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Keywords:

  • extended cost-effectiveness analysis;
  • health policy instruments;
  • public finance;
  • financial protection;
  • insurance;
  • tuberculosis;
  • India

ABSTRACT

Universal public finance (UPF)—government financing of an intervention irrespective of who is receiving it—for a health intervention entails consequences in multiple domains. First, UPF increases intervention uptake and hence the extent of consequent health gains. Second, UPF generates financial consequences including the crowding out of private expenditures. Finally, UPF provides insurance either by covering catastrophic expenditures, which would otherwise throw households into poverty or by preventing diseases that cause them. This paper develops a method—extended cost-effectiveness analysis (ECEA)—for evaluating the consequences of UPF in each of these domains. It then illustrates ECEA with an evaluation of UPF for tuberculosis treatment in India. Using plausible values for key parameters, our base case ECEA concludes that the health gains and insurance value of UPF would accrue primarily to the poor. Reductions in out-of-pocket expenditures are more uniformly distributed across income quintiles. A variant on our base case suggests that lowering costs of borrowing for the poor could potentially achieve some of the health gains of UPF, but at the cost of leaving the poor more deeply in debt. © 2014 The Authors. Health Economics published by John Wiley Ltd.