Optimal health insurance for prevention and treatment

A systematic review of strategies used for controlling consumer moral hazard in health systems

Background

Consumer moral hazard refers to an increase in demand for health services or a decrease in preventive care due to insurance coverage. This phenomenon as one of the most evident forms of moral hazard must be reduced and prevented because of its important role in increasing health costs. This study aimed to determine and analyze the strategies used to control consumer moral hazards in health systems.

Methods

In this systematic review. Web of Sciences, PubMed, Scopus, Embase, ProQuest, Iranian databases(Magiran and SID), and Google Scholar engine were searched using search terms related to moral hazard and healthcare utilization without time limitation. Eligible English and Persian studies on consumer moral hazard in health were included, and papers outside the health and in other languages were excluded. Thematic content analysis was used for data analysis.

Results

Content analysis of 68 studies included in the study was presented in the form of two group, six themes, and 11 categories. Two group included “changing behavior at the time of receiving health services” and “changing behavior before needing health services.” The first group included four themes: demand-side cost sharing, health savings accounts, drug price regulation, and rationing of health services. The second approach consisted of two themes Development of incentive insurance programs and community empowerment.

Conclusion

Strategies to control consumer moral hazards focus on changing consumer consumptive and health-related behaviors, which are designed according to the structure of health and financing systems. Since “changing consumptive behavior” strategies are the most commonly used strategies; therefore, it is necessary to strengthen strategies to control health-related behaviors and develop new strategies in future studies. In addition, in the application of existing strategies, the adaptation to the structure of the health and financing system, and the pattern of consumption of health services in society should be considered.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12913-022-08613-y.

A Game Model for Medical Service Pricing Based on the Diagnosis Related Groups

Background: Currently there are various issues that exist in the medical institutions in China as a result of the price-setting in DRGs, which include the fact that medical institutions tend to choose patients and that the payment standard for complex cases cannot reasonably compensate the cost.

Objective: The main objective is to prevent adverse selection problems in the operations of a diagnosis-related groups (DRGs) system with the game pricing model for scientific and reasonable pricing.

Methods: The study proposes an improved bargaining game model over three stages, with the government and patients forming an alliance. The first stage assumes the alliance is the price maker in the Stackelberg game to maximize social welfare. Medical institutions are a price taker and decide the level of quality of medical service to maximize their revenue. A Stackelberg equilibrium solution is obtained. The second stage assumes medical institutions dominate the Stackelberg game and set an optimal service quality for maximizing their revenues. The alliance as the price taker decides the price to maximize the social welfare. Another Stackelberg equilibrium solution is achieved. The final stage establishes a Rubinstein bargaining game model to combine the Stackelberg equilibrium solutions in the first and second stage. A new equilibrium between the alliance and medical institutions is established.

Results: The results show that if the price elasticity of demand increases, the ratio of cost compensation on medical institutions will increase, and the equilibrium price will increase. The equilibrium price is associated with the coefficient of patients' quality preference. The absolute risk aversion coefficient of patients affects government compensation and total social welfare.

Conclusion: In a DRGs system, considering the demand elasticity and the quality preference of patients, medical service pricing can prevent an adverse selection problem. In the future, we plan to generalize these models to DRGs pricing systems with the effects of competition of medical institutions. In addition, we suggest considering the differential compensation for general hospitals and community hospitals in a DRGs system, in order to promote the goal of hierarchical diagnosis and treatment.

ACA Mandate Led To Substantial Increase In Contraceptive Use Among Women Enrolled In High-Deductible Health Plans

The Affordable Care Act (ACA) mandated that private health plans cover contraceptives without out-of-pocket expenses for patients. Previously, long-acting reversible contraceptives (LARCs) were subject to deductibles, making them a higher-cost service for women with high-deductible health plans (HDHPs); however, the ACA mandate applied to HDHPs as well as traditional health plans. Using a national commercial claims database, we examined LARC use among continuously enrolled reproductive-age women between 2010 and 2017, comparing 9,014 women enrolled in HDHPs with 443,363 women enrolled in non-HDHPs. Using a quasi-experimental difference-in-differences analysis, we found that pre-ACA HDHP enrollees had lower LARC initiation rates than women in non-HDHPs and that rates of LARC initiation increased by 35 percent more postmandate for women in HDHPs than for women in traditional plans. These findings suggest that the ACA had a particularly important impact for women in HDHPs, who faced higher pre-ACA out-of-pocket expenses for these contraceptive methods.

