Format

Send to

Choose Destination
Value Health. 2017 Feb;20(2):261-265. doi: 10.1016/j.jval.2016.11.022.

Toward a Hedonic Value Framework in Health Care.

Author information

1
Pharmaceutical Outcomes Research and Policy Program, School of Pharmacy and Department of Health Services, University of Washington, Seattle, WA, USA; Department of Economics, University of Washington, Seattle, WA, USA; National Bureau of Economic Research, Cambridge, MA, USA. Electronic address: basua@uw.edu.
2
Pharmaceutical Outcomes Research and Policy Program, School of Pharmacy and Department of Health Services, University of Washington, Seattle, WA, USA.

Abstract

In well-functioning markets, a hedonic pricing scheme can reflect the marginal valuation of various attributes of a differentiated product at market equilibrium. It serves as an important tool to inform pricing of a new product with a specific combination of attributes. Because health cannot be bought and sold in a market setting, and health care markets are distorted by insurance or government subsidies, direct valuation of a health intervention as a differentiated good through observed market prices is difficult. In this article, we discuss the rationale of using stated preference methods for developing a hedonic value framework for health insurance products to inform the decision on whether a product should be covered or subsidized by insurance, given its price. This value index will not reflect marginal value at market equilibrium, as in a hedonic pricing scheme, but would capture the distribution of marginal value in the population. We discuss how affordability concerns can be integrated into the development of a hedonic valuation model. We compare this framework with traditional cost-effectiveness analysis and also the existing value frameworks put forth by various organizations. The framework can be adopted to inform other decisions such as pricing. We argue that developing such a comprehensive and decision-theoretic value framework is feasible and, if successful, can serve to inform health care resource allocation in this country for decades to come in a systematic manner.

KEYWORDS:

hedonic pricing; insurance; value; value framework

PMID:
28237206
DOI:
10.1016/j.jval.2016.11.022
[Indexed for MEDLINE]
Free full text

Supplemental Content

Full text links

Icon for Elsevier Science
Loading ...
Support Center