Productivity Costs Revisited: Toward a New Us Policy

In 1996, the Washington Panel recommended that the productivity costs that are not directly related to obtaining care be captured in the quality‐of‐life weights used to construct the quality‐adjusted life years (QALYs) in American cost–utility analyses. This paper revisits the original justification of the Panel and the critiques that appeared in the literature at the time. It then analyzes how productivity costs would be viewed from a cost–benefit analysis perspective to identify their welfare implications and then translates these implications into what they mean for how to express productivity costs in a cost–utility analysis. Next, three consistency issues are identified: (i) consistency between the welfare implications and the health status questionnaires used to construct the QALYs; (ii) consistency between the productivity costs from morbidity and mortality; and (iii) consistency between the measurement of productivity costs and the societal perspective. Finally, after reviewing the productivity costs policies of other countries, the paper makes a modest proposal for a new US policy.