05 de febrer 2016

Behavioral health insurance choice

Behavioral hazard in health insurance
Can Consumers Make Affordable Care Affordable? The Value of Choice Architecture

Behavioral Economics is still a great promise for health economics. Anyway, in health insurance some materials are already available. Today I'll bring two articles on the choice of health insurance policy.
Some insights:
People do not misuse care only because the price is below the social marginal cost: they also misuse it because of behavioral biases—because they make mistakes. We call this kind of misutilization behavioral hazard . Many psychologies contribute to behavioral hazard. People may overweight salient symptoms such as back pain or underweight non-salient ones such as high blood pressure or high blood sugar. They may be present-biased (Newhouse 2006) and overweight the immediate costs of care, such as copays and hassle-costs of setting up appointments or filling prescriptions. They may simply forget to take their medications or refill their prescriptions. Or they may have false beliefs about the efficacy of care (Pauly and Blavin 2008).
The key message from the first article:
Incorporating behavioral hazard alongside moral hazard changes the fundamental tradeoff between insurance and incentives. With only moral hazard, lowering copays increases the insurance value of a plan but reduces its efficiency by generating overuse. With the addition of behavioral hazard, lowering copays may potentially both increase insurance value and increase efficiency by reducing underuse. This means that having an estimate of the demand response is no longer enough to set optimal copays; the health response needs to be considered as well. This provides a theoretical foundation for value-based insurance design, where copays should optimally be lower both when price changes have relatively small effects on demand and when they have relatively large effects on health. We show that ignoring behavioral hazard can lead to welfare estimates that are both wrong in sign and off by an order of magnitude.
"Avoidable copayments" , that's it. And about the second:
We examine how well people make these choices, how well they think they do, and what can be done to improve these choices. We conducted 6 experiments asking people to choose the most cost-effective policy using websites modeled on current exchanges. Our results suggest there is significant room for improvement. Without interventions, respondents perform at near chance levels and show a significant bias, overweighting out-of-pocket expenses and deductibles. Financial incentives do not improve performance, and decision-makers do not realize that they are performing poorly. However, performance can be improved quite markedly by providing calculation aids, and by choosing a ‘‘smart’’ default. Implementing these psychologically based principles could save  purchasers of policies and taxpayers approximately 10 billion dollars every year.
That's a lot. glups!