Implications of spillover effects within the family for medical cost-effectiveness analysis

J Health Econ. 2005 Jul;24(4):751-73. doi: 10.1016/j.jhealeco.2004.12.002. Epub 2005 Apr 22.


Medical cost-effectiveness analyses traditionally treat patients as isolated individuals and neglect the effects of improvement in patients' health on the welfare of their family members. We use a model based on a family utility function with altruistic linkages to show that there can be direct and indirect effects on the welfare of all family members. We focus specially on a model of how the spillover effects to the spouse in a two-person family might affect choice of treatments for prostate cancer. We then test the predictions of this model by analyzing treatment choices of prostate cancer patients using the linked SEER-Medicare database. We find that our results are consistent with the model's predictions. We conclude that cost-effectiveness analyses may better reflect the full costs and benefits of medical interventions if they incorporate these family effects. However, concerns about equity present a dilemma for the practice of CEA from the societal perspective.

Publication types

  • Research Support, N.I.H., Extramural
  • Research Support, U.S. Gov't, P.H.S.

MeSH terms

  • Aged
  • Aged, 80 and over
  • Cost of Illness
  • Cost-Benefit Analysis / statistics & numerical data*
  • Family*
  • Humans
  • Male
  • Medicare
  • Models, Statistical
  • Prostatic Neoplasms / economics*
  • Prostatic Neoplasms / therapy
  • Quality-Adjusted Life Years
  • United States