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Valuing Health for Regulatory Cost-Effectiveness Analysis D Acronyms and Glossary ACRONYMS ADL Activities of daily living AIS Abbreviated Injury Scale BCA Benefit–cost analysis (same as CBA) CDC Centers for Disease Control and Prevention CEA Cost-effectiveness analysis CFR Code of Federal Regulations COI Cost of illness CPSC Consumer Product Safety Commission CR Category rating CUA Cost-utility analysis DALY Disability-adjusted life year DOT Department of Transportation ELS Equivalent lives saved EOP Executive Office of the President EPA Environmental Protection Agency EQ-5D EuroQoL-5D FMCSA Federal Motor Carrier Safety Administration FSIS Food Safety and Inspection Service
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Valuing Health for Regulatory Cost-Effectiveness Analysis HALex Health and Limitations Index HALY Health-adjusted life year HRQL Health-related quality of life HSPH Harvard School of Public Health HUI Health Utilities Index HYE Healthy year equivalent MAIS Maximum Abbreviated Injury Scale MILY Morbidity-Inclusive Life Year NASS National Accident Sampling System NHTSA National Highway Traffic Safety Administration NOAA National Oceanic and Atmospheric Administration OIRA Office of Information and Regulatory Affairs OMB Office of Management and Budget OSHA Occupational Safety and Health Administration PCEHM Panel on Cost-Effectiveness in Health and Medicine PTO Person trade-off QALD Quality-adjusted life day QALY Quality-adjusted life year QWB Quality of Well-Being Scale RS Rating scale SAVE Saved young life equivalent SDWA Safe Drinking Water Act SG Standard gamble TSCA Toxic Substances Control Act TTO Time trade-off USC United States Code VAS Visual analogue scale VSL Value of a statistical life VSLY Value of a statistical life year WTP Willingness to pay YHL Years of healthy life
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Valuing Health for Regulatory Cost-Effectiveness Analysis GLOSSARY Activities of Daily Living (ADL): The measurement of independence that is based on the following five personal care activities: bathing, dressing, using the toilet, getting in or out of bed or chair, and eating. Attribute, Health: A state, behavior, or perception that is part of an operational definition of health-related quality of life. Bayesian Methods: Statistical techniques for synthesizing data from different studies using empirical data and subjective probability. Used in benefits transfer to combine such data with information on the regulatory scenario. Benefit: Generally used to indicate a positive or desirable outcome. See Chapter 5 for specific definitions relevant to the calculation of cost-effectiveness ratios. Benefit–Cost Analysis (BCA): Also referred to as cost-benefit analysis (CBA). A type of economic analysis that compares the monetary value of improvements and harms to determine the option that provides the largest net benefits to society. Benefit Transfer: The practice of applying estimates developed in an existing research study (the “study scenario”) to another context, such as a regulatory analysis (the “regulatory scenario”). Generally involves using studies that differ somewhat from the regulatory context in terms of the characteristics of the risks or of the affected population. Concurrent Validity: A type of validity based on a comparison of scores on a measurement to those obtained by applying alternative, equivalent measurements at the same time. Construct: A concept or model developed or constructed through informed scientific theory. Construct Validity: A type of validity that compares results of several contrasting tests of validity (e.g., convergent and divergent validation tests) with predictions from a model. Content Validity: The extent to which a measurement covers all aspects of the topic being assessed. Contingent Valuation: A stated preference method that uses surveys to directly elicit estimates of individual willingness to pay. These values are “contingent” on the realization of the scenarios described in the study. Convergent Validity: The extent to which two or more measuring instruments for the same topic are in accord. Correlation: A measure of association that conveys the degree to which two or more sets of observations fit a linear relationship.
