HCM 4050 Module 1 Economic Evaluation Paper Example

Four Ways to Price a Shingles Shot: Choosing an Economic Evaluation for a Health Fund's Vaccination Drive

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B.S. in Healthcare Management, Thomas Edison State University

HCM-4050: The Financing and Economics of Healthcare Delivery

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Month Day, Year

Four Ways to Price a Shingles Shot: Choosing an Economic Evaluation for a Health Fund's Vaccination Drive

The Garden State Transit Workers Health Fund is a composite self-funded health plan covering about 14,000 bus and rail employees, retirees under 65 and their families. Its trustees have been told that only about one in five members aged 50 to 64 has completed the two-dose recombinant zoster vaccine, even though the plan already covers the shots without cost sharing, as federal law requires for vaccines on the national adult schedule. A vendor has proposed a vaccination drive: mailed reminders, a text campaign and on-site clinics at the six largest depots, priced at about $310,000 over two years, not counting the vaccine itself. The trustees want to know whether the drive is a good use of members' money. This paper explains why economics applies to a decision like this, distinguishes the four main types of economic evaluation used in healthcare, and shows what each would tell the trustees.

Why Economics Belongs in This Decision

Every dollar the fund spends on the drive is a dollar not spent on something else, whether a diabetes program, a lower premium contribution or a reserve against a bad claims year. Economists call that forgone alternative the opportunity cost, and it is the reason a benefit plan cannot simply fund every program that does some good. Health care markets also behave differently from ordinary markets. Members do not pay the vaccine's price at the pharmacy, so price does not ration demand; low uptake reflects time, information, fear of side effects and missed workdays rather than cost. A fund that wants more members vaccinated must therefore pay for something other than the shot itself, and it needs a way to judge whether that spending is worth it.

Talk of a crisis in health care spending usually refers to cost growth that outpaces wages. For this fund the crisis is concrete: claims costs rose faster than contributions for three straight years. In that setting, the trustees are right to ask for evidence of value before adding a program, even a preventive one.

Cost-Minimization Analysis

A cost-minimization analysis compares only costs, and it is valid only when the options produce the same health result. The trustees could use it to choose between two ways of delivering the same vaccinations: on-site depot clinics run by a contracted pharmacy, or vouchers that members redeem at retail pharmacies. If a member vaccinated at a depot is as protected as one vaccinated at a pharmacy, the cheaper delivery route wins. The method fails, however, as soon as the options differ in effect. Depot clinics probably vaccinate more people because they remove travel and time off, so treating the two as equivalent would understate the clinic option's value.

Cost-Effectiveness Analysis

A cost-effectiveness analysis compares the extra cost of one option with its extra effect, measured in a natural unit such as cases of shingles prevented. If the drive raises completion among 5,200 members aged 50 to 64 from 20% to 40%, about 1,040 more members would be fully vaccinated. Using the program cost alone, the drive would cost roughly $298 per additional member protected, before any savings are counted. Adding the expected cases avoided would let the trustees express the result as a cost per case prevented. The strength of this approach is that the unit is easy to understand. Its weakness is that it cannot compare the drive with programs that produce a different kind of result, such as fewer hospital admissions for heart failure, because the units differ.

Cost-Utility Analysis

Cost-utility analysis solves the comparison problem by measuring every result in quality-adjusted life years, which combine length of life with its quality. It is the form most published vaccine evaluations use, and it shows how sensitive economic conclusions are to assumptions. Prosser et al. (2019), working as input for the national recommendation, estimated that the recombinant vaccine cost between $10,000 and $47,000 per quality-adjusted life year compared with no vaccination, depending on age, from a societal perspective. Curran et al. (2018) reported a similar figure of $11,863 per quality-adjusted life year for adults 60 and older, but their study was conducted by the vaccine's manufacturer and its contractors, which trustees should weigh when reading it.

More recent work changes the picture for the youngest members. Yue et al. (2026) updated an earlier model with newer evidence on how long protection lasts, completion of the second dose and 2025 vaccine prices. They estimated $161,162 per quality-adjusted life year when vaccinating at age 50, well above a common threshold of $100,000, but $31,465 at 60 and $16,457 at 70; vaccination became cost-effective at about age 54. For a fund whose target group is 50 to 64, that finding suggests focusing the drive on members 55 and older, where the value is clearer.

Cost-Benefit Analysis

Cost-benefit analysis converts all results into dollars, so a program passes if its monetized benefits exceed its costs. For the fund, benefits would include avoided medical claims for shingles and postherpetic neuralgia, and, if the employers join the analysis, workdays not lost to illness. That framing appeals to trustees because it speaks their language. Its difficulty is that it requires a dollar value for pain and lost quality of life, which many people find uncomfortable and which can be set high or low to reach a preferred answer. Because the fund pays only medical claims, a narrow cost-benefit analysis from its own perspective would almost certainly show a net cost, while a societal one that counts lost work and suffering might not.

Recommendation

Each method answers a different question. Cost-minimization helps choose the cheapest delivery route among equally effective ones. Cost-effectiveness gives a clear cost per member protected. Cost-utility allows comparison with other uses of the fund's money and draws on the strongest published evidence. Cost-benefit tells the trustees whether the drive pays for itself in dollars, which it is unlikely to do from the fund's narrow perspective. The trustees should base the decision on cost-utility evidence, restrict the drive to members 55 and older where the published estimates fall well below common thresholds, use a cost-minimization comparison to choose between depot clinics and pharmacy vouchers, and track completed doses so that the fund's own cost per member protected can be calculated after the first year.

References

Curran, D., Patterson, B., Varghese, L., Van Oorschot, D., Buck, P., Carrico, J., Hicks, K., Lee, B., & Yawn, B. (2018). Cost-effectiveness of an adjuvanted recombinant zoster vaccine in older adults in the United States. Vaccine, 36(33), 5037-5045. https://doi.org/10.1016/j.vaccine.2018.07.005

Prosser, L. A., Harpaz, R., Rose, A. M., Gebremariam, A., Guo, A., Ortega-Sanchez, I. R., Zhou, F., & Dooling, K. (2019). A cost-effectiveness analysis of vaccination for prevention of herpes zoster and related complications: Input for national recommendations. Annals of Internal Medicine, 170(6), 380-388. https://doi.org/10.7326/M18-2347

Yue, Y., Le, P., Adekunle, O., Tran, H. T., & Rothberg, M. B. (2026). Cost-effectiveness of recombinant zoster vaccine (Shingrix) in US adults aged ≥50 years. The American Journal of Medicine, 139(11), 1480-1487.e2. https://doi.org/10.1016/j.amjmed.2026.05.024