In health economics, much attention has been devoted to the value of health for production, i.e., to economic valuation of health from a societal perspective. Key issues in this regard are production losses caused by sick leave and disability and the importance of population health for economic growth.
What Is Health?
Health is a multidimensional concept. According to a simple definition, one has more health, the more free one is of disease and disability, including being free of diseases at early asymptomatic stages (e.g., high blood pressure and young tumors). In health economics, the concept of health usually refers to observable characteristics such as (1) functionality of bodily organs, (2) ability to move about and do normal activities of daily living, (3) freedom of symptoms in terms of physical discomfort – for example, pain or nausea, and (4) freedom of clinical psychological problems like anxiety disorder, depression, and psychosis.
Health can be viewed as an entity at a given point in time or as an aggregate over a given time period. A person’s level of health at a given point in time may be perceived and described in verbal and/or numerical terms along some or all of the above dimensions of symptoms and functioning. This yields a health profile for that person. A number of standardized questionnaires and descriptive systems are available for establishing the health profile of patients. Some of these are disease specific, others are generic, for example, the Sickness Impact Profile and SF-36. Some of the generic ones yield overall index scores that are used in economic evaluation, see below.
Health over a given time period may be understood as an aggregate of the person’s health at different stages of that period. If the time period is the future, the aggregate is expected future health and much the same concept as prognosis. If the time period is the whole life, the aggregate is called lifetime health. Both expected future health and lifetime health include longevity (life expectancy).
A description of a person’s health over time on one or more dimensions of functioning and symptoms is called a health scenario.
The health of individuals may be used to estimate average, median, or typical health in groups of people, for instance, in a diagnostic group, an age group, a local community or a whole nation. All are examples of estimation of population health.
Both health profiles and scenarios are descriptive entities. They build on measurements of individuals’ performance on specific health dimensions, for example, blood pressure, degree of hearing, number of meters one is able to walk without help, score on a pain scale, or score on a depression scale.
The Value Of Health
Health profiles and scenarios can be valued. This means judging how good or bad, or how desirable or undesirable they are – all things considered – compared to other possible profiles and scenarios.
It is possible to see health as valuable per se, for instance, by regarding good health as something that is the will of God or consistent with a ‘natural order.’ This would be a deontological view. In health economics, the perspective on valuation is mainly consequentialist: The value of health derives from its positive consequences – or from avoiding the negative consequences of illness.
Consequences of health are of different kinds and may be judged from the viewpoint of different stakeholders.
From individual’s personal viewpoint, good health enhances quality of life. This applies both at a subjective and emotional level – in terms of feelings of well-being – and more objectively in terms of capabilities for doing different things and thus opportunities for enjoying a rich life. These are all aspects of health-related quality of life. Good health also enhances longevity and personal income. The personal value of health lies in all these potential consequences.
But individuals’ health (or health deficits) may also have consequences for others. Family members may be affected by a person’s illness in various ways. Society as a whole may lose production and income as a result of absence from work caused by illness. And communicable disease in one person is potentially harmful to other persons. In short, health has societal value over and above personal value to the individual.
Measuring The Value Of Health
In health economics, much attention has been devoted to the value of health for production, i.e., to economic valuation of health from a societal perspective. Key issues in this regard are production losses caused by sick leave and disability and the importance of population health for economic growth.
In personal valuation of health, one main theme is how much individuals are willing to pay out of pocket for improvements in health and for reductions in risks of health losses. Results of research in this area are used as inputs in monetary cost–benefit analyses of health programs.
Another main theme in personal valuation is how highly individuals value life in different states of illness compared to living in full health. In health economics, this is referred to as measurement of health-related quality of life. The quality of life associated with any given health state is expressed as a score on a scale running from zero (corresponding to a state as bad as being dead) to unity (corresponding to being in full health). Alternatively, the scale can be reversed in order to focus on the severity of a state of illness or disability rather than its positive quality. Severity is then expressed as a score running from zero (corresponding to ‘no problem’) to unity (corresponding to as bad as being dead).
