Risks and benefits in health care: The view from economics

Health Affairs

Volumn 26, Issue 3, 2007, Pages 653-662

  Pauly, Mark V ^a  

^a UNIVERSITY OF PENNSYLVANIA   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

DECISION MAKING; ECONOMICS; HEALTH CARE DELIVERY; HEALTH INSURANCE; HUMAN; MEDICARE; METHODOLOGY; POLITICS; REVIEW; RISK ASSESSMENT; RISK MANAGEMENT; SOCIAL PSYCHOLOGY; STATISTICAL MODEL; UNITED STATES;

DECISION MAKING; DELIVERY OF HEALTH CARE; HUMANS; INSURANCE, HEALTH; MEDICARE; MODELS, ECONOMIC; POLITICS; RISK ASSESSMENT; RISK MANAGEMENT; SOCIAL VALUES; UNITED STATES;

EID: 34248549618     PISSN: 02782715     EISSN: 02782715     Source Type: Journal    
DOI: 10.1377/hlthaff.26.3.653     Document Type: Review

References (8)

1. One source of error is in the language used to describe choices of medical therapies: "the trade-off between benefits and risks." The confusion arises because sometimes the word risk is really used as a synonym for adverse or undesired effects. Suppose a drug I might take for my allergies always and unequivocally in all patients does two things: It alleviates the symptoms of allergy, and it causes an unsightly rash. There is no uncertainty, no variation. The appropriate decision might still be ambiguous since it involves a trade-off between alleviated symptoms (for sure) and a red rash (for sure), and different people might value these outcomes differently. But there is no issue of risk.
2. C.E. Phelps, "Health Insurance," chap. 10 in Health Economics, 3d ed. (Boston: Addison Wesley, 2003), 318-365.
3. See S. Peltzman, "An Evaluation of Consumer Protection Legislation: The 1962 Drug Amendments," Journal of Political Economy 81, no. 5 (1973): 1049-1091, for a classic early statement of this view;
4. see C.R. Sunstein, Laws of Fear: Beyond the Precautionary Principle (Cambridge, U.K., and New York: Cambridge University Press, 2005), for a more recent version.
5. National Health Access, "Limited Health Benefits" (table), http://www.nationalhealthaccess.com/ParticLM.aspx (accessed 9 February 2007).
6. H. Kunreuther, "Risk Analysis and Risk Management in an Uncertain World," Risk Analysis 22, no. 4 (2002): 655-664.
7. R.H. Thaler and C.R. Sunstein, "Libertarian Paternalism," American Economic Review 93, no. 2 (2003): 175-179.
8. M. Pauly, H. Kunreuther, and J. Vaupel, "Public Protection against Misperceived Risks: Insights from Positive Political Economy," Public Choice 43, no. 1 (1984): 45-64.