BEHAVIORAL HAZARD IN HEALTH INSURANCE

Religious proximity and misinformation: Experimental evidence from a mobile phone-based campaign in India

We investigate how religion concordance influences the effectiveness of preventive health campaigns. Conducted during the early stages of the COVID-19 pandemic in two major Indian cities marked by Hindu-Muslim tensions, we randomly assigned a representative sample of slum residents to receive either a physician-delivered information campaign promoting health-related preventive practices, or uninformative control messages on their mobile phones. Messages, introduced by a local citizen (the sender), were cross-randomized to start with a greeting signaling either a Hindu or a Muslim identity, manipulating religion concordance between sender and receiver. We found that doctor messages increased compliance with recommended practices and beliefs in their efficacy. Our findings suggest that the campaign's impact is primarily driven by shared religion between sender and receiver, leading to increased message engagement and compliance with recommended practices. Additionally, we observe that religion concordance helps protect against misinformation.

Physician responses to insurance benefit restrictions: The case of ophthalmology

This study examines the impact of social insurance benefit restrictions on physician behaviour, using ophthalmologists as a case study. We examine whether ophthalmologists use their market power to alter their fees and rebates across services to compensate for potential policy-induced income losses. The results show that ophthalmologists substantially reduced their fees and rebates for services directly targeted by the benefit restriction compared to other medical specialists' fees and rebates. There is also some evidence that they increased their fees for services that were not targeted. High-fee charging ophthalmologists exhibited larger fee and rebate responses while the low-fee charging group raise their rebates to match the reference price provided by the policy environment.

Do VIP medical services damage efficiency? New evidence of medical institutions' total factor productivity using Chinese panel data

This study examines the causal impact of very important person (VIP) medical services on hospital total factor productivity in Deyang, a prefectural-level city in western China, spanning the years 2015-2020. This aims to offer empirical evidence and policy recommendations for the implementation of VIP practices in the medical field. A secondary unbalanced panel dataset of 416 observations was collected from the annual reports of the Health Commission and 92 eligible medical institutions were included. This study utilized a two-stage strategy. First, the Global Malmquist index was used to calculate the total factor productivity and its decomposition terms for hospitals from 2015 to 2020. In the second stage, two-way fixed effects models and Tobit models were used to identify the relationship between VIP medical services and hospital efficiency; instrumental variables were used to solve potential endogeneity problems in the model. The results showed that VIP medical services had a significantly negative impact on medical institutions' efficiency. The technological advances and pure technical efficiency related to VIP medical care may help explain these negative impacts, which were heterogeneous across groups divided by the nature of the hospital and the outside environment. It is imperative to prioritize the standardized provision of VIP medical services for medical institutions, optimize management and service process, enhance the training of clinical and scientific research capabilities of medical personnel, and scientifically allocate resources for both VIP and general medical services. This will help mitigate health inequality while improving the overall quality of medical services.

Health inequality and health insurance coverage: The United States and China compared

We study inequality in the distribution of self-assessed health (SAH) in the United States and China, two large countries that have expanded their insurance provisions in recent decades, but that lack universal coverage and differ in other social determinants of health. Using comparable health survey data from China and the United States, we compare health inequality trends throughout the period covering the public health insurance coverage expansions in the two countries. We find that whether SAH inequality is greater in the US or in China depends on the concept of status and the inequality-sensitivity parameter used; however, the regional pattern of SAH inequality is clearly associated with health-insurance coverage expansions in the US but not significant in China.

Minimum generosity levels in a competitive health insurance market

An important condition for optimal health insurance is that the level of health care coverage is inversely related to the elasticity of demand. We show that this condition is not satisfied for voluntary deductibles in the Netherlands, which are optional deductibles on top of the mandatory deductible introduced by the Dutch government. We find that low-risk types, that mainly choose voluntary deductibles, have a lower elasticity of demand than high-risk types. Moreover, we show that voluntary deductibles introduce equity problems as it results in non-trivial cross subsidies from high-risk to low-risk types. Capping the level of voluntary deductibles (imposing minimum generosity) is likely to be welfare enhancing in the Netherlands.

