Cost-of-Illness Methodology: A Guide to Current Practices and Procedures

illness and disease have been on a dramatic upward trend that is projected to continue. The most recent estimates of national health expenditures indicate a 400 percent increase since 1965 (Freeland and Schendler, 1981). As a proportion of the Gross National Product (GNP), the costs associated with illness and disease are projected to reach nearly 11 percent by the year 1990 (Freeland and Schendler, 1981) compared to 9.4 percent in 1980 and 6 percent in 1965 (Gibson and Waldo, 1981). It should not be surprising that the analytic literature on these costs has also grown rapidly. Medical journals, in particular, contributed to this growth as the medical profession has become increasingly involved with economists, sociologists, public health specialists, and others in scrutinizing the cost of modern health care (Warner and Hutton, 1980). Estimates of the costs of illness and disease are produced and used in cost-benefit and cost-effectiveness analyses and in other modes to set priorities and make government policy decisions, to prepare and deliver congressional testimony, and to support agency budgets. The application of the techniques of cost-benefit and cost-effectiveness analysis to health care, in particular, has been the subject of several