A study in the May 4 2004 issue of the Annals of InternalMedicine considered the cost-effectiveness and cost-benefit ofscreening people with hypertension (blood pressure of 140/90 orhigher) for Type 2 Diabetes among people with hypertension. Assume- 5 % of people with hypertension have undiagnosed diabetes. -Early diagnosis of diabetes saves 0.2 years of life per person withpreviously undiagnosed diabetes. - A year of life is valued at$100,000. - Early diagnosis of diabetes increases health costs (dueto treatment of diabetes for a longer period of time) by $10,000per person with previously undiagnosed diabetes. We consider thecosts and benefits of diabetes screening for 10,000 people withhypertension who have not been screened for diabetes. In parts (a)and (b) assume that there are no direct costs for the actualscreening tests, the only cost is the indirect cost of receivingmore health care, and that the screening detects all cases ofundiagnosed diabetes.

(a) Perform a cost-benefit analysis of diabetes screening forthis group. Does it favor screening?

(b) What is the cost of screening per life-year saved?

(c) Suppose that the costs of screening each individual are$120. How would this affect your answer from part a? For thiscost-benefit analysis, what is the break-even price that wouldfavor screening (At what value would the costs and benefits beequal)?