Thursday, July 16, 2009

How Much is Your Life Worth?

What's a QALY? It's an acronym for Quality-Adjusted Life Year: a unit of measurement designed by economists to calculate how much value "a generic human life" has based on how many years the person probably has left -- and the "quality" of those years -- compared with someone of ordinary health. It's a chillingly straightforward formula that is used in many countries to determine whether to pay for a particular treatment: if the treatment costs X and delivers Y benefit, is it worth it? If the benefit is that it extends your life by a year, but no more, and costs, say, $50,000, is that a good deal?

You might say "Yes, of course, a year of my life is worth that." But here's the catch: The entity that gets to answer the question is not the person whose life is at stake; it's the one paying the $50,000. In a publicly financed healthcare system, it would be answered, most likely, by a panel of economists and physicians appointed, probably, by the Secretray of Health and Human Services. In England, for example, this panel is called the National Institute for Health and Clinical Excellence, better known by the Orwellian acronym NICE.

I think this concept is coming soon to the United States. We will all know what "QALYs" are, and how to calculate them. Check out some of the commentary and coverage of health reform ideas that we've published.

So, how does the QALY formula work?

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In a much-discussed article in the New York Times (to be published this weekend in the Times Magazine), bioethics professor Peter Singer explains it. He says that "The dollar value that bureaucrats place on a generic human life is intended to reflect social values, as revealed in our behavior." Since most people would pay almost anything to save their own lives, he explains, the bureaucrats instead start by examining how much people are willing to pay to reduce the RISK of their own death.

He goes on:

"How much will people pay for air bags in a car, for instance? Once you know how much they will pay for a specified reduction in risk, you multiply the amount that people are willing to pay by how much the risk has been reduced, and then you know, or so the theory goes, what value people place on their lives. Suppose that there is a 1 in 100,000 chance that an air bag in my car will save my life, and that I would pay $50 — but no more than that — for an air bag. Then it looks as if I value my life at $50 x 100,000, or $5 million."

How do you value the life of someone with a disability versus someone who doesn't have a disability? That's in there, too. He acknowledges the obvious flaws in this system but dismisses them are mere inconveniences.

How does all this sound to you? I'm no pollyanna: I understand that every system of allocating a resource (like healthcare) amounts to rationing when the demand for it is greater than the supply of it. America rations healthcare by price, through a bad facsimile of a free-market system known as the "large group market," paid for mostly by employers. The question is who should do the rationing, and how? Any sensible discussion of health reform must begin with that question.


  1. A famous quote- "Only in America is death optional." This was used by health care experts who lament the money spent on ineffective therapies given at the end of life. They see tremendous waste.

    It was also used by a Pharma executive whose company produces the mega-expensive chemotherapeutic agents that extend life by a month or two. He sees tremendous opportunity.

    Doctors offices are flooded by drug reps pushing me-too drugs that cost a fortune and are no better (and possibly even less effective or down right dangerous) than generics.

    Remember bone marrow transplantation for metastatic breast cancer? Senate hearings, picketing, outrage to get it covered. Well, the data finally proved it was no good.

    Society has to make choices-there is only so much money to pay for health care and sorry to say that death is not optional. I prefer data-driven choices, not ones made by emotion.

  2. Signaturedoc, you should be the blogger...