Pinning Down the Money Value of a Person’s Life

The New York Times
SCREENING A technician from the University of Connecticut Health Center gives a mammogram to a patient. Economists are trying to determine whether the costs of tests are worth it.



By ALEX BERENSON
Published: June 11, 2007
HOW much is your life worth? How about a year of life? How much is your vision worth? What about being pain-free? Able to walk unassisted? Have sex?

What is Good Health Worth? Unanswerable questions all. Or maybe not.

Economists are sometimes accused of knowing the prices of everything and the value of nothing. Now they are trying to answer what may be the most difficult question of all — the price of health.

The exercise has enormous real-world implications that are reverberating as health care technology becomes more expensive and health care spending becomes a bigger burden on companies, taxpayers and patients. The price of health is part of the calculus in determining whether a new medicine or treatment is worth the cost.

While making such determinations may seem unsavory, some countries, including Britain, are explicitly using the cost-effectiveness of treatments in deciding what drugs to cover. Even in the United States, where there is a general reluctance to limit health care based on a treatment’s expense, costs and benefits are weighed, sometimes in subtle ways.

“The reality is we have to make these comparisons, and we either do them implicitly or explicitly,” said Dana Goldman, director of health economics at the RAND Corporation, a nonprofit research institute in Santa Monica, Calif.

To make the process more explicit, economists want to compare the cost-effectiveness of different treatments in a single measurement, one that doctors and policy makers will trust enough to use.

So, how much is your life worth? You may think the answer is infinity, that no amount of money could compensate you for the loss of your life.

But people do put a price tag on their existence. Workers accept riskier jobs for higher pay, for example. And the rich tend to think their lives are worth more than poor people’s.

Studies of real-world situations produce relatively consistent results, suggesting that average Americans value a year of life at $100,000 to $300,000, said Peter J. Neumann, director of a program at Tufts-New England Medical Center that measures the cost-effectiveness of new treatments.

Kidney dialysis treatment provides another data point to suggest that estimate is fair. Keeping a patient with kidney failure alive on dialysis costs about $70,000 per year, according to a federally financed survey of dialysis clinics. But no one has suggested that dialysis is too expensive or that it should be limited.

So a year of life is worth at least $100,000.

But that figure only begins to answer the question of what health is worth. Dialysis saves lives directly. But most medical care has a more modest goal: back surgery is performed to relieve the pain of a herniated disk, and drugs are given to lift Depression or end an asthma attack more quickly. Those treatments are meant to improve — not necessarily to save — lives. Can their value actually be compared?

Yes, say health care economists, who have created the “quality-adjusted life year.” The idea is that a year in perfect health is worth more — both to the patient and to society — than a year spent in pain, Depression or a wheelchair.

So what’s worse? Losing one eye or both ears? Constant back pain or severe asthma? Late-stage diabetes or congestive heart failure?

To get the answer, these economists have developed several tests. The simplest and most elegant is called the standard gamble. People are asked to imagine having the symptoms of a certain disease — the pain, loss of function and shortened life expectancy. (Economists try to avoid using the specific name of the disease when they are describing it because some diseases, especially cancer, provoke disproportionately negative responses.)

Then the people are told that an operation exists that would cure them. But if the operation fails, the patient will die.

Under those circumstances, what odds of failure will the sick person tolerate? The higher the odds, the worse the disease. For example, a survey of people with severe diabetes, including blindness, found that they would accept the operation even if there were only a 42 percent chance they would survive, according to a registry compiled by Dr. Neumann’s program at Tufts.

In other words, these patients would, on average, accept a better than 50-50 chance of immediate death to be rid of their condition. Patients who had suffered a severe stroke carried an even more negative view of their condition.

On the other hand, people with severe sleep apnea — which causes them to wake up repeatedly during the night and requires them to wear a breathing mask in bed — were much more willing to live with the disease than stroke or diabetes patients were. The apnea patients would accept an operation only if their chances of dying were no higher than about 10 percent.

Economists put these conditions on a simple scale, with a year in perfect health scored at 1. Death is scored at 0, but 0 is not the lowest point on the scale. A person who is in intractable pain, bedridden, depressed and unable to care for himself could have a score below 0, because many people would rather be dead than living with those problems.