Impact of community-based health insurance on utilisation of preventive health services in rural Uganda: a propensity score matching approach

The effect of voluntary health insurance on preventive health has received limited research attention in developing countries, even when they suffer immensely from easily preventable illnesses. This paper surveys households in rural south-western Uganda, which are geographically serviced by a voluntary Community-based health insurance scheme, and applied propensity score matching to assess the effect of enrolment on using mosquito nets and deworming under-five children. We find that enrolment in the scheme increased the probability of using a mosquito net by 26% and deworming by 18%. We postulate that these findings are partly mediated by information diffusion and social networks, financial protection, which gives households the capacity to save and use service more, especially curative services that are delivered alongside preventive services. This paper provides more insight into the broader effects of health insurance in developing countries, beyond financial protection and utilisation of hospital-based services.

Moral hazard effects of supplemental private health insurance in Korea

Supplemental private health insurance has gained popularity despite having a mandatory social health insurance program in Korea. Private insurance supplements the social insurance program by covering co-pays and services not covered by social insurance. Using longitudinal microdata from the 2008-2014 Korea Health Panel, this study finds evidence of favorable selection into supplemental private insurance. Results show that supplemental private insurance increases outpatient and hospitalization utilization. Private health insurance generates welfare benefits especially among the elderly and low-income individuals, though the coverage rate for these groups is low.

Geographic Access to Preexposure Prophylaxis Clinics Among Men Who Have Sex With Men in the United States

Objectives. To explore US geographic areas with limited access to HIV preexposure prophylaxis (PrEP) providers, PrEP deserts.Methods. We sourced publicly listed PrEP providers from a national database of PrEP providers from 2017 and obtained county-level urbanicity classification and population estimates of men who have sex with men (MSM) from public data. We calculated travel time from census tract to the nearest provider. We classified a census tract as a PrEP desert if 1-way driving time was greater than 30 or 60 minutes.Results. One in 8 PrEP-eligible MSM (108 758/844 574; 13%) lived in 30-minute-drive deserts, and a sizable minority lived in 60-minute-drive deserts (38 804/844 574; 5%). Location in the South and lower urbanicity were strongly associated with increased odds of PrEP desert status.Conclusions. A substantial number of persons at high risk for HIV transmission live in locations with no nearby PrEP provider. Rural and Southern areas are disproportionately affected.Public Health Implications. For maximum implementation effectiveness of PrEP, geography should not determine access. Programs to train clinicians, expand venues for PrEP care, and provide telemedicine services are needed.

Policy of prevention: Medical utilization under a wellness plan

Wellness programs constitute central components of disease prevention efforts under the Affordable Care Act and are likely to remain a component of employer provided health insurance. This paper evaluates the impact of such programs on medical utilization 4 to 7 years after enrollment in the plan. Using a unique suited data provided by a large private employer, I analyze medical expenditure and utilization for individuals enrolled in a wellness plan. The analysis compares expenditures and visits between wellness members and nonmembers who are matched through propensity score methods. The results show that although the wellness program increases utilization of preventive and outpatient care, by as much as 1.57 visits per year, there is no comparable decline in emergency or inpatient care, resulting in an overall increase in medical expenditure of around $507 per person per year. The increase in medical expenditure persists even 6 to 7 years of continued enrollment in wellness. I find some evidence of improved health, as diagnoses of diabetes decline 0.8 percentage points among wellness members. The results suggest that employer savings stemming from improved health and more judicious use of medical services are not likely to materialize in this wellness program.

