Consider an illness that affects 1,000 patients, but can be treated by 3 mutuall
ID: 1129385 • Letter: C
Question
Consider an illness that affects 1,000 patients, but can be treated by 3 mutually exclusive medical interventions I, II, and III. Intervention I costs $9,000 per patient, and can lengthen the patient's life by 3 years. Intervention II yields 4 additional years at a cost $15, 000. Intervention III is the most costly (818, 000), but also the best available-capable of extending each patient's life by 5 more years. Suppose initially the government's health- care budget only allows it to adopt Intervention I 1. Now the government wants to expand its budget to save more lives. Based on CEA should it go for Intervention II or Intervention III? Explain. 2. Suppose the government budget is limited to $9.9 million, which is insufficient to fund 100% Intervention 11 or 100% Intervention III. To maximize total life years, how should it allocate the $9.9 million to the 1, 000 patients using a combination of the 3 interventions? In particular, how many patients would continue to receive Intervention I and how many would enjoy better treatment-viz., Intervention(s) II and/or III?Explanation / Answer
1. The treatment cost under intervention I = $9,000/ patient
total number of patient = 1,000
therefore, total cost of patient treatment = $9,000 x 1,000 = $ 9,000,000
If government wants to expand its existing budet from existing $9 million to save maximum lives then it must go for intervention III patient treatment as it will increase patient's life by 5 years. But this will increase government's total patient care budget from existing $9,000,000 to $18,000,000 which is double. But if government adopts Intervention II patient care then it will have to spend $15,000,000 on overall patient treatment which is also nearly double to total treatment cost under Intervention II. Therefore government should adopt patient treatment under Intervenntion III.
2. The treatment cost ratio of intervention I, II and II is
9:15:18 or 3:5:6
Total fund available for patient treatment is $9900,000 So if we take total available fund $9899,988 which is multiple of 14 out of $9900,000 for patient treatment then fund allocation for Intervention I patient care is 3/14 X $98,99,988 = $231426
Fund allocation for Intervention II patient care = 5/14 x $98,99,988 = $385710
Fund allocation for Intervention III patient care = 6/14 x $98,99,988 = $462852
Total number of patient = 1000
There is inverse relationship between demand and price.
So number of patient who can receive costly treatment under Intervention III will be least.
therefore, patient ratio for Interventio I, II and III treatment will be 6:5:3
Suppose total number of patient = 1001 then
Number of patient receiving Intervention I treatment = 6/14 X1001= 429
Number of patient receiving Intervention II treatment = 5/14 X 1001 = 357.5 = 358
Number of patient receiving Intervention III treatment = 3/14 X 1001 = 214.5 = 214