What is the price of life? (Aug-03)

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Do you think that your life is worth more than the amount that the government usually uses as the maximum to spend to provide one year of life?

Imagine that you are a member of a government panel that is trying to decide how cost-effective a medical treatment must be in order for the government to cover the costs of the treatment. Suppose that a certain treatment could provide one additional year of life to an otherwise healthy person. What is the highest amount the government should be willing to pay per person for this treatment?

How do your answers compare?

For the past twenty years, the figure most often used as the maximum amount to spend to provide one year of life has been $50,000. This figure was originally proposed since it was the cost of a year of kidney dialysis, a lifesaving treatment that the U.S. government funds in Medicare.

Should the number be higher or lower than the current standard?

Conventional wisdom would suggest that the number be higher to take into account the inflation that has occurred in the years since the standard was developed. Current practices such as annual Pap smear screening for women with low risk for cervical cancer, which has a cost of $700,000 per year of life gained, also suggest that society is willing to pay more than the current standard for a year of life. The authors of the cited article recommend, based on current treatment practices and surveys of the general public, that the cost-effectiveness threshold should be revised to be around $200,000.

Should the number increase, decrease, or stay the same over time?

Again, it seems that the threshold amount should increase over time due to inflation. However, other factors come in to play that affect the value.

Since new technologies are emerging all the time, some of which will be deemed cost-effective, there will be more and more treatments to be offered in the future. Also, the rate of use of treatments is an important consideration, because even if a new treatment is more cost-effective than an old one, if it is used more often it will end up costing more to society overall. With more treatments becoming available and more people being given treatments, the threshold cost will probably have to decrease so that insurance companies and the government can keep up with the increasing availability and demand.

Why is this important?

Insurance companies and government health care entities face a continuing struggle when trying to determine which medical treatments to cover. Health care costs are increasing rapidly, so these groups will be facing even tougher decisions in the future. Establishing cost-effectiveness guidelines would be extremely helpful as an aid to making the decisions about treatment coverage. Evidence shows that the current threshold is probably not an accurate reflection of the desires of society or actual prescribing practices. It needs to be adjusted to become useful once again, and must be reevaluated periodically to make sure the value keeps up with trends in the health care market, rather than being left alone without question for two decades as is the current situation.

For more information see:

Ubel PA, Hirth RA, Chernew ME, Fendrick AM. What is the price of life and why doesn't it increase at the rate of inflation? Archives of Internal Medicine. 163:1637-1641, 2003.