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Budget Impact Analysis: When and How Ministries Use It
What a budget impact analysis is, how it differs from cost-effectiveness analysis, the components of a good analysis, and how ministries and insurers use the results.
PDFUpdated 30 September 2026Economic evaluation & HTA
What's inside
- Budget impact analysis versus cost-effectiveness analysis
- When a budget impact analysis is needed
- The six building blocks of a budget impact model
- How to present uncertainty with scenarios
- How ministries and insurers use the results
Key points
- 01Budget impact analysis asks whether an intervention is affordable for a specific budget holder over the next few years.
- 02It uses the budget holder's perspective and a short time horizon, usually one to five years.
- 03The eligible population, uptake and displaced treatments drive most results.
- 04Present scenarios rather than a single number.
Frequently asked questions
Are costs discounted in budget impact analysis?
Usually not. Good practice guidance recommends presenting costs undiscounted, as budget holders plan in annual amounts.
Can an intervention be cost-effective but unaffordable?
Yes. If many people are eligible, even a good-value intervention can cost more in the first years than a budget can absorb. That is why decision-makers often ask for both analyses.
How long does a budget impact analysis take?
Adapting an existing budget impact model can take a few weeks; a new model depends on the data available and the number of scenarios needed.
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This guide explains the method. If you would rather have the analysis done for you — with local data, independent quality control and a report you can defend — we can help.
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