a strategy is dominated if it costs more than an equally or more effective strategy, or it is less effective than another strategy that costs the same or less. List the strategy number(s) here.







  1. (30 pts.) Fill in the table above. Calculate the incremental cost, incremental QALYs, and ICERs for all economically rational strategies (relative to strategy 0, no screening).


  1. (4 pts.) The local health district has asked your opinion on the “best” strategy from a public health perspective. What do you tell them?




  1. (52 pts. total) The following information has been gathered on the costs and effectiveness of the two treatments, A and B. In this problem, costs and consequences are not discounted.


Treatment A Treatment B
Mortality rate 2% 5%
Life expectancy for survivors 20 years 10 years
Initial treatment cost $10,000 $3,000
Follow up costs, year 1 $5,000 $1,000
Annual follow up costs, all subsequent years $1,000 $500


  1. (6 pts.) What is the total cost for the survivors receiving treatment A?





(6 pts.) For decedents (assuming sudden death)?





  1. (6 pts.) What is the total cost for survivors receiving treatment B?





(6 pts.) For decedents?





  1. (6 pts.) What is the expected cost for those patients receiving treatment A?






  1. (6 pts.) Treatment B?








  1. (10 pts.) Draw a simple decision tree showing the costs and consequences of each treatment option. Note: You will need to calculate expected benefits to fully fill out the tree.






















  1. (6 pts.) What treatment should be chosen, if lowest cost per benefit is the criterion?




  1. (8 pts.) Based on the article “Forbidden Topic in Health Policy Debate: Cost Effectiveness,” what are some of the pros and cons to using cost-effectiveness at a national level? (A few sentences will suffice.)