This chapter reviews the potential use of cost-effectiveness (CE) analysis in health and health insurance management. The goal is to assure the supply of all medical services with positive benefits greater than cost and none with benefits less than cost. This method is sometimes unpopular in the US because it limits use of care with positive benefits but very high costs; however, the great majority of treatments studied are cost-effective by the usual standards for the dollar value of health improvements. It is shown than cost-sharing can make a service cost-effective. The relevance of the incremental cost-effectiveness ratio (ICER) model for the use of CE analysis by insurers is questioned.