Measuring the value of life: Exploring a new method for deriving the monetary value of a QALY

Economic evaluations of new health technologies now typically produce an incremental cost per Quality Adjusted Life Year (QALY) value. The QALY is a measure of health benefit that combines length of life with quality of life, where quality of life is assessed on a scale where zero represents a health state equivalent to being dead and one represents full health. The challenge for decision makers, such as the Treasury, is to determine the appropriate size of the healthcare budget. Bodies such as the National Institute for Health and Clinical Excellent (NICE) in the U.K. must then determine how much they can afford to pay for a gain of one QALY, while operating under this fixed budget. While there is no fixed cost-effectiveness threshold and each intervention is assessed on a case by case basis, under normal circumstances the threshold will not be below £20,000 and not above £30,000 per QALY. Recent research has sought to determine the monetary value individuals place on a QALY to inform the size of the healthcare budget and the level of the cost-effectiveness threshold. This research has predominantly used Willingness to Pay (WTP) approaches. However, WTP has a number of known problems, most notably its insensitivity to scope. In this paper we present an alternative approach to estimating the monetary value of a QALY (MVQ), which is based upon a Time Trade Off (TTO) exercise of income with health held constant at perfect health. We present the methods and theory underlying this experimental approach and some results from an online feasibility study in the Netherlands