Health policymakers have choices about which health interventions they are able to fund, interventions that often differ in cost and effectiveness. Parker Tomkinson and Emily Adrion look at a commonly used form of health technology assessment, the quality-adjusted life year, or QALY, a measure the US Congress may ban. They write that despite the widespread use of QALYs – especially in the UK – there is mistrust of the measure among US policymakers. QALYs can be an important tool for policymakers to decide which health interventions provide the most benefit for the least cost – banning them will make existing US healthcare inequalities and inefficiencies worse.

Healthcare spending, both per capita and as a share of GDP, is considerably higher in the US than in any other high-income country; the result of well-documented equity and efficiency failures of the US healthcare system. Policy tools, such as health technology assessment, can be used to allocate resources more efficiently, thereby improving affordability, and maximizing population health.

Health technology assessment

Health technology assessment, often in the form of cost-effectiveness and cost utility analysis, is used across the world to compare the benefits of health interventions. One of the most commonly used measures of effectiveness is the quality-adjusted life year (QALY), which captures the impact of health interventions on length and quality of life. While health technology assessment is not foreign to the US – though analysts typically rely on the more limited comparative effectiveness analysis to inform decision-making – there is widespread mistrust of QALYs among US policymakers. This scepticism became particularly evident earlier this year, when the US House of Representatives passed H.R. 485, the Protecting Health Care for All Patients Act of 2023. This bill, if passed in the US Senate, would prohibit all federal healthcare programmes from using QALYs and “similar measures” to determine pricing, reimbursement, and coverage of health technologies and services.

Proponents of H.R. 485 argue that QALYs discriminate against older adults and people with disabilities, limiting access to care. However, this misrepresents how QALYs are used. QALYs, and cost-effectiveness analysis more broadly, can play an important role in informing more systematic, consistent, and transparent resource allocation decisions. The incremental cost-effectiveness ratio (ICER), which represents the additional cost per added unit of health gain produced by one intervention compared to another (expressed as a ‘cost per QALY gained’) allows for the comparison of treatment benefits and costs across a range of interventions for a range of health conditions, making it an important tool for policymakers in deciding which health interventions provide the most benefit for the least cost. Indeed, numerous countries around the world use QALY-based cost-effectiveness research to make evidence-based decisions in the allocation of scarce health resources.

Cost-effectiveness and UK health decision-making

The UK is perhaps the country that is the most well-known for strictly adhering to cost-effectiveness analysis in decision-making, and yet, even here, QALYs are merely one input – albeit an important one – in priority setting decisions. The UK’s National Institute for Health and Care Excellence (NICE) is responsible for evaluating the cost-effectiveness of treatments to make recommendations for their provision in the UK’s National Health Service (NHS). Within its appraisal process, NICE uses the ICER compared to a threshold value to determine whether a new health intervention is an efficient use of NHS resources. The threshold range is £20,000 – £30,000; new technologies that do not add costs beyond this threshold per QALY gained are typically recommended. Technologies that exceed this threshold may still be funded with justification based on social and ethical values, such as extending the end of life and accommodating people with disabilities.

The UK NICE’s methodology provides a framework on which to judge whether social and ethical values outweigh the value of cost-effectiveness. NICE does not limit access to care. Rather, in a health system with scarce resources, it uses QALYs to filter new technologies based on evidence to ensure that resources are allocated in a way that promotes the most benefit for the most patients. Cost-effectiveness is just one tool contributing to the resource allocation decisions made by NICE.

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Prohibiting QALYs in the US may make healthcare more expensive for everyone.

While there are indeed limitations associated with QALYs – both methodological and philosophical – newer cost-effectiveness metrics that seek to address some of the concerns around QALYs, such as the Equal Value of Life Years Gained (evLYG), Health Years in Total (HYT), or Generalized Risk-Adjusted QALY (GRA-QALY), would also be banned under H.R. 485, effectively preventing any cost-effectiveness analysis to be used to inform decision-making. To illustrate the extent to which this will impact US policymakers’ ability to make sound and equitable coverage decisions, one need only look to the US Medicare programme, the public insurance programme for adults over 65. The Centers for Medicare and Medicaid Services (CMS) have long been barred from taking cost into consideration in making coverage decisions for Medicare, with crucial implications for equity and financial protection. These equity implications became starkly evident in 2021 when, following the US Food and Drug Administration’s approval of the high-cost Alzheimer’s drug Aduhelm, CMS announced a 14.5 percent increase in Medicare premiums for all beneficiaries, half of which was due to the cost of Aduhelm alone. In short: disregarding cost enables very expensive drugs to be made available through Medicare, but with a heavy financial impact on all beneficiaries, especially the least well off.

The pushback against QALYs shown by the House passage of H.R. 485 arguably stems from Americans’ resistance to any degree of limit-setting or rationing in healthcare. However, it perhaps also represents an important failure among health economists to clearly communicate the role of cost-effectiveness analysis in decision-making, i.e. as one factor of many that can help to facilitate reasonable and accountable decisions to advance universal health coverage. In a healthcare system plagued by astronomically high costs for care, H.R. 485 will only serve to exacerbate inefficiency and inequity. 

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• Note: This article gives the views of the author, and not the position of USAPP – American Politics and Policy, nor the London School of Economics. 
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