Discounting health outcomes in economic evaluation: The ongoing debate

  • Severens J
  • Milne R
  • Severens H
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Abstract

Discounting is a mathematical procedure for adjust- ing future costs and outcomes of health-care interventions to “present value”; essentially this means adjusting for differences in the timing of costs (expenditure) compared to health benefits (outcomes). Calculations for discounting are straightforward: for each year ( n ) in the future the value of costs or benefits is multiplied by (1/(1 + D ) n ) where D is the discount rate [1]. Higher discount rates or longer delays produce lower net present value. A constant discount rate produces values that decline exponentially with time. The impact of discounting depends on the timing of costs and health outcomes and therefore the type of health-care intervention that is evaluated. For instance, the impact of discounting can be nil or negligible in hemodialysis programs (since costs and benefits occur simultaneously) or considerable in the case of a smoking cessation intervention or repair of a ruptured aneurysm, when the costs are upfront and the health benefits occur later [2]. However, the principle of discounting has greatest application to health-care programs for which most of the costs are incurred at the present moment and health benefits occur in the far future. These include public health programs such as screening and pediatric vaccination

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