Health as a Financial Asset: A Decision-Theoretic Framework for Individual Health Capital Management

Background: Health expenditure is universally classified as a cost rather than an investment, creating a structural bias against preventive resource allocation. No prior framework has systematically applied the principal instruments of financial asset theory to individual-level health capital management. Objective: To develop and operationalise a decision-theoretic framework for evaluating, comparing, and optimising personal preventive health investment decisions using six instruments from financial theory: Discounted Cash Flow (DCF), Shiller’s CAPE Ratio, the Sharpe Ratio, Value at Risk (VaR), Jensen’s Alpha, and Markowitz’s efficient frontier. Methods: The framework applies each financial instrument to the individual-level health investment problem, with parameters calibrated on published epidemiological and health economics data. The quality-of-life component is monetised at individual willingness-to-pay (€20,000/QALY; Mason et al. 2009; Bobinac et al. 2010) rather than the institutional AIFA reimbursement threshold (€30,000/QALY). Structured sensitivity analysis on discount rate (2–5%), adherence (30–100%), and WTP (€15,000–25,000/QALY) identifies boundary conditions. An explicit failure case is provided to demonstrate falsifiability. Results: For a reference subject aged 40 with an annual preventive investment of €3,000, the individual NPV over a 42-year horizon is €148,000 (r=3%, central estimate; range €85,000–€210,000). Oncological screening presents the highest Sharpe Ratio (SR≈4.6). Structured prevention reduces the individual 95% VaR from €145,000 to €78,000 (−46%). The framework produces a negative NPV (−€4,282) for undifferentiated PSA screening once overdiagnosis is correctly modelled. Individual WTP-based estimates are systematically 35% lower than those using the institutional AIFA threshold. Conclusions: The health financial asset framework provides a rigorous, falsifiable, and behaviourally realistic tool for individual preventive investment decisions, extending Grossman’s health capital model by operationalising modern portfolio theory at the individual level. Not all preventive interventions yield positive returns; the framework identifies the conditions under which they do and do not.