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Priority Setting in Health Care and Prevention Decisions (Beatrice Rey-Fournier)

Abstract

We  examine how priority setting in health care expenditure is influenced by the presence of uncertainty. We provide necessary and sufficient conditions on preferences for which a social planner will allocate more health care ressources to the higher risk population. In the case of uncertainty on the severity of the disease, we show how the most commonly used utility functions, i.e. those whose successive derivatives to any order $n$ alternate in signs, lead to prioritize the patients more at risk for any $nth$-order increase in risk.  In the case of a risk on the efficiency of medical treatment, we explain why conditions on preferences are more limiting and necessitate conditions on $nth$-order relative risk aversion.