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Valuing Health for Regulatory Cost-Effectiveness Analysis Cost: Generally used to indicate a measure of the resources that are used or exchanged to obtain or produce a good or service. See Chapter 5 for specific definitions relevant to the calculation of cost-effectiveness ratios. Cost-Effectiveness Analysis (CEA): An economic analysis in which all costs are related to one common measure of effectiveness. Results are usually presented as a ratio of the increase in costs associated with an increase in effectiveness. Cost of Illness (COI): The direct medical costs associated with illness, including, for example, resources expended for doctor visits, medication, and hospital stays. May also include indirect costs associated with lost productivity due to morbidity or preventable mortality. Cost-Utility Analysis: A type of cost-effectiveness analysis that uses a form of health-adjusted life year weighted by a measure of individual preferences or utility as the effectiveness metric. (This report does not use the term because the Committee does not interpret health-adjusted life years as actual measures of utilities.) Criterion Validity: Validity based on a comparison of results obtained using a measurement scale believed to indicate the true situation. Decision Analysis: An explicit, quantitative, systematic approach to decision making under uncertain conditions. Delphi Process: An iterative process for reaching consensus among experts where opinions are exchanged anonymously. Disability: The temporary or long-term reduction in an individual’s functional capacity. Disability-Adjusted Life Year (DALY): A summary measure of population health status originally used to quantify the global burden of diseases. DALYs are calculated as disability weights, inverse to quality-adjusted life-year weights, assigned to each of 107 categories of health status. Discounting: The process of converting future cost and benefits to a present value under the assumption that individuals generally prefer to receive desirable benefits soon and to defer costs, using a rate that reflects the opportunity cost associated with these time preferences. The formula is 1/(1+r)t where r equals the discount rate and t measures the number of years into the future when the cost or benefit accrues. Domains: Components of a health state; categories of function, perception, or experience within a health-related quality-of-life survey instrument. Economic Efficiency: A criterion for identifying the preferred allocation of
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Valuing Health for Regulatory Cost-Effectiveness Analysis scarce resources based on determining the option that generates the largest net benefits to society, ignoring the distribution of the impacts. Expected Utility: A quantity representing the relative desirability of a given action that has uncertain outcomes. Each possible outcome has a utility or preference rank and a probability of occurrence. The expected utility is the value of a particular outcome multiplied by the probability that outcome will occur, summed over all possible outcomes. Expected Utility Theory: The dominant theory of individual behavior under conditions of uncertainty. The theory assumes that, under different alternatives, the individual will choose the alternative that has the highest expected utility. Functional Status: The effective performance or ability of an individual to perform certain activities, roles, and tasks, such as going to work, riding a bicycle, maintaining the house. Generic Index: Multiattribute health state classification system with predetermined index values, usually anchored by death (0) and perfect or optimal health (1.0). Index values for health states that are described generically in terms of functional (e.g., mobility) and experiential (e.g., pain) attributes or domains are usually extablished by community or general population preference elicitation surveys. Examples of generic indexes are the EuroQol EQ-5D, the Health Utilities Index, the Quality of Well Being Scale, and the SF-6D. Health-Adjusted Life Year (HALY): Summary measures of population health that describe morbidity and mortality with a single index value. Types of HALY measures include quality-adjusted life years, disability-adjusted life years, and healthy-year equivalents. Health-Related Quality of Life (HRQL): A value that takes into account impairments, functional status, perceptions, and social opportunities during the lifetime of an individual as influenced by disease, injury, treatment, or policy. Health State: An individual’s general state of health, including aspects such as morbidity, functioning, and general well-being. Health State Classification System: A classification system consisting of mutually exclusive and an exhaustive set of health states used to describe and measure HRQL. It consists of one or more concepts, domains, or indicators and is used to generate health states. Healthy-Year Equivalent (HYE): A measurement of HRQL that incorporates two sets of preferences. The first set reflects individuals’ prefer-
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Valuing Health for Regulatory Cost-Effectiveness Analysis ences for life years. The second set reflects individuals’ preferences for states of health. Incidence: The number of new cases of disease. Incremental Cost Effectiveness Ratio: The additional cost incurred by the next most effective strategy to produce an additional unit of health outcome. (See Cost-Effectiveness Ratio.) Indicator, Health Status: A measure indicating the presence, absence, or degree of health-related quality of life. Injury: A form of harm, damage, or loss that can either be physical or mental. Instrumental Activities of Daily Living: An evaluation of independence that generally consists of performing six home management activities: preparing meals, shopping for personal items, managing money, using the telephone, doing light house work, and doing heavy housework. Internal Consistency (of a measurement): The extent to which various components all measure the same thing. Interobserver or Interrater Reliability: The correlation between responses to the same items obtained by different observers or raters. Interval Scales: A scale in which the distance between adjacent numbers in one region is equal to the distance between adjacent numbers in another region of the scale. League Table: A table, usually in ascending order of cost per unit of outcome, that is used to rank the cost-effectiveness or (less frequently) the net benefits of different policy or medical interventions. May also be referred to as a “scorecard.” Life Expectancy: The average number of years of life remaining for an individual of a certain age, based on statistical analysis of population death rates. Monte Carlo Model: A simulation model used to assess uncertainty, that selects values from prespecified probability distributions for each parameter through repeated trials. Results are reported as probability distributions indicating the estimated likelihood of each outcome. Meta-Analysis: Statistical methods for combining the results from different studies. Morbidity: The conditions or qualities associated with illness or disease. Multiattribute Assessment: An assessment that consists of a multidimensional preference-based health state classification system; an indirect method for obtaining utility scores.
