21 Health impacts are rarely a question simply of lives lost or saved. In policy areas that affect mainly health, an alternative approach is often used, to take account of changes in life expectancy (including expected life years where lives are lost or saved), and changes in the quality of life. This approach is known as the quality-adjusted life year (QALY).
22 The EuroQol instrument provides a simple and consistent framework for measuring general health and deriving QALY values and is the most commonly used measure of health benefits in Europe. It weights life expectancy for health-related quality of life over time.
23 The comparison of health interventions may reveal the impact of different factors on clinical effects. For example, working out the relationship between dosage and response of a particular medicine is a necessary prior step to properly valuing a policy for the provision of that medicine. In some cases, such as when the benefits of an intervention are measured in 'natural' units (e.g. reduced incidence of a disease or lower blood pressure rates), it may be appropriate to undertake an appraisal on the basis of its cost effectiveness.9
24 It is difficult to determine whether a health programme should be funded, or how large it should be, without first allocating a monetary value to the projected health gains. Valuation is also important when health impacts are to be weighed against non-health impacts. There are a number of techniques available, including undertaking a survey to estimate an individual's WTP for certain health benefits.10 Once WTP is known, appraisers can compare the marginal benefits of an intervention against its marginal costs.
25 An example of a broad approach to estimating acute health impacts is set out in Box 2.1.11
BOX 2.1: MEASURING SHORT TERM HEALTH BENEFITS ASSOCIATED WITH REDUCTIONS IN AIR POLLUTION12
A FIVE-STEP APPROACH TO VALUING HEALTH IMPACTS 1. Estimate the annual average concentration of pollutants and resident population in each 1km grid square of the country. 2. Assign the baseline level of the given health-related and pollution affected events to each grid square e.g., daily deaths, hospital admissions for the treatment of respiratory diseases. 3. Combine the data from (1) and (2) and apply a dose-response function linking pollutant concentrations with the relevant effects. Dose-response functions are expressed as a percentage increase in the baseline rate of health outcome per unit concentration of pollutant. Three outputs can be derived: 3.1 The current effect on health of the relevant pollutant per grid square 3.2 The benefit to health per grid square produced by the fall in concentrations of air pollutants expected to occur 3.3 The benefit to health produced by reducing the concentration of pollutants in each grid square, in accordance with the proposed policies which aim to meet the objectives. 4. Sum the results obtained in (3) to estimate the total reduction in the number of cases of each health effect (which has an accepted dose-response function) associated with meeting or approaching the objectives. 5. Apply monetary values for each health effect to transform quantitative estimates into monetary estimates. |
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9 It is also possible to appraise a proposal on the basis of its 'cost utility' if there is an appropriate measure of the benefit of an intervention in terms of human welfare.
10 The interim Interdepartmental Group on Costs and Benefits (IGCB) report, 'An Economic Analysis of the National Air Quality Strategy Objectives' provides an example of how to conduct an economic analysis including health benefits.
11 Further guidance on the assessment and valuation of health impacts is given in the Department of Health's (DH) 'Guidance on Policy Appraisal and Health' (1995) and 'Evaluation of Health Technologies for Use in the NHS: Good Practice Guidelines' (1999). HSE guidance on the valuation of health impacts is included in GAP23, 'Regulatory Impact Assessment - Policy Appraisal', June 2002.
12 See An Economic Analysis to Inform the Review of the Objectives for Particles Air Quality Strategy available on the Defra website (http://www.defra.gov.uk).