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How to balance the maximization of health and concerns for the worse off remains a challenge for health care decision makers when setting priorities. In regulatory guidelines these concerns are typically specified in terms of priority setting according to needs and priority setting according to cost-effectiveness. Still, it is often unclear when and why needs and cost-effectiveness diverge or overlap as guiding priority setting principles in practice. We conduct a comparative analysis of need and cost-effectiveness in the context of health care priority setting. Based on theories of distributive justice we specify three normative interpretations of need and explicate how these relate to the normative basis for cost-effectiveness analysis. Using priority-setting dilemmas we then move on to explicate when and why need and cost-effectiveness diverge as priority-setting principles. We find that: (i) although principles of need and cost-effectiveness may recommend the same allocation of resources the underlying reason for an allocation is different; (ii) while they both may give weight to patients who are worse off they do so in different ways and to different degree; and (iii) whereas cost-effectiveness clearly implies the aggregation of benefits across individuals principles of needs give no guidance with regard to if, and if so, how needs should be aggregated. Priority setting according to needs or cost-effectiveness does not necessarily recommend different allocations of resources. Thus, the normative conflict between them, often highlighted in practice, seems exaggerated. For health policy this is important knowledge because unclear conceptions may obstruct an informed public discussion. Moreover, if decision-makers are to properly account for both principles they need to recognize the inconsistencies as well as similarities between the two.