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Valuing Health for Regulatory Cost-Effectiveness Analysis Nominal Scale: Scales in which numbers are assigned arbitrarily with no inherent order, but only as a classification system. Opportunity Cost: The value of the best alternative that must be forgone when scarce resources are used or invested for a particular purpose or policy alternative. Ordinal Scale: A scale that implies a distinct order among categories, but without any prescription of the relative distance between adjacent values. Outcome Measure: The final health consequence of an intervention. Person Trade-Off (PTO): A choice-based elicitation method that determines the relative values of health states and interventions by asking questions about the equivalence of different-sized groups of people in different states of health. Preferences: The exercise of choice, reflecting the desirability of a particular set of outcomes over another. Prevalence: The number of cases of a given disease in a given population at a designated time. Preventable Mortality: A decrease in the risk of death attributable to a particular intervention. Proxy Respondent: A person who responds to a survey by providing information and details about another person who is in the survey sample. Psychometrics: The branch of psychology dealing with the testing and measurement of psychological variables. Psychophysics: The study of human perceptions and judgments about physical phenomena. Quality-Adjusted Life Year (QALY): A health outcomes measure used in CEA that integrates the quality of life with length of life using a multiplicative formula, measured on a scale ranging from 0 to 1 that characterizes HRQL. Quality of Life: The judgment or value of the experience of an individual or group that reflects their physical, emotional, and social well-being. Rating Scale: A numerical scale that directly values preferences for health states under conditions of certainty. Ratio Scale: An interval scale with a true zero point, so ratios between values are meaningful. Rational Choice Theory: An economic theory based on three basic assumptions about how individuals make choices. The three basic assumptions are (1) ranking alternatives according to their prefer-
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Valuing Health for Regulatory Cost-Effectiveness Analysis ences for the goods, (2) consistency of choices, and (3) the preference for more rather than less. Reference Case: A set of rules or stipulated criteria that facilitates comparisons of alternatives. (See Gold et al., 1996b, for reference case criteria for health-related CEA.) Reliability: The extent in which one gets the same or identical results with repeated measurement; the stability of measurement. Response Shift: Changing internal standards or values regarding quality of life in a particular state of health based upon experience with that state. Restricted-Activity Days: The number of days a person experiences restrictions in his or her normal activities due to impaired health. Revealed Preference: Methods that use observable behavior or market data to determine the monetary value of nonmarket goods or services. For example, data on the wage differential associated with riskier jobs may be used to value the change in risk. Risk Aversion: The preference for a certain rather than an uncertain outcome. Sensitivity Analysis: A form of quantitative assessment that varies the value of key input parameters to determine the impact on the results, often used to characterize the uncertainty associated with the selected parameter estimates. Social Discount Rate: The rate at which society is willing to trade off costs or benefits incurred in different time periods. Social Welfare: The combined well-being of all members of society; the summation of all things that members of a society view as contributing to the quality of their lives. Standard Gamble (SG): The determination of a utility of a particular outcome using a lottery-based approach. An SG score is obtained by discovering a point of indifference between a lottery consisting of a preferred outcome with a probability P and a less-preferred outcome with probability of 1–P, versus a guaranteed intermediately ranked certain outcome. Stated Preference: Methods that ask individuals to state the monetary amount that they would be willing to pay to obtain a good or service; includes contingent valuation surveys and similar approaches. Test–Retest Reliability: The reliability of results when the tests are repeated and in agreement to prior or earlier tests. Time Preference: A characteristic of the utility function. A gain today is more valuable than the same gain in the future. The trade-off between current and future gains is reflected in the discount rate.
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Valuing Health for Regulatory Cost-Effectiveness Analysis Time Trade-Off (TTO): A choice-based preference elicitation technique. The TTO score for a particular health state is the point of indifference between shorter period of time in perfect (or other desirable) health and a longer period in an impaired health state. Utilitarianism: A theory of social justice that contends that the right policy is one that produces the greatest happiness or welfare for the greatest number of people. Utility: A concept from welfare economics that refers to the level of satisfaction or well-being individuals achieve from the consumption of goods and services. May include goods that are not directly bought and sold in the market, such as good health. Validity: A descriptive term meaning that a measure is well grounded and accurately reflects the concept that it is intended to measure. Value: Sometimes used narrowly to refer solely to monetary worth or a numerical quantity; this report uses a broader definition that encompasses worth as measured by individual preferences, desirability, usefulness, or importance. Value of a Statistical Life (VSL): A statistical life is the aggregation, across a population, of small reductions in the risk of preventable mortality. Estimates of willingness to pay for these risk reductions are then summed across the affected population to determine the value of a statistical life saved (or preventable death avoided) by a policy. For example, if each member of a population of 100,000 were willing to pay $50 for a 1/100,000 risk reduction, the corresponding value of a statistical life would be $5 million (i.e., $50 * 100,000). Visual Analogue Scale (VAS): A format for preference measurement in which a subject marks a representation of a scale (e.g., a rule or thermometer) that indicates the intensity of response. Von Neumann and Morgenstern Utility Function: A function that is based on a set of axioms, including transitivity and continuity, that represents one definition of rational choice in a risky environment. Welfare Economics: The normative theory of economics that focuses on allocating resources so as to achieve the maximum or optimal level of well-being for members of society. Well-Being: Subjective evaluation of one’s mental, bodily, and emotional states. Willingness to Accept (WTA): When used to value desirable benefits in BCA, the least amount of money that an individual would accept to forego the improvement.
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Valuing Health for Regulatory Cost-Effectiveness Analysis Willingness to Pay (WTP): When used to value desirable benefits in BCA, the maximum amount of money that an individual would voluntarily exchange to obtain an improvement, given his or her budget constraints. Years of Healthy Life (YHL): A duration of life that is discounted by a fraction between 0 and 1 that estimates the quality of life during a given period.
Representative terms from entire chapter: