How to Estimate the Economic Value of Health Care Intervention: A Methodological Study and an Illustrative Empirical Application on Diabetes

Sammanfattning: Health plays a vital role in every human’s life; and the centre for the maintaining and retaining our health lies in the health care. Thanks to innovations in health care technology and innovations of new drugs the health care is constantly improving, which contributes to improved survival probability and improved quality of life. However, this development in health care comes at a high price, since the development of drugs and technologies is costly which leads to rising prices in health care. This is one explanation to the fact that health care costs take up an increasing part of many countries GDP. We are interested in how the gains, in terms of improved longevity and quality of life, from the improved health care can be measured and valued. We have chosen to compare two methods in this area, one econometric model developed by Frank R. Lichtenberg, and one model based on the theory of willingness to pay (WTP) developed by Kevin M. Murphy and Robert H. Topel. We then make an illustrative empirical application of one of the methods on the case of increasing longevity in diabetes in Sweden. With the data we found on diabetes longevity we came to the conclusion that Murphy and Topel’s model is more applicable to this issue in the scope of our study. It would be interesting for further studies to applicate Lichtenberg’s method; however it demands more extensive work and larger amounts of data. In our empirical application on diabetes our resulting valuation of the increased longevity in diabetes in Sweden between the years 1897 to 1993 were 1,114 trillion SEK, which is a large number compared to any standard.