Recently, for many health economics researchers, empirical estimation of the monetary valuation of a quality-adjusted life year (QALY) has become an important endeavour. Different philosophical and practical approaches to this have emerged. On the one hand, there is a view that, with health-care budgets set centrally, decision-making bodies within the system can iterate, from observation of a series of previous decisions, towards the value of a QALY, thus searching for such a value. Alternatively, and more consistent with the approach taken in other public sectors, individual members of the public are surveyed with the aim of directly eliciting a preference-based – also known as a willingness-to-pay-based (WTP-based) – value of a QALY. While the former is based on supply-side factors and the latter on demand, both in fact suffer from informational deficiencies. Sole reliance on either would necessitate an acceptance or accommodation of chronic inefficiencies in health-care resource allocation. On the basis of this observation, this paper makes the case that in order to approach optimal decision making in health-care provision, a framework incorporating and thus, to a degree, reconciling these two approaches is to be preferred.
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