This is a Chris Conover post at another list serve:
Garber and Phelps (1997) have demonstrated that the optimal cost-effectiveness ratio varies greatly by income and risk aversion. Interestingly, it did not vary that much by age, gender or discount rate. The optimal cost/QALY cutoff for Medicaid thus would be much lower than the optimum for Medicare patients. So what’s rational economically may be a tough sell politically, especially when you consider that Medicare by law is prohibited from taking cost-effectiveness into account when making coverage decisions!
In a perfect world, public programs would indeed set an upper limit on the CE ratio which would adjust up or down based on the amount of funds the legislature has been willing to allocate each year (essentially what Oregon Medicaid has done). In that perfect world, the threshold actually would be set pretty low (in Garber/Phelps, the optimum was just under 3 times per capita income and the figures roughly scaled with income, so for someone at poverty, that would imply a threshold of about $35K/QALY). The rationale is that in other domains of life, such families are presumably trading off at that rate — car purchases, housing location decisions, whether to buy smoke alarms. Setting such a cap would be a far more efficient (and arguably fair) way to allocate limited public resources than trying to rely on price controls or other micro-management of health care delivery to keep costs in publicly financed health plans “affordable.”