A normative foundation for equity‐sensitive health evaluation: The role of relative comparisons of health gains

• Author: Juan D. Moreno‐Ternero,Lars Peter Østerdal
• Date: 01 October 2017
• Published date: 01 October 2017
• DOI: http://doi.org/10.1111/jpet.12233

Received: 12 May2016 Accepted: 2 July 2016

DOI: 10.1111/jpet.12233

ARTICLE

A normative foundation for equity-sensitive health

evaluation: The role of relative comparisons

of health gains

Juan D. Moreno-Ternero1Lars Peter Østerdal2

1UniversidadPablo de Olavide, and CORE, Uni-

versitécatholique de Louvain

2Universityof Southern Denmark

JuanD. Moreno-Ternero,Department of

Economics,Universidad Pablo de Olavide,

andCORE, Université catholique de Louvain

(jdmoreno@upo.es).

LarsPeter Østerdal, Department of Economics,

CopenhagenBusiness School, Porcelæn-

shaven16A, 2000 Frederiksberg, Denmark

(lpo.eco@cbs.dk).

Anearlier version of this work circulated under

thetitle “Normative foundations for equity-

sensitivepopulation health evaluation.” We thank

JensLeth Hougaard, Erik Schokkaert and the

anonymousreferees of this journal for helpful

commentsand suggestions. We also thank partici-

pantsat the World Congress in Health Economics

(Dublin),the Workshop on New Trends in Health

EquityResearch (Odense), and the Health Eco-

nomicsWorkshop (Alicante), as well as seminar

audiencesat the University of Glasgow, the Public

Universityof Navarra, and the ToulouseSchool

ofEconomics for their comments. Financial sup-

portfrom the Spanish Ministry of Economics and

Competitiveness(ECO2011-22919, ECO2014-

57413-P),the Andalusian Department of Econ-

omy,Innovation and Science (SEJ-5980), and

theDanish Council for Independent Research |

SocialSciences (Grant ID: DFF–6109–000132) is

gratefullyacknowledged.

We explore in this paper the relationship between equity-sensitive

population health evaluation measures and normative concerns for

relative comparisons of health gains. Such a relationship allows us

to characterize focal equity-sensitive models for the evaluation of

population health. Instances are the so-called multiplicative Quality

Adjusted Life Years(QALYs) and multiplicativeHealthy Years Equiv-

alents (HYEs), as well as generalizations of the two. Our axiomatic

approach assumes social preferences overdistributions of individual

health states experienced in a given period of time. It conveysinfor-

mational simplicity,as it does not require information about individ-

ual preferences on health.

1INTRODUCTION

It is frequently argued that the benefit a patient derives from a particular health care interventionis defined according

to two dimensions: quality of life and quantity of life (e.g., Pliskin, Shepard, & Weinstein, 1980). The so-called Quality

Adjusted Life Years (in short, QALYs) constitute the standard currency to deal with both health dimensions in the

methodology of cost–utility analyses, probably the most widely accepted methodology in the economic evaluation

Journal of Public Economic Theory.2017;19:1009–1025. wileyonlinelibrary.com/journal/jpet c

2017 Wiley Periodicals,Inc. 1009

1010 MORENO-TERNERO AND ØSTERDAL

of health care nowadays (e.g., Drummond, Sculpher, Torrance, O'Brien, & Stoddart, 2005). Nevertheless, addition

of QALYs is usually criticized on equity grounds (e.g., Harris, 1987; Smith, 1987) and the importance of considering

alternative (equity-sensitive) measures of population health in cost–utility analyses is widely accepted (e.g., Anand,

2003; Nord, 1999; Wagstaff,1991; Williams, 1997).1

The purpose of this paper is to explorethe relationship between equity-sensitive population health evaluation mea-

sures and normative concerns for relativecomparisons of health gains. To do so, we follow the new axiomatic approach

to the evaluation of population health, recently introduced by Hougaard, Moreno-Ternero, and Østerdal (2013a). In

such an approach, the health of an individual in the population is defined according to the two dimensions mentioned

above (quality of life and quantity of life). Quantity of life is given by number of life years, while no assumptions are

made on how quality of life is described. The approach is informationally simple, as it does not makeassumptions about

individual preferences over length and quality of life, which might not be available information, either for practical or

ethical reasons.2This is in contrast with the more standard approach to population health evaluation, where cardinal

individual health utilities are assumed to be available as the basic input of the model (e.g., Bleichrodt, 1997; Dolan,

1998), or where structured individual preferences for quality and quantity of life, implying QALY-like individual utility

functions, are assumed to exist (e.g., Harvey& Østerdal, 2010; Østerdal, 2005). We here, instead, address population

health evaluation grounding directly on normative concerns oversocial preferences (on health gains).

One of the equity-sensitive population health evaluation functions for which we provide normative foundations is

the so-called multiplicative QALYs function, which evaluates the health of a population by the product of the QALYs

each individual in the population is endowed with. Multiplicative forms of the QALY model have been frequently

endorsed in the literature (e.g., Bleichrodt, 1997; Dolan, 1998). A multiplicative form induces an obvious concern for

equity, because it penalizes uneven distributions of QALYs,whereas an additive form is not sensitive to such uneven

distributions.3

QALYs can be seen as a specific computation of the so-called Healthy YearsEquivalent (in short, HYEs), which refer

to the socially equivalent population health distribution to a given one, in which the health outcome of one (and only

one) agent is replaced by that of full health, for some quantity of time.4The additive HYE model evaluates population

health by means of the unweighted sum of HYEs. As such, it is subject to the same criticism, on equity grounds, of its

counterpartadditive QALY model. Wealso derive in this paper normative foundations for the multiplicative HYE model

in which the health of a population is evaluatedby the product of the HYEs each individual in the population is enjoying.

One might argue that, for large populations, a multiplicative evaluation function might be too equity–sensitive.For

that reason, we also derive normative foundations for two families of population health evaluation functions, each

generalizing the multiplicative QALY and HYE models, respectively. In such families, individual QALYs (respectively,

HYEs) are submitted to an arbitrary (but increasing) function before being added. When such a function is logarithmic,

we recover,precisely, the multiplicative QALY(respectively, HYE) model.

Another focal contribution within the health economics literature to developequity-sensitive forms of evaluating a

distribution of health is the so-called fair innings notion (e.g., Williams, 1997). Essentially,the notion reflects the feeling

that everyoneis entitled to some normal span of health. In some sense, one could consider that the multiplicative QALY

and HYE models characterized in this paper are implementing a variant of the fair innings notion: they both aim to give

afair number (actually, the average) of QALYs, or HYE, to each person. Nevertheless, one might also argue that the

fair innings notion is captured by Williams (1997) upon endorsing a Bergsonian functional form to evaluate the health

distribution of a population. We shall also derive normative foundations for such functional forms in this paper.

1For discussions on the related issue of the conceptual foundations of measuring (in)equality in health and health care, the reader is referred to Wagstaff

andvan Doorslaer (2000), Williams and Cookson (2000),and, more recently, Fleurbaey and Schokkaert (2012) and Hougaard, Moreno-Ternero,and Østerdal

(2013b).

2See, for instance, Dolan (2000) and Dolan and Kahneman (2008) for a discussion of the numerous conceptual and empirical challenges concerning the esti-

mationand interpretation of individual health utility.

3This isarguably the main reason whythe United Nations Development Programme unveiled a new methodology for the calculation of the so-called Human

DevelopmentIndex (e.g., Zambrano, 2013).

4Thisnotion can be traced back to Mehrez and Gafni (1989) who propose it as a plausible way to reflect a patient's preferences over health.