In health economic analysis, there is a reliance on having decision rules in place so that it can be judged as to whether one course of action (e.g. Intervention A) should be taken over another (Intervention B). The standard framework for this in health economic evaluations is to maximise health (more specifically quality-adjusted life years or QALY gains), so long as the cost of the QALY gains fall below a willingness to pay threshold. For example, the UK regulatory body NICE, use a cost-effectiveness threshold of £20,000 to £30,000 per QALY gain. The rationale behind such thresholds is that they are based on a social willingness to pay estimate, or alternatively a reflection of the opportunity costs forgone by providing a new intervention.
In terms of decision-rules for use in relation to ICECAP, there are a number of factors that need to be considered.
- What is the overall objective when measuring capability?
- What is the outcome of interest to achieve this objective?
- What is the cost-effectiveness threshold for achieving the objective as efficiently as possible?
1. The overall objective in health economics tends to follow that used within welfare economics, in terms of maximising the outcome of interest, irrespective of distributional considerations. As the capability approach offers an alternative normative framework to welfare economics, it is unclear whether adopting such a maximisation approach is always appropriate. A recent literature review examined how practical applications of the capability approach were undertaken and although there were some studies applying a maximising criteria, the majority of studies employed an objective below that of what could be fully attained (1). This led to the development of an alternative objective for economic evaluations known as sufficient capability (2).
2. In terms of outcome of interest when using the ICECAP, two approaches have been put forward. The use of Years of Full Capability (YFC) (equivalent) works similarly to that of the traditional approach taken in health economics of measuring the absolute gains across time (3). It is important to note, however, that this outcome is NOT equivalent to a QALY outcome: the anchors on the ICECAP values are on a full capability-no capability scale (1-0), whereas for measures used to generate QALYs, they are anchored on a perfect health-dead scale (1-0). Years of full capability (equivalent) represent the total amount of capability that is available over time; those who die have no capability and thus would have zero years of full capability from this point of death. The YFC approach only measures capability within the capability space; the use of a zero value for death is based on measured lack of capability, rather than any judgement about the value of any capability state in relation to death. This is an important conceptual difference from the theoretical basis for the QALY measure commonly used in health economics, where values are generated in relation to the value for death (which is commonly set at zero).
An alternative approach is to generate Years of Sufficient Capability (YSC), whereby the change in capability over time is based on the relative changes below a threshold, deemed to be sufficient (2). How to set a level of sufficient capability is currently being explored further through an MRC funded research project. Contact Dr Philip Kinghorn for further information about this current research project.
3. The same MRC funded research project is looking to establish societal willingness to pay for gains in capability outcomes up to the sufficient level of capability (see above). Contact Dr Philip Kinghorn for further information about this current research project.
1. Mitchell PM, Roberts TE, Barton PM, Coast J. Applications of the Capability Approach in the Health Field: A Literature Review. Social Indicators Research. 2016:1-27.
2. Mitchell PM, Roberts TE, Barton PM, Coast J. Assessing sufficient capability: A new approach to economic evaluation. Soc Sci Med. 2015;139:71-9.
3. Flynn TN, Huynh E, Peters TJ, Al-Janabi H, Clemens S, Moody A, et al. Scoring the Icecap-a Capability Instrument. Estimation of a UK General Population Tariff. Health Econ. 2015;24(3):258-69.