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Valuing Health for Regulatory Cost-Effectiveness Analysis
analysis (CEA) for economically significant health and safety regulations (OMB, 2003a). In CEA, the result is a ratio of monetary costs to a nonmonetary benefit measure, which can range from single-dimension measures, such as deaths averted, cases of illness or injury avoided, or tons of pollution reduced, to integrated measures such as health-adjusted life years (HALYs), which combine different types of health impacts in a single number. The single-dimension measures have the advantage of being relatively straightforward, but are of limited usefulness when more than one type of benefit is of interest. To address this problem, integrated measures that reflect both life expectancy and health-related quality of life (HRQL) traditionally have been developed and used in medical and public health studies. Such estimates are available for many more types of health effects than are estimates of the monetary measures used in BCA.
This report of the Institute of Medicine’s (IOM’s) Committee to Evaluate Measures of Health Benefits for Environmental, Health, and Safety Regulation provides recommendations and guidance regarding the measurement of health and safety improvements using CEA. In response to a request from OMB, the Committee investigated alternative approaches for assessing health-related impacts in CEA by reviewing current federal agency practices; commissioning supporting research; reviewing the available literature; and completing three case studies of agency rulemakings.
Based on its investigations, the Committee concludes that CEA provides useful information for the development of regulatory policies. At the same time, CEA (like BCA) poses significant challenges in this context. Some of these challenges are practical, relating to the time and cost of doing such analyses, while others relate to the strengths and limitations of the available data on the nature of the risk reductions and the measurement of their value.
The magnitude of the impacts of major health and safety regulations argues for careful attention to the development of high-quality, unbiased analyses that include thorough documentation of their limitations. The Committee’s recommendations, both for selecting measures to value health outcomes in regulatory CEA and for supplementing these measures with other information, aim to ensure that the analytic results are accurate and reliable, and useful to a variety of audiences. After describing the charge to the Committee, this summary provides an overview of the key concepts and conclusions of this report and presents the Committee’s recommendations.
The Charge to the Committee
A consortium of federal sponsors charged the IOM Committee to identify current and proposed measures of health benefits for use in regulatory