On resource allocation in health care: The case of concierge medicine

Resource allocation generally involves a tension between efficiency and equity, particularly in health care. The growth in exclusive physician arrangements using non-linear prices is leading to consumer segmentation with theoretically ambiguous welfare implications. We study concierge medicine, in which physicians only provide care to patients paying a retainer fee. We find limited evidence of selection based on health and stronger evidence of selection based on income. Using a matching strategy that leverages the staggered adoption of concierge medicine, we find large spending increases and no average mortality effects for patients impacted by the switch to concierge medicine.

Technology adoption and market allocation: The case of robotic surgery

The adoption of health care technology is central to improving productivity in this sector. To provide new evidence on how technology affects health care markets, we focus on one area where adoption has been particularly rapid: surgery for prostate cancer. Within just eight years, robotic surgery grew to become the dominant intensive prostate cancer treatment method. Using a difference-in-differences design, we show that adopting a robot drives prostate cancer patients to the hospital. To test whether this result reflects market expansion or business stealing, we also consider market-level effects of adoption and find effects that are significant but smaller, suggesting that adoption expands the market while also reallocating some patients across hospitals. Marginal patients are relatively young and healthy, inconsistent with the concern that adoption broadens the criteria for intervention to patients who would gain little from it. We conclude by discussing implications for the social value of technology diffusion in health care markets.

Healthcare Rationing in Public Insurance Programs: Evidence from Medicaid

We study two mechanisms used by public health insurance programs for rationing health care: outsourcing to private managed care plans and quantity limits for prescription drugs. Leveraging a natural experiment in Texas’s Medicaid program, we find that the shift to managed care and the relaxation of a strict drug cap increased access to high-value drugs and outpatient services and reduced avoidable hospitalizations. Program costs increased significantly, indicating a trade-off between cost and quality. We provide suggestive evidence attributing the reduction in hospitalizations to the relaxation of the drug cap and much of the spending increase to the shift to managed care. (JEL G22, H75, I13, I18, I38)

Evaluating the Effect of San Francisco's Paid Parental Leave Ordinance on Birth Outcomes

Since 2017, San Francisco's Paid Parental Leave Ordinance (PPLO) has allowed parents who work for private-sector employers to take 6 weeks of fully paid postnatal parental leave. Previous studies have linked paid parental leave with health improvements for birthing people and babies, although evidence for birth outcomes is limited. We hypothesized that the PPLO may have improved birth outcomes via reduced stress during pregnancy due to anticipation of increased financial security and postnatal leave. We used linked California birth certificate and hospital discharge records from January 2013 to December 2018 (n = 1,420,781). We used quasi-experimental difference-in-difference (DD) models to compare outcomes among SF births before and after PPLO to outcomes among births in control counties. Births from January 2017 through December 2018 among working San Francisco (SF) people were considered "exposed" to PPLO; births during this time among working people outside of SF, as well as all births before 2017, served as controls. We conducted subgroup analyses by race/ethnicity, education and Medicaid coverage at delivery. Overall analyses adjusting for covariates and indicators for time and seasonality indicated no association between PPLO and birth outcomes. Our results indicate that PPLO may not have affected the birth outcomes we examined among marginalized groups who, due to structural racism, are at heightened risk of poor outcomes. We speculate that this result is due to the PPLO's design and focus on postnatal leave. Future work should examine the policy's effects on other outcomes.

The Effect of a Future-Self Avatar Mobile Health Intervention (FutureMe) on Physical Activity and Food Purchases: Randomized Controlled Trial

BACKGROUND

Insufficient physical activity and unhealthy diets are contributing to the rise in noncommunicable diseases. Preventative mobile health (mHealth) interventions may help reverse this trend, but present bias might reduce their effectiveness. Future-self avatar interventions have resulted in behavior change in related fields, yet evidence of whether such interventions can change health behavior is lacking.

OBJECTIVE

We aimed to investigate the impact of a future-self avatar mHealth intervention on physical activity and food purchasing behavior and examine the feasibility of a novel automated nutrition tracking system. We also aimed to understand how this intervention impacts related attitudinal and motivational constructs.

