What’s a year of life worth? Here is Aaron Carroll on the subject:
When asked, most oncologists thought that a drug should cost less than $100,000 per year of life gained to be cost-effective. When confronted with a patient (even a hypothetical one), however, they endorsed giving drugs that cost up to $250,000 per additional year of life.
The authors conclude that we should do a better job of helping doctors understand how cost-effectiveness information should be used. I agree with that, but want to add to it. It’s necessary, but not sufficient.
I think society needs to have this discussion. Almost no one has $250,000, or even $100,000, saved up if they need it to extend their life for one year. So when we say we think that’s the reasonable number, we’re asking others to pay for it, either through government programs or private insurance. Is $100,000 a reasonable amount to pay for an additional year of life? Is it too low? Is $250,000 enough?
What’s wrong with this post? Answer below the fold.
What people have saved is completely irrelevant. What is relevant is: when making choices between small risks and small amounts of money, what is the implicit value of a year of life in the choices people actually make. We need not ask others to pay this amount. The question is: would people be willing to pay an extra premium to cover extra treatments, given that the treatment will cost $X per year of life saved. These are the decisions that should guide us in deciding what health insurance contracts should look like. From the economics literature, we know that $100,000 is well within the range of the choices people make. The $250,000 figure is bumping up against the upper bound, but it too is not unreasonable.