Value of life, price of healthcare
While it is reasonable for politicians to shy away from rationing -- especially when voters believe no expense should be spared to save a human life -- if the experience of other countries serves as precedent, they will probably get there sooner or later. In Britain, the National Institute for Health and Clinical Excellence determines what therapies will be covered by the National Health Service. It generally recommends against paying for a therapy that costs more than $31,000 to $47,000 for each year of life gained, adjusted for quality.
Putting a value on life, as it were, is controversial. The National Institute in Britain has denied or limited coverage of expensive drugs for ailments like pancreatic cancer, macular degeneration and Alzheimer's. But in a world of limited budgets, such decisions must be made.
Similar systems exist in many countries, including Australia and New Zealand, where the government decided not to pay for a universal vaccine against pneumococcal disease until its price fell to 25,000 New Zealand dollars (about $20,000) per quality-adjusted life year.
Though this concept may sound foreign, Washington has been putting a price on life since the administration of Ronald Reagan -- who determined that regulations should pass through a strict cost-benefit analysis, with values placed on factors like life and health. The Environmental Protection Agency values a life at about $9 million today. In 2009, the Transportation Department used a price tag of about $6 million. If safety improvements on a road were projected to cost more than the value of the lives expected to be saved by the improvement, the project would be deemed too expensive.
This approach has been contentious. And it has had an impact on Americans' health. In 1991 an appeals court reversed the E.P.A.'s decision to ban asbestos on the ground that it was too costly. The E.P.A., it argued, "would have this court believe that Congress, when it enacted its requirement that the E.P.A. consider the economic impacts of its regulations, thought that spending $200 million to $300 million to save approximately seven lives (approximately $30 million to $40 million per life) over 13 years is reasonable."