METHODS

We conducted a 12-week parallel randomized controlled trial (RCT), followed by semistructured interviews. German-speaking smartphone users aged ≥18 years living in Switzerland and using at least one of the two leading Swiss grocery loyalty cards, were recruited for the trial. Data were collected from November 2020 to April 2021. The intervention group received the FutureMe intervention, a physical activity and food purchase tracking mobile phone app that uses a future-self avatar as the primary interface and provides participants with personalized food basket analysis and shopping tips. The control group received a conventional text- and graphic-based primary interface intervention. We pioneered a novel system to track nutrition by leveraging digital receipts from loyalty card data and analyzing food purchases in a fully automated way. Data were consolidated in 4-week intervals, and nonparametric tests were conducted to test for within- and between-group differences.

RESULTS

We recruited 167 participants, and 95 eligible participants were randomized into either the intervention (n=42) or control group (n=53). The median age was 44 years (IQR 19), and the gender ratio was balanced (female 52/95, 55%). Attrition was unexpectedly high with only 30 participants completing the intervention, negatively impacting the statistical power. The FutureMe intervention led to small statistically insignificant increases in physical activity (median +242 steps/day) and small insignificant improvements in the nutritional quality of food purchases (median -1.28 British Food Standards Agency Nutrient Profiling System Dietary Index points) at the end of the intervention. Intrinsic motivation significantly increased (P=.03) in the FutureMe group, but decreased in the control group. Outcome expectancy directionally increased in the FutureMe group, but decreased in the control group. Leveraging loyalty card data to track the nutritional quality of food purchases was found to be a feasible and accepted fully automated nutrition tracking system.

CONCLUSIONS

Preventative future-self avatar mHealth interventions promise to encourage improvements in physical activity and food purchasing behavior in healthy population groups. A full-powered RCT is needed to confirm this preliminary evidence and to investigate how future-self avatars might be modified to reduce attrition, overcome present bias, and promote sustainable behavior change.

TRIAL REGISTRATION

ClinicalTrials.gov NCT04505124; https://clinicaltrials.gov/ct2/show/NCT04505124.

The Liquidity Sensitivity of Healthcare Consumption: Evidence from Social Security Payments

Insurance is typically viewed as a mechanism for transferring resources from good to bad states. Insurance, however, may also transfer resources from high-liquidity periods to low-liquidity periods. We test for this type of transfer from health insurance by studying the distribution of Social Security checks among Medicare recipients. When Social Security checks are distributed, prescription fills increase by 6-12 percent among recipients who pay small copayments. We find no such pattern among recipients who face no copayments. The results demonstrate that more-complete insurance allows recipients to consume healthcare when they need it rather than only when they have cash.

Effects of establishing a financing scheme for outpatient care on inpatient services: empirical evidence from a quasi-experiment in China

The relationship between outpatient and inpatient care is central to the current healthcare reform debate especially in developing countries. Despite the importance of this relationship to health policy makers, empirical evidence, particularly evidence that can be interpreted as causal is limited and inconclusive. This paper examines the effects of establishing a financing scheme for outpatient care on inpatient utilization and expenditure in China's Urban Employee Basic Medical Insurance scheme. Under a quasi-experimental design, we use a unique administrative insurance claim dataset and conduct a difference-in-differences analysis. Our results indicate that after the policy change, total number of admissions and total inpatient expenditure of the enrollees decreased by 0.47% and 6.05% respectively, which imply outpatient and inpatient care are substitutes, and the reduction in cost-sharing can release the underuse of the outpatient care, so as to reduce those excessive demands for inpatient care. Moreover, we present evidence that the effects on the admissions of Ambulatory Care Sensitive Conditions which should be sensitive to outpatient care intervention are relatively limited because of the lower reimbursement cap, inadequate capacity of the local primary care providers and stickiness in patients' healthcare-seeking behaviors. While the enrollees aged over 55 and retirees are more vulnerable to the medical prices, and the enrollees living in the central districts are more responsive because of the better and more accessible primary care.

Copayment policy reforms and effective care utilization by patients with persistent asthma in Taiwan

OBJECTIVES

Reforms to the Taiwan National Health Insurance copayment scheme in 2005 imposed a notable increase in the cost of outpatient visits. This provided an ideal situation to determine whether such reforms lead to a reduction in the utilization of effective care by patients with persistent asthma.

METHODS

This study applied the pretest-posttest non-randomized control group design in our analysis of nationwide claims data (2002 to 2010). Based on propensity score matching, the patients were divided into two groups, subject and not subject to copayment reform. Medication Management for People with Asthma measure was used to identify patients with persistent asthma and instances of effective care.