Two different kinds of judgment of health-related quality of life need to be kept apart. One is judgments of own situation made by people with illness or disability. This is often referred to as ex post judgments (judgments made after experience with the illness or disability in question). The other is judgments in samples of the general population of health states that are presented to the subjects as states they might be in. This is often referred to as ex ante judgments (judgments mostly made before experience).
In both approaches, valuations may be elicited at different levels of measurement. Ordinal valuations are verbal reports or crude ratings that allow investigators to rank different health states with respect to value, without saying how much better one state is than another. Cardinal reports allow investigators to compare differences between health states more accurately and say that one difference seems to be X times more valuable than another one.
In health economics, judgments of health-related quality of life at a cardinal level are often referred to as judgments of individual utility. Utility measured as ex ante judgments (in general populations) is called decision utility, whereas utility measured as ex post judgments (in patients and disabled people) is called experience utility.
Research on ex post judgments of health has mainly been conducted by clinicians (physicians, nurses, and others) and by social scientists working more generally with quality-of-life issues. In this research tradition, focus has been on functioning and well-being measured mainly at an ordinal level. But there are also studies of patients’ and disabled people’s cardinal valuations of the states they are in.
In health economics, research on health-related quality of life has focused mainly on ex ante judgments in general populations. Here, the ambition has been to obtain data with cardinal level measurement properties. For this purpose, various specialized preferences elicitation techniques have been developed. Furthermore, various so-called multiattribute utility instruments have been developed that allow investigators to first establish health profiles for patients in question and then translate the profiles into single index estimates of the overall personal value – utility – of the profiles.
The exact interpretation of utility scores for health states is open to debate. On the one hand, they may be understood as the level of personal welfare (subjective well-being, happiness) that individuals derive (or expect to derive) from different states. This interpretation relates to welfare economic theory and is called welfarist. On the other hand, they may be understood as valuations of health itself as judged by some wider criteria that include objective capabilities and levels of functioning. This interpretation is called extra-welfarist.
Utility scores for health states may be multiplied by time spent in the states in question to estimate the aggregate value of health over time for individuals or groups of individuals (including whole populations). The unit of valuation is then 1 year in full health for one individual. This unit is called a quality-adjusted life-year (QALY). Any health scenario may thus be assigned an overall utility in terms of a certain number of QALYs. Similarly, severity scores for health states may be used to estimate the value of aggregate health losses over time.
Health interventions may lead to health benefits both in the present and sometime in the future. Depending on the perspective of the analysis, the value of distant benefits may be considered to be less than the value of benefits that are close in time.
The Utility And Value Of Health Care
In health economics, the utility of an intervention for an individual is conventionally estimated by (1) using decision utilities or severity scores to calculate QALYs or disability adjusted life years (DALYs) and (2) computing the difference between the individual’s post and preintervention health scenario in terms of QALYs or DALYs. The utility of a program for a group of persons is estimated as a sum of the QALY (or DALY) gains of the individuals involved.
Utility estimated in this way is not necessarily the same as the value of care. By their distance from unity, decision utility scores reflect the loss of value – or the ‘disutility’ – that people in the general population, who mostly are in quite good health, associate with different kinds of health problems. But when people fall ill, their Bibliography: points may change. Their valuation of care may then depend on the extent to which the best possible is being done for them, even if they cannot be restored to full health. This source of value is not incorporated in decision utility judgments of health states. Furthermore, societal decision makers’ valuations of care for different groups of patients may be affected by various concerns for fairness, for instance, special concerns for the worse off. In sum, there is a difference between expressing health benefits in terms of QALYs or DALYs and valuing care more completely. The importance of the issue is most easily seen in the context of life-saving medicine. All other things being equal, life is better in good health than in less good health. But it does not follow that a person in good health values life itself more – i.e., has a stronger interest in continued life – than a person in less good health. It also does not follow that society as a whole values protection of the former person’s life higher than protection of the latter person’s life. The value of life itself is not the same as the valuation of health.