Introduction:

Though Americans spend a higher percentage of their GDP on health expenditure, they live for an shorter life span than other income countries and the situation is seem to be getting worse in the last 3 decades. Allocation of resources to health is very important when it comes to the effectiveness of the health policies. In this report we are going to discuss the cost effectiveness analysis and cost benefit analysis are useful in assessing and following the priorities that support decision making processes in allocation of resources.

Health expenditure and public health:

Nearly 18% of GDP is spent as health expenditure in United States( according to 2011 statistics) and still life expectancy at birth is 79 years this is lower than Japan and United Kingdom where only 9.3% of the GDP is spend as health expenditure. In the case of Japan life expectancy is 83 years and in the case of United Kingdom it is 81 years. Though the medical science and medical facilities available in these countries are almost similar/equal, the differences in the health of people across these countries arise out of the medical choices that are made at the country level and these charges determine the structure of the National Health sector, the level of resources that are provided to the public and the framework that are created by the various agents like the insurance, medical providers and patients.

Cost effectiveness analysis and cost benefit analysis:

Cost effectiveness analysis is a recent phenomenon that emerged from the discipline of operations research and is blending with cost benefit analysis in the health sector to provide better choices in the selection of health policies. in the case of choosing the best health policies, the decision makers follow a normal range of all policies as the medical sector alone offers many kinds of policies with regard to acute care preventive care, rehabilitative care and chronic disease management apart from Mother policies.

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