RESULTS

Matching yielded a final panel of 7,890 individuals with persistent asthma (3,945 individuals in each cohort) eligible for the study. GEE analysis revealed that policy reforms had significant effects over the short-term (OR = 0.745, p < 0.05), medium-term (OR = 0.752, p < 0.01), and long-term (OR = 0.721, p < 0.01).

CONCLUSIONS

Reforms to copayment policy were significantly correlated with a reduction in the utilization of effective care by patients with persistent asthma over the short-, medium- and long-term. Government should develop implementation strategies aimed at protecting the economically disadvantaged patients.

Quality provision in hospital markets with demand inertia: The role of patient expectations

Switching costs and persistent preferences generate demand inertia and link current and future choices of hospital. Using a model of hospital competition with demand inertia, we investigate the effect of patient expectations on quality. We consider three types of expectations. Myopic patients choose a hospital based on current variables alone, forward-looking but naïve patients consider the future but assume that quality remains constant, and forward-looking and rational patients foresee the evolution of quality. We rank quality provision and show that it is higher under naïve than myopic expectations, while quality under rational expectations may be highest or lowest. This result also holds for patients' health gains, suggesting that rationality may hurt patients. Additionally, policies to reduce switching costs lead to lower quality, possibly unless patients are rational and cost substitutability between output and quality is sufficiently strong. Finally, we show how optimal price regulation depends on expectations and switching costs.

Family health spillovers: evidence from the RAND health insurance experiment

I study how family spillovers shape healthcare consumption through two main sources: a learning channel whereby family members share information about their health insurance and the effectiveness of healthcare, and a behavioral channel whereby risk perception and habits are shared and transmitted. I exploit two types of sudden health shocks to identify a causal effect operating through each channel: a spouse's non-fatal heart attack or stroke and a severe injury to a child. I incorporate these shocks into an event-study framework to quantify the effect of spillovers on healthcare consumption of a non-injured adult family member. I find a significant behavioral spillover effect of an increase of more than 200% in medical expenditure of preventive care over a four-year horizon. Moreover, I find a strong and persistent learning spillover that amounts to an average increase of more than 150% in medical expenditure relative to prior to the health shock, and I demonstrate that this effect promotes health investment. While the first result is in line with previous findings in the literature, the second is novel.

Stress-related health depreciation: Using allostatic load to predict self-rated health

Approximately one quarter of UK adults are currently diagnosed with two or more chronic conditions, often referred to as multimorbidity. Chronic stress has been implicated in the development of many diseases common to multimorbidity. Policymakers and clinicians have acknowledged the need for more preventative approaches to deal with the rise of multimorbidity and "early ageing". However divergence may occur between an individual's self-rated health and objectively measured health that may preclude preventative action. The use of biomarkers which look 'under the skin' provide crucial information on an individual's underlying health to facilitate lifestyle change or healthcare utilisation. The UK's Understanding Society dataset, was used to examine whether baseline variation in biomarkers measuring stress-related "wear and tear" - Allostatic Load (AL) - predict changes in future self-rated health (SRH) while adjusting for baseline SRH, socioeconomic and lifestyle factors, and healthcare inputs. An interaction between baseline AL and baseline SRH was included to test for differential rates of SRH change. We examined SRH using the SF6D instrument, measuring health-related-quality of life (HRQoL), as well as its physical and mental health components separately. We found that HRQoL and physical health decline faster for those with higher baseline AL (indicating greater "wear and tear") however the same pattern was not observed for mental health. These findings provide novel insights for clinicians and policymakers on the usefulness of AL in capturing health trajectories of which individual's may not be aware and its importance in targeting resilience enhancing measures earlier in the lifecourse to delay physical health decline.

Free prescriptions for low-income pensioners? The cost of returning to free-of-charge drugs in the Spanish National Health Service

This study estimated the impact of reducing a capped low coinsurance rate for outpatient medicines to nil for low-income pensioners and disabled individuals in the Valencian Community (Spain). This reduction was implemented in January 2016 as a regional reform which modified the national cost-sharing reform adopted in July 2012. The impact of this intervention on the number of monthly prescriptions dispensed between July 2012 and December 2018 was estimated using two different approaches of the synthetic control method, the classical method and the method based on Bayesian structural time series. The estimates from both methods were similar, showing significant overall increases of 6.34% and 6.70% [95% credible interval: 4.05, 9.47], respectively in the number of prescriptions dispensed in this region. These results are similar to those of the previous studies indicating that reducing price from a small amount to zero discontinuously boosts demand. This evidence indicates that the impact of this intervention on the budget of the regional health service is far greater than the amount of the subsidy in the public budget. These results are useful for making accurate budgetary projections for similar eliminations of charges for low-income pensioners in the Spanish National Health Service.

