Cost of illness studies: an aid to decision-making?

Health Policy, 6 (1986) 119-143 contained an article by Henke and Behrens which purported to estimate the economic costs of illness in the Federal Republic of Germany. The paper is one of the latest in a collection of empirical studies which are linked by a common approach and methodology dating from Rice's seminal work in 1966. It has been argued that such work is of value in indicating the burden of disease and in setting priorities in research, prevention and treatment. Indeed it has been claimed that cost of illness studies are an essential component of the evaluation of alternative demands on scarce health care resources. However, cost of illness estimates are based on unsound theory which leads to circularity and bias in their policy prescriptions. The shortcomings of the technique are both well known and well documented yet cost of illness estimates continue to be produced. In response to this we would like to restate the theoretical errors of the approach and indicate its limitations for policy. We would also like to remind policy-makers that economics can offer something more useful than a method for estimating the 'benefits of the unattainable'. Cost-benefit analysis provides a framework in which information relevant to the decision at hand, on the effectiveness and resource consequences of policy options, can be considered in a systematic manner.