Cost-Effectiveness Threshold for Healthcare and Safety: Justification and Quantification

Yanovskiy, M.; Levy, O. N.; Shaki, Y. Y.; Zigdon, A.; Socol, Y.

Every public expenditure, including saving lives or extending life expectancy of particular persons (target population), has unwanted but unavoidable side effects of statistical shortening of life expectancy of the general public. Therefore, cost-effectiveness analysis in making decisions regarding health and safety is an ethical necessity. We report here cost-effectiveness estimation based on comparison of three independent methods: (1) by analyzing salaries in risky occupations, (2) by assuming that people value their lives twice more than the wealth they earn, and (3) by comparing with the U.S. current legal practice. To the best of our knowledge, nobody applied method (2) to cost-effectiveness analysis. Our result is that the cost-effectiveness threshold for the developed countries is about US$60,000 +/- 25,000 per life-year (LY), or about 1.0 +/- 0.4 GDP (gross domestic product) per capita per LY. Therefore, a sum of not higher than US$85,000 (1.4 GDP per capita) is statistically sufficient to 'purchase' an additional year of life - or, alternatively, to 'rob' one year of life if taken away. So, 140% GDP per capita per life-year should be considered as the upper limit of prudent expenditure on healthcare and safety. The result is in excellent correspondence with the existing healthcare policies.