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Measurement and Application of Illness Costs

Dorothy P. Rice
Public Health Reports (1896-1970)
Vol. 84, No. 2 (Feb., 1969), pp. 95-101
Published by: Sage Publications, Inc.
DOI: 10.2307/4593512
Stable URL: http://www.jstor.org/stable/4593512
Page Count: 7
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Measurement and Application of Illness Costs
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Abstract

The measurement of illness costs involves the distribution of direct expenditures by disease categories and the development of a systematic framework for use in estimating annual losses in output and the present value of lifetime earnings lost as a result of death. When the annual direct expenditures for medical care services and supplies are added to the losses to the economy caused by illness and to the present value of lost output for those who have died, the total economic costs of poor health in fiscal year 1967 are estimated to have amounted to at least $125 billion. The measurement of illness costs has been applied and used in the several cost-benefit analyses generated by the planning-programing-budgeting system within the Department of Health, Education, and Welfare. Alternative techniques to the use of various mortality and morbidity measures include the translation of benefits into dollar terms. The major issues that result in differences in analytical procedures arise from the difficulty of measuring intangible benefits and the varying values placed on different age groups. The translation of tangible savings into dollar benefits by cost-benefit analysis enables the decision-maker to consider them along with the unmeasurable and nonquantifiable social and political benefits.

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