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The European Journal of Health Economics
Erschienen in: The European Journal of Health Economics 1/2010

01.02.2010 | Original Paper

On the welfare theoretic foundation of cost-effectiveness analysis—the case when survival is not affected

verfasst von: Bengt Liljas

Erschienen in: The European Journal of Health Economics | Ausgabe 1/2010

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Abstract

This paper develops a welfare theoretic foundation for cost-effectiveness analysis (CEA) when survival is not affected. With this foundation, all costs and their corresponding utility-terms should be included. A key question, though, is whether these utility-terms are consistent with quality-adjusted life year (QALY) (utility) theory or not. The results show that health care costs and changes in the utility of health should be included. However, as QALYs do not capture the utility of changes in consumption (as this utility must be independent of health, according to QALY theory), the corresponding changes in consumption costs should be excluded. Regarding the costs for changes in absence from work, these should only be included if the utility of changes in the amount of leisure is included. As no QALY theory has been developed that includes this utility, it is unclear how to handle these costs (even if there are arguments for excluding them). For changes in productivity at work, though, there are robust arguments for the inclusion of these costs. Overall, it seems difficult to provide a clear basis for CEA in economic welfare theory when also including non-medical goods such as consumption and leisure.
Fußnoten
1
It should be noted that Garber and Phelps [3] reached a somewhat different conclusion. Recently, Lee [4] highlighted that this difference came, at least in part, from using different budget restrictions, and argued in favour of the model by Garber and Phelps [3]. This was, though, later forcefully criticized by both Meltzer [5] and Feenstra et al. [6]. For a review of these areas, see Meltzer [7] and Rappange et al. [8].
 
2
This symmetry rule has also been supported by van Baal et al. [10], referring to it as ‘internal consistency’.
 
3
Whether or not this is in fact the case has been debated ever since (see e.g. Gandjour [11], Nyman [12], and Lundin and Ramsberg [13]).
 
4
An interesting contribution on this topic was recently made by Le Pen [15], who elaborated on why the influence of CEA on health care decisions has been so different across Europe. He concluded that one of the possible reasons could be the relative willingness of these countries to accept the underlying concepts of CEA (especially when using QALYs as the measure of effectiveness).
 
5
With an extra-welfarist foundation, one objective is to also try to incorporate the inequalities in individuals’ opportunities in the analysis. Following the tradition of Sen [16, 17], CEA would then move away from a pure utility-based welfare to interpersonal comparisons based on non-utility information, such as functionings and capabilities (see e.g. the recent papers by Brouwer et al. [18] and Coast et al. [19]). Even if alternative foundations for CEA, such as this, will be briefly touched on later, a full comparison between welfarism and extra-welfarism is beyond the scope of this paper, and the interested reader is therefore referred to the papers (and the references therein) above.
 
6
Introducing survival here would only complicate the model, without adding any further insights on top of those already generated by Meltzer [2] and others (see above).
 
7
Clearly, consumption could also depend on leisure, and vice versa. Further, both consumption and leisure could also depend on the wage rate. However, for simplicity (without losing any key insights) it will be assumed that this is not the case.
 
8
In a perfect market economy, the individual will (of course) be paid according to his or her marginal productivity. However, given the imperfections in labor markets in real-life (such as ‘sticky wages’), individuals are rarely paid exactly according to their marginal productivity. It is therefore important to note that this model does not require a perfect labor market in that sense—only that the individual’s wage rate is a function of his or her level of health (but not necessarily in a 1:1 ratio).
 
9
An implicit assumption in Eq. 2 is that the individual can spend his or her time in only two different ways: work or leisure. Further, leisure is assumed here to include only those leisure-activities that increase the individual’s utility (e.g. spending time with family and friends or performing hobbies), but not aspects such as travel-time to the hospital and time for recuperation. In order to fully capture these aspects, the time available to an individual would have to be divided not only into work and leisure, but also into (for example) time seeking medical care. However, including this would only add to the complexity of the model without adding any further key insights. In general, though, if time seeking medical care represents a substantial amount of the individual’s total time available, then this will (of course) have implications on how he or she distributes the remaining time to work and leisure.
 
10
It should be noted, though, that Bleichrodt and Quiggin [22] also investigated the case when consumption is allowed to vary over time. However, this led to other assumptions—with the level of consumption still having to be independent of the level of health.
 
11
Obviously, the value of leisure foregone will depend on the individual’s level of health; it is not unlikely that the value of leisure for someone who is really ill is rather low.
 
12
There has been some research on whether or not respondents include income and leisure in their QALY-responses (see e.g. Meltzer et al. [23], Sendi and Brouwer [24], Krol et al. [25], Myers et al. [26], and Richardson et al. [27]). Overall, the results have varied between these studies—indicating both a need for further research but also a need to be more transparent about these aspects when assessing QALYs.
 
13
An alternative to excluding these costs is, of course, to try to also include the value of lost leisure in the analysis; however, this will require additional research on both the theory and methods of assessing QALYs.
 
14
Clearly, there is already a large literature questioning the need for a welfare theoretic foundation for CEA and instead arguing in favour of e.g. the extra-welfarist approach (see e.g. Culyer [37], Williams [38], Brouwer and Koopmanschap [39], Brouwer et al. [18], and Coast et al. [19]).
 
15
For a discussion of the normative question on whether or not decision-makers should adopt a welfare theoretic foundation, see e.g. Weinstein and Manning [40], Nord et al. [41], and Richardson and Olsen [42].
 
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Metadaten
Titel
On the welfare theoretic foundation of cost-effectiveness analysis—the case when survival is not affected
verfasst von
Bengt Liljas
Publikationsdatum
01.02.2010
Verlag
Springer-Verlag
Erschienen in
The European Journal of Health Economics / Ausgabe 1/2010
Print ISSN: 1618-7598
Elektronische ISSN: 1618-7601
DOI
https://doi.org/10.1007/s10198-009-0145-6

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