Private provision of social insurance: drug-specific price elasticities and cost sharing in Medicare Part D

We explore how private drug plans set cost-sharing in the context of Medicare Part D. While publicly-provided drug coverage typically involves uniform cost-sharing across drugs, we document substantial heterogeneity in the cost-sharing for different drugs within privately-provided plans. We also document that private plans systematically set higher consumer cost sharing for drugs or classes associated with more elastic demand; to do so we estimate price elasticities of demand across more than 150 drugs and across more than 100 therapeutic classes. We conclude by discussing the various channels that likely affect private plans' cost-sharing decisions.

Basic versus supplementary health insurance: Access to care and the role of cost effectiveness

In a model where patients face budget constraints that make some treatments unaffordable without health insurance, we ask which treatments should be covered by universal basic insurance and which by private voluntary insurance. We argue that next to cost effectiveness, prevalence is important if the government wants to maximize the welfare gain that it gets from its health budget. Conditions are derived under which basic insurance should cover treatments that are mainly used by high risk agents with low income.

Medical expenditure in urban China: a quantile regression analysis

Many countries have been trying to expand their public health insurance coverage in recent years. To achieve two fundamental policy goals-equity in health care utilization and control of health care costs-policymakers need a better understanding of the underlying determinants of individual health care expenditure beyond the results of mean regressions. In this paper, we apply a quantile regression method to investigate the heterogeneous effects of various determinants of medical expenditure in China. Comparing with the average effects, we find that health care expenditures at the upper end of the distribution are under stronger influences of need factors such as poor health status, and weaker influences of socioeconomic factors and insurance status. On the other hand, health care expenditures at the lower end of the distribution are under stronger influences of socioeconomic factors and insurance status, and weaker influences of need factors. Our study may provide useful information to policymakers for the optimal design of their health care systems, and it may be of particular interests to the health policymakers in China, where is currently still in a period of reshaping its health-care system.

BEHAVIORAL HAZARD IN HEALTH INSURANCE

A fundamental implication of standard moral hazard models is overuse of low-value medical care because copays are lower than costs. In these models, the demand curve alone can be used to make welfare statements, a fact relied on by much empirical work. There is ample evidence, though, that people misuse care for a different reason: mistakes, or "behavioral hazard." Much high-value care is underused even when patient costs are low, and some useless care is bought even when patients face the full cost. In the presence of behavioral hazard, welfare calculations using only the demand curve can be off by orders of magnitude or even be the wrong sign. We derive optimal copay formulas that incorporate both moral and behavioral hazard, providing a theoretical foundation for value-based insurance design and a way to interpret behavioral "nudges." Once behavioral hazard is taken into account, health insurance can do more than just provide financial protection - it can also improve health care efficiency.

Optimal health insurance for multiple goods and time periods

We examine the efficiency-based arguments for second-best optimal health insurance with multiple treatment goods and multiple time periods. Correlated shocks across health care goods and over time interact with complementarity and substitutability to affect optimal cost sharing. Health care goods that are substitutes or have positively correlated demand shocks should have lower optimal patient cost sharing. Positive serial correlations of demand shocks and uncompensated losses that are positively correlated with covered health services also reduce optimal cost sharing. Our results rationalize covering pharmaceuticals and outpatient spending more fully than is implied by static, one good, or one period models.

Multilateral contracting and prevention

Incentives created through contracts can be used as a means of decentralized control in healthcare systems to ensure more efficient healthcare. In this paper, we consider an insurer contracting with a consumer and a provider. We focus on the trade-off between ex ante moral hazard and insurance, and consider both consumer and provider incentives in the insurer's contracting problem in the presence of unobservable preventive efforts. We study two cases of provider efforts: those that complement consumer efforts and those that substitute for consumer efforts. In the first case, our results show that the provider must have greater incentives when the consumer is healthy to induce effort and that inducing provider effort allows an insurer to offer a more complete insurance contract relative to the bilateral benchmark. In the second case, we state conditions under which these conclusions continue to hold. On the basis of our findings, we discuss the implications and challenges of multilateral contracting in practice.

