ECON 500 WMU Calculate the Incremental Cost And Incremental Benefit Excel Task
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 |
Complete the following calculations and analysis:
- What is the total cost for the survivors receiving treatment A? For decedents (assuming sudden death)?
- What is the total cost for survivors receiving treatment B? For decedents?
- What is the expected cost for those patients receiving treatment A?
- What is the expected cost for those patients receiving treatment B?
- Draw a simple decision tree showing the costs and consequences of each treatment option
- Calculate the incremental cost and incremental benefit of the treatment alternatives.
- What is the ICER?
- Which treatment would you recommend be covered by your health plan and why?
