How to correctly calculate discounted healthcare costs and benefits

A feature of a healthcare policy (such as screening) with interventions at specific ages is that when it is introduced, part of the population is too old to participate in the full programme. This fact changes the formulae to be used for cost and benefit discounting in a non-intuitive way. General f ormulae are derived for the expected discounted costs and benefits of such health promotion policies, for a stationary population. Correct ways to cal culate discounted costs and benefits via simulation are also described. The formulae have some surprising properties, for example the relative cost of two health policies does not depend on the discounting rate. They are also relevant to the ongoing debate over the correct discounting rate for benef its. It is shown that when health benefits follow quickly on treatments, va rying the discounting rate for health benefits is merely equivalent to resc aling the cash value of a benefit. It is only when benefit follows long aft er treatment that the problem of choosing an appropriate discount rate for benefits cannot be simplified.