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Cost-Effectiveness Threshold for Healthcare: Justification and Quantification.

Moshe Yanovskiy1, Ori N Levy1,2, Yair Y Shaki1

  • 1Department of Industrial Engineering, 42730Jerusalem College of Technology, Jerusalem, Israel.

Inquiry : a Journal of Medical Care Organization, Provision and Financing
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Summary
This summary is machine-generated.

Cost-effectiveness analysis (CEA) is crucial for public health policy, justifying its ethical necessity. This study establishes a cost-effectiveness threshold (CET) for life extension at approximately 140% of GDP per capita per quality-adjusted life-year.

Keywords:
cost-benefit analysisethicshealth policyrisk managementwillingness to pay

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Area of Science:

  • Health Economics
  • Public Health Policy
  • Bioethics

Background:

  • Public health expenditures, including life-saving interventions, incur costs.
  • Cost-effectiveness analysis (CEA) is standard in health policy, but its ethical basis and cost-effectiveness threshold (CET) for life extension lack consensus.

Purpose of the Study:

  • To ethically justify the use of CEA in health policy.
  • To establish a consensus method and value for the CET for life-extending measures.

Main Methods:

  • Ethical analysis of CEA through policy impact assessment, linking health and wealth disparities.
  • Quantified CET using three methods: salary analysis in risky occupations, Prospect Theory (valuing life over lifetime earnings), and U.S. legal practice.
  • Applied Prospect Theory to CET determination, a novel approach.

Main Results:

  • CEA is both a practical and ethical necessity for health policy.
  • Three independent methods converged to yield a CET of approximately 1.0 ± 0.4 gross domestic product per capita (GDPpc) per quality-adjusted life-year.
  • An upper limit of 140% GDPpc per quality-adjusted life-year is proposed for prudent and ethically justified life extension programs.

Conclusions:

  • CEA is ethically justified and practically essential for resource allocation in public health.
  • A standardized CET, informed by economic and ethical considerations, is vital for equitable life-extension policies.
  • The proposed CET of 140% GDPpc provides a benchmark for evaluating the prudence and ethical standing of life extension initiatives.