|
Britain operates a national health service (NHS) that services all British residents. The NHS is funded primarily via tax receipts, but users sometimes also pay fees for the services they receive. As the British population has aged, larger numbers of individuals have become afflicted by Alzheimer's disease. Hence, over the past few decades, the NHS more and more often has paid for drugs that are designed to counteract or retard Alzheimer's disease. The problem is, the drugs don't always work on some individuals, or, if they work, they may only work for a period of time. As a consequence, the NHS has concluded that the benefits of the drugs are not worth their cost and has issued a ruling that the NHS no longer will pay for these drugs. Construct a simple model to describe how an NHS economist would come to such a conclusion. I.e., what are the costs? What are the benefits? How should these costs and benefits be matched and evaluated overtime? What does opportunity cost have to do with this?
|