Budget impact analysis

Budget impact analyses are used to estimate the likely change in expenditure for a specific budget holder resulting from a decision to fund a new healthcare intervention or some other alteration in policy at an aggregate population level. The budget (or financial) impact is typically calculated using a budget impact model, over a period of 3 to 5 years, either at a national level or for more local healthcare payers and providers. In contrast to cost-effectiveness analyses, which are used to estimate value for money, budget impact analyses assess affordability. Two scenarios are usually compared: a situation where the new intervention or policy is implemented, and a counterfactual situation without the new intervention. Each scenario considers population size, patient eligibility, speed of uptake and market share of the intervention, as well as many of the inputs associated with a model-based cost-effectiveness analysis. Budget impact models are commonly used by local or national-level decision makers for planning purposes, particularly where (additional) expenditure in one budget is balanced by savings in another.