ABSTRACT
The health professions sometimes regard allocative efficiency as unethical based on their primary commitment to saving lives and promoting health. The slighting of cost considerations in the provision of healthcare raises an ethical issue; in the United States, it has been a roadblock to developing mechanisms to improve allocative efficiency. Cost-effectiveness analysis sometimes provides clear evidence that a new technology is an improvement to efficiency, which means it both improves health and costs less. One of the more controversial aspects of cost-effectiveness analysis is the use of discounting. The distribution of costs and outcomes is also an important aspect of cost-effectiveness analysis, and studies should indicate any distributional impact. Insurers are called upon to make such decisions but when they balk at rendering tough decisions, they undermine allocative efficiency. The use of cost-effectiveness analysis can help cut through the confusion, assist decision makers, and improve allocative efficiency.