A Welfare Measure of "Offset Effects" in Health Insurance

Changing health insurance coverage for one service may affect use of other insured services. When improving coverage for one service reduces use of another, the savings are referred to as "offset effects." For example, costs of better coverage for prescription drugs may be partly "offset" by reductions in hospital costs. Offset effects have welfare implications but it has not been clear how to value these impacts in design of health insurance. We show that plan-paid - rather than total -- spending is the right welfare measure of the offset effect, and go on to develop a "sufficient statistic" for evaluating the welfare effects of change in coverage in the presence of multiple goods. We derive a simple rule for when a coverage improvement increases welfare due to offset effects.

A Prescription for Drug Formulary Evaluation: An Application of Price Indexes

Existing economic approaches to the design and evaluation of health insurance do not readily apply to coverage decisions in the multi-tiered drug formularies characterizing drug coverage in private health insurance and Medicare. This paper proposes a method for evaluating a change in the value of a formulary to covered members based on the economic theory of price indexes. A formulary is cast as a set of demand-side prices, and our measure approximates the compensation (positive or negative) that would need to be paid to consumers to accept the new set of prices. The measure also incorporates any effect of the formulary change on plan drug acquisition costs and "offset effects" on non-drug services covered by the plan. Data needed to calculate formulary value are known or can be forecast by a health plan. We illustrate the method with data from a move from a two- to a three-tier formulary.

Does medication adherence following a copayment increase differ by disease burden?

OBJECTIVES

To compare changes in medication adherence between patients with high- or low-comorbidity burden after a copayment increase.

METHODS

We conducted a retrospective observational study at four Veterans Affairs (VA) medical centers by comparing veterans with hypertension or diabetes required to pay copayments with propensity score-matched veterans exempt from copayments. Disease cohorts were stratified by Diagnostic Cost Group risk score: low- (<1) and high-comorbidity (>1) burden. Medication adherence from February 2001 to December 2003, constructed from VA pharmacy claims data based on the ReComp algorithm, were assessed using generalized estimating equations.

RESULTS

Veterans with lower comorbidity were more responsive to a U.S.$5 copayment increase than higher comorbidity veterans. In the lower comorbidity groups, veterans with diabetes had a greater reduction in adherence than veterans with hypertension. Adherence trends were similar for copayment-exempt and nonexempt veterans with higher comorbidity.

CONCLUSION

Medication copayment increases are associated with different impacts for low- and high-risk patients. High-risk patients incur greater out-of-pocket costs from continued adherence, while low-risk patients put themselves at increased risk for adverse health events due to greater nonadherence.

Impact of pharmacy benefit design on prescription drug utilization: a fixed effects analysis of plan sponsor data

OBJECTIVE

To study the impact of various elements of pharmacy benefit design on both the absolute and relative utilization of generics, brands, retail pharmacy, and mail service.

DATA SOURCE

Panel data on 1,074 plan sponsors covering 21.6 million individuals over 12 calendar quarters (2005-2007).

STUDY DESIGN

A retrospective analysis of pharmacy claims.

STATISTICAL METHODS

To control for potential endogeneity, linear fixed effects models were estimated for each of six dependent variables: the generic utilization rate, the brand utilization rate, the generic dispensing rate (GDR), the retail pharmacy utilization rate, the mail service utilization rate, and the mail distribution rate.

PRINCIPAL FINDINGS

Most member cost-share variables were nonlinearly associated with changes in prescription drug utilization. Marginal effects were generally greater in magnitude for brand out-of-pocket costs than for generic out-of-pocket costs. Time dummies, as well as other pharmacy benefit design elements, also yielded significant results.

CONCLUSIONS

Prior estimates of the effect of member cost sharing on prescription drug utilization may be biased if complex benefit designs, mail service fulfillment, and unmeasured factors such as pharmaceutical pipelines are not accounted for. Commonly cited relative utilization metrics, such as GDR, may be misleading if not examined alongside absolute prescription drug utilization.