Thinking and Deciding

312 UTILITY MEASUREMENT
Most of the methods I describe are used in practice. Some are used more than
others, but practices vary over time and region, and all these methods are closely
related, so any practitioner should understand all of them. One major application
is in medicine. The methods discussed in this chapter are used mostly in medicine.
Estimation of utility is becoming more common because of two factors. One is the
increasing adoption of new medical technology, from magnetic resonance imaging
(MRI) in rich countries to polio vaccination in poor ones. The more technology
available, the more likely that some of it will raise questions about whether the benefits
are worth the costs. The second factor is that more people around the world
have their medical costs paid by someone else, either the government or a private
health-insurance plan. These payers often realize that they cannot afford to pay for
every potentially beneficial application of every technology. They must set policies
about which technologies to cover. A useful approach is to cover those methods that
do the most good for the money available. This requires measurement of good, and
this is, of course, something like utility.
Multiattribute analysis has been applied to a greater variety of decisions. It has
been applied to such practical questions as where to put the Mexico City airport;
where to locate a national radioactive-waste disposal site in the United States; which
school desegregation plan the city of Los Angeles should accept; and hundreds of
other problems in business and government.
The Oregon Health Plan
The state of Oregon lies just north of California. As one of the states of the United
States, it had to grapple with the problem of providing medical care to the poor. In the
1980s, the U.S. government provided funding for Medicaid, a government insurance
program available to children and to those with incomes below the official poverty
line. The benefits provided by Medicaid were comparable to those provided by private
health insurance. But the program was not given enough funding to provide
these benefits to all who could qualify, let alone to the millions of others who were
just above the poverty line but still found ordinary medical insurance too expensive.
Those without insurance hoped they would not get sick. When they got sick, they
went to the emergency room. This was expensive for hospitals, but hospitals did not
turn needy people away. In the mid-1980s, Oregon found itself unable to cover more
than half of those technically eligible.
John Kitzhaber was a state legislator who had been an emergency room doctor.
In order to free up money for this extra coverage, the plan was to stop covering health
services that were expensive and relatively ineffective, such as liver transplants that
were unlikely to work anyway in people whose life expectancy was short, that is,
older people. Thus, many more people would get coverage for basic health care,
even perhaps more than basic health care, but some people would do without very
expensive procedures that did little good. Total utility would increase because the
utility of the basic services provided to people would be very great, and the loss to
those who did without would be relatively small.