The Well-Being Valuation Model: A Method for Monetizing the Nonmarket Good of Individual Well-Being

Published in Health Services and Outcomes Research Methodology

Authors: Sidney, J. A., Jones, A., Coberley, C., Pope, J. E., & Wells, A.

Objective: The objective of this research is to advance the evaluation and monetization of well-being improvement programs, offered by population health management companies, by presenting a novel method that robustly monetizes the entirety of well-being improvement within a population.

Methods: This was achieved by utilizing two employers’ well-being assessments with medical and pharmacy administrative claims (2010–2011) across a large national employer (n = 50,647) and regional employer (n = 6170) data sets. This retrospective study sought to monetize both direct and indirect value of well-being improvement across a population whose medical costs are covered by an employer, insurer, and/or government entity. Logistic regression models were employed to estimate disease incidence rates and input–output modelling was used to measure indirect effects of well-being improvement. These methodological components removed the burden of specifying an exhaustive number of regression models, which would be difficult in small populations.

Results: Members who improved their well-being were less likely to become diseased. This reduction saved, per avoided occurrence, US$3060 of total annual health care costs. Of the members who were diseased, improvement in well-being equated to annual savings of US$62 while non-diseased members saved US$26.

Conclusion: The method established here demonstrates the linkage between improved well-be- ing and improved outcomes while maintaining applicability in varying populations.

Key Takeaways:

  • This study describes the development and application of a method for monetizing the non- market good of individual well-being to evaluate the value of improved health and well-being in two employer populations.
  • The methodology captures four sources of value resulting from improvements in total population well-being: reduction in health care spend among the non-diseased, reduction in the likelihood of developing chronic disease, reduction in medical spend among newly diseased members, and reduction in spend among those with disease
  • The estimated value of improved well-being was $38.59 per person per year (PPPY). The highest per person per year savings ($3059 PPPY) was derived from estimated reduction in incidence rate of chronic conditions although the contribution of savings from this source was only 17% of total estimated savings.
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