What is a Life Worth? “Rational” Rationing of Health Care Examined in Lawrence University Biomedical Ethics Series Address

The notion of rationing health care may be a frightening concept, but is it necessarily wrong?

Northwestern University Professor David Dranove explores the question of what is a life worth and offers insights on why “rational” rationing of health care resources is becoming increasingly embraced in the third installment of a Lawrence University’s 2004-05 Edward F. Mielke Lecture Series in Biomedical Ethics.

Dranove, the Walter McNerney Distinguished Professor of Health Industry Management at Northwestern, presents “Putting a Price on Life” Wednesday, Feb. 23 at 7 p.m. in Lawrence’s Wriston Art Center auditorium. The lecture is free and open to the public.

Drawing on Oregon’s 12-year old Medicaid initiative in which more than 700 medical interventions have been ranked from most cost effective to least and the British National Health System’s National Institute for Clinical Excellence (NICE), which examines the cost-effectiveness of expensive treatments and recommends against paying for the least cost-ineffective technologies, Dranove will discuss the growing acceptance of rational rationing and outline the promises and pitfalls associated with a rationing approach to health care.

An essential element of rational rationing is attempting to quantify the seemingly unanswerable question: what is a life worth? When health care is rationed, a threshold for cost-effectiveness is established and coverage is denied for treatment that falls below that threshold. In England, NICE routinely denies coverage for interventions that cost more than $93,500 per year of life saved. Other systems use similar valuations.

Dranove argues that if the value of a life is based on the best available evidence, then the threshold used by NICE and others is much too low. Properly implemented, Dranove believes rational rationing could lead to more health spending, not less, but with the promise that the money is spent wisely on something of unsurpassed value.

A specialist in medical economics and cost-benefit analysis, Dranove joined the Northwestern University Kellogg Graduate School of Management in 1991 after spending eight years teaching at the University of Chicago Graduate School of Business. He is the author of three books, including 2000’s “The Economic Evolution of American Health Care” and is in the process of completing a fourth, “Pricing Your Life.” Dranove earned a Ph.D. in economics from Stanford University.