QALY and the Distribution of Resources in Health Care

A great variety of morbid and mortal effects, differing in severity, affected body parts, and duration, can be produced by environmental health risks. Such effects can manifest in individuals that differ by age, pre-existing health, and other factors. Comparing the effectiveness of measures to reduce environmental health risks with each other and with the opportunity costs of the resources consumed by these measures can be assisted by a measure of human preferences for health. Several such measures have been developed and are often used in practice. The most prominent measure is the “Quality Adjusted Life Year” (QALY) framework, widely used in various aspects of public health and medicine.

Quality Adjusted Life Years-QALYs offer a rational approach to the distribution of resources in health care. Spending the limited health care dollars on the cheapest QALYs will maximise the health gains received from the health care budget. Consequently, reviewing spending in terms of its cost per QALY has a lot of appeal to those now confronting health care rationing.

Quality Adjusted Life Years are life years evaluated to reflect their quality. They were developed as a measure of benefit for use in economic evaluation. In cost benefit analysis both costs and benefits must be measured in money terms. Hence, it is extremely difficult to apply it to health care where the benefits are the extension of life, the relief of pain and the reduction of disability. In health care, cost effectiveness analysis has been more widely applied than cost benefit analysis. Cost effectiveness analysis requires that the benefits of health care are measured in their naturally occurring “units” – most generally number of life years saved.

The problem with number of life years gained is that they do not seize all the health care benefits, such as improved mobility after hip replacement. They also don’t distinguish between lives of different quality such as a normally functioning child compared to a child with blindness or intellectual handicap – both of which could be the outcome of neonatal intensive care. Apart from that, number of life years gained cannot capture all the benefits of health care interventions, where the important objective is quality of life, or to make explicit tradeoffs between quality and quantity of life.

QALYs were developed in an attempt to defeat these problems in cost effectiveness analysis. With QALYs such multiple objectives as prolonging life and improving life quality can be measured in a single measure.