Cost-Benefit Analysis and Hard Decisions. This is not a hypothetical example. The bad news: you have incurable cancer and are very likely to die within one year. The slightly less bad news: There is a drug you can take that will prolong your life by 3 to 6 months, so that your life expectancy becomes 15-18 months, instead of a year. The conundrum: The drug will cost $125,000 to $150,000. If you had to pay the cost of the drug yourself, would you use it, reducing your children's inheritance by $125,000-$150,000? If you have health care through a government program such as Medicare, should that program pay for the drug? Doctors Without Borders says that they can protect a child from undernutrition for $62 a year, or for about $1000 (using a 2% discount rate) for the child's first 18 years of life. If you had to bear the cost of the cancer drug, would you use the money to extend your own life by 3-6 months, or would you donate the money to Doctors Without Borders to protect 125-150 children from undernutrition during their developmental years? If a government program is bearing the cost of the cancer drug, would the tax money be better spent on those children?
posted July 6, 2008 at 8:10 a.m.