Chuka University

School of Nursing and Public Health

Bachelor of Public Health

Unit: Public Health Policy

Code: PUHE 482

Group 2:
Stephen Muchonji EB19/43160/19 …………………………
Jacqline Muthoni EB19/43148/19 …………………………
Douglas Shikwati EB19/43146/19 …………………………

Lecturer: Dr Sundays

Date ………………………………….

Task: Discuss the procedure of using a cost utility plan in policy formulation. What are the
advantages of a cost utility plan?
Introduction

A cost utility plan is an economic evaluation used in policy formulation to assess the efficiency
of different interventions or policies by comparing their costs with the benefits they generate.

The procedure for using a cost-utility plan

The procedure for using a cost-utility plan typically involves the following steps:

1. Identify the policy or intervention under consideration.

The first step is to define the policy or intervention being evaluated clearly. This
involves specifying the target population, the outcomes of interest, and the alternative
policy options.
2. Identify the costs and benefits.
The next step is identifying the costs and benefits of each policy option. Costs can
include direct costs, such as program costs, and indirect costs, such as lost
productivity. Benefits can include improvements in health outcomes, quality of life,
and other outcomes relevant to the policy objective.
3. Measure the costs and benefits.
Once the costs and benefits have been identified, they need to be measured. This
involves quantifying the costs and benefits in a common unit of measurement, such as
dollars or quality-adjusted life years (QALYs).
4. Calculate the cost-effectiveness ratios.
The next step is to calculate the cost-effectiveness ratios for each policy option. The
cost-effectiveness ratio is the ratio of the cost of the intervention to the benefit it
generates. This allows policymakers to compare the relative efficiency of different
policy options.
5. Evaluate the cost-effectiveness ratios.
The final step is to evaluate the cost-effectiveness ratios and use this information to
inform policy decisions. Policymakers can use the cost-effectiveness ratios to identify
the most efficient policy option or set resource allocation priorities.

Advantages of a cost-utility plan

1. It helps to maximize resources: By evaluating the cost of implementing a policy against
its benefits, policymakers can allocate resources more effectively and efficiently. This
ensures that the available resources are put to the best possible use.
2. It promotes transparency: Cost-utility planning provides a clear picture of the costs and
benefits associated with a policy. This promotes transparency and helps stakeholders
understand the rationale behind the policy decision.
3. It facilitates better decision-making: A cost-utility plan enables policymakers to make
informed decisions based on a clear understanding of the costs and benefits of different
policy options. This helps to ensure that the policy decision is well thought out and
backed by evidence.
4. It encourages stakeholder involvement: Cost-utility planning requires input from
stakeholders such as experts, community members, and policymakers. This encourages
stakeholder involvement and promotes a collaborative approach to policy formulation.
5. It promotes accountability: Cost-utility planning promotes accountability by evaluating
the costs and benefits associated with a policy. Policymakers can be held accountable for
their decisions, and stakeholders can hold them responsible for the policy's outcomes.
6. It encourages innovation: Cost-utility planning encourages policymakers to think
creatively and explore innovative solutions to problems. Policymakers can identify new
and innovative ways to achieve their goals by considering the costs and benefits of
different policy options.
7. It helps to minimize unintended consequences: By carefully evaluating the costs and
benefits of a policy, policymakers can identify potential unintended consequences and
take steps to mitigate them. This helps ensure that the policy decision does not negatively
impact other areas.
8. It promotes efficiency: Cost-utility planning helps policymakers to identify the most
efficient ways to achieve their goals. This ensures that resources are well-spent and the
policy decision is implemented most effectively.
9. It encourages long-term thinking: Considering a policy's long-term costs and benefits,
cost-utility planning encourages policymakers to think beyond short-term solutions. This
promotes sustainable policy decisions that have long-lasting impacts.
 10. It promotes evidence-based decision-making: Cost-utility planning requires policymakers
to consider the evidence when making policy decisions. This ensures that the policy
decision is based on sound evidence, not assumptions or guesswork.

Conclusion.

In summary, a cost utility plan provides a systematic and evidence-based approach to policy
formulation that promotes transparency, accountability, efficiency, and stakeholder involvement.
It enables policymakers to make informed decisions and allocate resources effectively while
encouraging innovation and long-term thinking.
References

Flyvbjerg, B., & Bester, D. W. (2021). The cost-benefit fallacy: Why cost-benefit analysis is
broken and how to fix it. Journal of Benefit-Cost Analysis, 12(3), 395-419.

Koopmans, C., & Mouter, N. (2020). Cost-benefit analysis. In Advances in Transport Policy and
Planning (Vol. 6, pp. 1-42). Academic Press.

Li, M., Liu, S., Wang, F., Liu, H., Liu, Y., & Wang, Q. (2022). Cost-benefit analysis of
ecological restoration based on land use scenario simulation and ecosystem service on the
Qinghai-Tibet Plateau. Global Ecology and Conservation, 34, e02006.

Liu, W., Zhang, J., & Yang, T. (2022). Will China's household coal replacement policies pay off:
A cost-benefit analysis from an environmental and health perspective. Journal of Cleaner
Production, 357, 131904.