What is Good Health Worth? Economists acknowledge that these figures are rough estimates.

“There’s a number of different ways of eliciting this information, and depending on how it’s done and who you ask, you get different numbers,” said Emmett B. Keeler, a math professor and specialist in health care economics at RAND.

Many sick people, for example, adapt surprisingly well to their conditions, Dr. Keeler said. As a result, those who are actually sick tend to be more tolerant of their diseases — and less willing to gamble their lives on a cure — than healthy people who are asked to imagine having a disease.

“People are terrible at doing this,” said Richard M. Suzman, director of the behavioral and social research program at the National Institute on Aging. “There are data that show that people overestimate the impact of spinal cord injuries compared to people who’ve actually had them.”

Despite these caveats, economists insist that the estimates have value, at least as guides to the diseases and conditions that people will spend the most to avoid.

“I think of it as ‘What’s the weather like?’ ” said David Cutler, a professor of economics at Harvard and author of “Your Money or Your Life: Strong Medicine for America’s Health-Care System.” “There’s no firm answer, but pretty much everyone would agree that some days are nicer than other days.”

Once they know how to rank the “costs” of various diseases, economists can determine the worthiness of a particular treatment. To do so, they use the “quality-adjusted life-year,” or QALY.

The idea of QALY is to put a value on treatments that may not save lives but improve them. For example, if a blind person’s quality of life is “worth” 0.75 points per year, a treatment that would restore him to perfect vision — and raise his quality of life to 1 per year — is worth 0.25 per year of life. If the person lived another 30 years, the treatment would be worth 7.5 QALYs, or 30 times 0.25.

With QALYs, that treatment would produce the equivalent of keeping 10 patients on dialysis — whose lives are also “worth” 0.75 points per year — alive for a year.

In theory, QALYs offer a single figure that can measure value of every treatment, from drugs to surgeries to preventive care, like vaccines and cancer screenings.

Once they know how many QALYs a treatment is worth, economists can figure out its cost per QALY — the broadest measure of the cost-effectiveness of health care.

For example, what does screening for colon cancer really cost? First, divide the cost per screening by the probability that a screening will find cancer to determine the cost of a cancer diagnosis. Then divide that figure by the number of QALYs lost in an average case of colon cancer.

And as any gastroenterologist will you, because screening is relatively cheap and colon cancer is expensive and difficult to treat, colon cancer screening turns out to be something of a bargain, at $10,000 to $25,000 per quality-adjusted life year — at most, one-third the cost of dialysis. Put another way, if the United States had to choose between dialysis and colon cancer screening, most economists would suggest it pick screening.

But the United States has never accepted that health care should be rationed, or that new treatments should not be covered simply because they are expensive. That attitude has led to coverage for technologies like the left-ventricular assist device, a wildly expensive way to help failing hearts pump blood more usefully.

Costing as much as $1.4 million per QALY, the device is an enormous use of resources. Some new cancer medicines are also inefficient, extending the lives of very sick patients by a few weeks at a cost of tens of thousands of dollars per case, or several hundred thousand dollars per QALY.

Meanwhile, some people without insurance do not have access to cholesterol-lowering drugs, which cost just a few thousand dollars per QALY when they are prescribed to patients who have a high risk of heart attack.

Such inefficiencies contribute to the high cost of American health care, economists say. They argue that the United States will have little alternative but to follow the lead of other countries, notably Britain, and begin to examine cost-per-QALY explicitly when it considers the coverage of new treatments.

“When we go and buy health care, we have no idea how much health we’re going to get for a dollar,” said Dr. Goldman of RAND. “And if we had this just right, we’d know how much health we’re going to get. You’re not really interested in buying health care — you’re interested in buying health. That’s what this is trying to do.”

Still, Dr. Goldman said that using QALYs would work only if policy makers use them as guides and do not make decisions on the basis of efficiency. In some cases, like new cancer treatments, Americans simply do not want to consider cost, he said.

“They’re incredibly expensive and don’t work so well,” Dr. Goldman said of the cancer drugs. “But Americans have said they want these things. We like to do things for patients that are very vulnerable.”