Massachusetts Legislature Proposes Banning Use Of Cost-Effectiveness Analysis To Inform Healthcare Coverage Decisions

Massachusetts legislators have drafted two bills that propose banning the use of cost-effectiveness analysis to inform healthcare coverage decisions. The proposals state that employing measures of benefit, such as the Quality Adjusted Life Year (QALY), will discriminate against the disabled.   

But, such legislative bills ignore the fact that our existing coverage framework rations healthcare, which can discriminate against those with disabilities or simply poor health. And it does so in ways that are arbitrary.

Rationing in the U.S.

For years, conventional wisdom has suggested that the U.S. doesn’t ration healthcare, while other nations’ healthcare systems do. Commenters often cite waiting lists for certain hospital procedures in other countries, such as the U.K. However, rationing occurs in the U.S., albeit implicitly, with ability to pay, insurance coverage, health status, as well as quality of health insurance all playing roles.

Rationing refers to the controlled distribution of scarce resources, goods, and services. Usually the entity doing the rationing is government, but it doesn’t have to be. It can be a private healthcare insurer.

For example, healthcare insurers limit the use of certain prescription drugs by requiring step therapy, for instance, and only allowing access after cheaper alternatives have been tried and failed. Sometimes these step therapy protocols are stricter than clinical practice guidelines issued by medical professional societies, or narrower than the label approved by the Food and Drug Administration.


Pharmacy benefit managers (PBMs) also exclude certain therapeutically interchangeable products from the formulary. Exclusions, or decisions by PBMs (and payers) not to include certain drugs on formularies, are not new, but they are increasingly in the spotlight. A Xcenda study found that from 2014 to 2020, the number of medicines excluded by at least one of the three largest PBMs from their formularies increased by an average of 34% per year. PBMs assert that exclusions are important for negotiating lower prices on behalf of health plans and members.

The U.S. system of healthcare is not one-size-fits-all. There are multiple healthcare systems and hundreds of healthcare plans, each with unique characteristics. And so there is some (limited) choice for patients who can’t gain access to a medical technology at one payer, but can at another.

Yet, the typical patient is faced with rationing in the U.S., based on ability to pay, quality of health insurance, and imposed limits on reimbursement. A person’s health status can also indirectly impact access to healthcare, as those with diseases or conditions for which treatments are expensive are confronted with barriers, often in the form of high out-of-pocket costs or coverage restrictions.

Furthermore, healthcare waiting times in the U.S. can be longer than in healthcare systems outside the U.S.; in particular, the average wait times for primary care appointments, emergency room visits and specialty service consultations.

What’s problematic is that rationing – allocation of scare resources, goods, and services – based on arbitrary factors, such as ability to pay, isn’t evidence- or value-based. A proxy for value is clinical- and cost-effectiveness. Allowing for clinical and cost-effectiveness considerations to inform allocation decisions is less arbitrary. Additionally, the principle of opportunity cost – when one alternative is chosen there’s invariably a loss of the potential gain from another alternative – implies that policymakers must assess value to ensure that healthcare dollars are spent appropriately.

In the U.S., however, historically there has been strong opposition to the use of cost-effectiveness to inform decision-making in healthcare. The general argument is that considerations of cost-effectiveness will lead to explicit forms of rationing.

Massachusetts Legislative Proposals

To illustrate just how deep-seated the resistance is to the use of cost-effectiveness analysis, Massachusetts legislators are considering two bills that would effectively ban cost-effectiveness analysis from informing public and private decision-making.

The fear is that by making rationing decisions explicitly based on clinical and cost-effectiveness data, the state or any entity making decisions on how to distribute scarce resources based on such evidence, may wind up discriminating against those with disabilities.

The proposed bills in Massachusetts would prohibit the use of metrics, such as the Quality-Adjusted-Life-Year (QALY). Implicitly, the proposed legislation presumes that QALYs and other such metrics set a value on life of a person with a disability that is less than the value given to the life of a person without a disability. Here, the implication is that public or private entities should not withhold medical treatments to individuals based on them having a disability.

But, when applied in practice, the QALY doesn’t necessarily discriminate against people with disabilities. Here, the goal of using the QALY in cost-effectiveness analyses is not to place a value on individuals with different health conditions. rather, its purpose is to place a value on treatments; favoring those that produce longer life and greater quality of life (that is, reduced disability).*

Cost-effectiveness analysis is a means to informing healthcare (and other) decisions. It can be helpful to determine whether an investment in a healthcare resource is worth it. Moreover, cost-effectiveness analyses is something that government agencies have been doing for decades. The U.S. Department of Transportation, for example, mandates the use of QALYs in its cost-benefit analyses of road safety decisions. And, for nearly three decades, the U.S. National Highway Traffic Safety Administration has employed QALY estimates in its analyses which compare the cost and utility of alternate uses of resources.

The U.S. healthcare system rations, although Americans don’t like to admit it. It does so mostly based on a person’s ability to pay, quality of health insurance, and health status. As a result, there’s generally less healthcare for individuals who don’t have a job, and for those in poor health who are un- or underinsured and can’t afford certain treatments. Allowing for clinical- and cost-effectiveness considerations to inform allocation decisions is less arbitrary and discriminatory. Yet, Massachusetts lawmakers want to ban the use of such considerations in healthcare decision-making.

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