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.

The effect of increased cost-sharing on low-value service use

We examine the effect of a value-based insurance design (VBID) program implemented at a large public employer in the state of Oregon. The program substantially increased cost-sharing for several healthcare services likely to be of low value for most patients: diagnostic services (e.g., imaging services) and surgeries (e.g., spinal surgeries for pain). Using a difference-in-differences design coupled with granular, administrative health insurance claims data over the period 2008-2012, we estimate the change in low-value service use among beneficiaries before and after program implementation relative to a comparison group not exposed to the VBID. Our findings suggest that the VBID significantly reduced the use of targeted services, with an implied elasticity of demand of -0.22. We find no evidence that the VBID led to substitution to non-targeted services or increased overall healthcare costs. However, we also observe no evidence that the program led to cost-savings.

Distinguishing moral hazard from access for high-cost healthcare under insurance

CONTEXT

Health policy has long been preoccupied with the problem that health insurance stimulates spending ("moral hazard"). However, much health spending is costly healthcare that uninsured individuals could not otherwise access. Field studies comparing those with more or less insurance cannot disaggregate moral hazard versus access. Moreover, studies of patients consuming routine low-dollar healthcare are not informative for the high-dollar healthcare that drives most of aggregate healthcare spending in the United States.

METHODS

We test indemnities as an alternative theory-driven counterfactual. Such conditional cash transfers would maintain an opportunity cost for patients, unlike standard insurance, but also guarantee access to the care. Since indemnities do not exist in U.S. healthcare, we fielded two blinded vignette-based survey experiments with 3,000 respondents, randomized to eight clinical vignettes and three insurance types. Our replication uses a population that is weighted to national demographics on three dimensions.

FINDINGS

Most or all of the spending due to insurance would occur even under an indemnity. The waste attributable to moral hazard is undetectable.

CONCLUSIONS

For high-cost care, policymakers should be more concerned about the foregone efficient spending for those lacking full insurance, rather than the wasteful spending that occurs with full insurance.

Framing Flexible Spending Accounts: A Large-Scale Field Experiment on Communicating the Return on Medical Savings Accounts

Tax-preferred health savings devices such as Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) offer employees potentially valuable financial instruments for directing pre-tax earnings to eligible medical expenses. Despite their increasing popularity as an employee benefit, however, there is little causal evidence around individual demand for these accounts. This paper seeks to address this gap in the literature, reporting on a randomized controlled field experiment conducted with over 11,000 U. S federal employees in 2017 in order to evaluate the effectiveness of targeted messages designed to increase FSA contributions. Our results suggest that the provision of basic information about FSAs delivered via an emailed employee newsletter did not affect the likelihood of contribution or the contribution level. The addition of statements about the absolute returns or relative returns offered by the accounts similarly had no significant effects, and these null effects are observed despite relatively high email open rates. We discuss explanations for the null results and the policy implications of findings from what appears to be the first health economics experiment analyzing tax incentives around health care savings.

The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment

We develop a set of frameworks for welfare analysis of Medicaid and apply them to the Oregon Health Insurance Experiment, a Medicaid expansion for low-income, uninsured adults that occurred via random assignment. Across different approaches, we estimate recipient willingness to pay for Medicaid between $0.5 and $1.2 per dollar of the resource cost of providing Medicaid; estimates of the expected transfer Medicaid provides to recipients are relatively stable across approaches, but estimates of its additional value from risk protection are more variable. We also estimate that the resource cost of providing Medicaid to an additional recipient is only 40% of Medicaid's total cost; 60% of Medicaid spending is a transfer to providers of uncompensated care for the low-income uninsured.

What to expect when you are expecting: Are health care consumers forward-looking?

A fundamental question in health insurance markets is how do health care consumers dynamically optimize their medical utilization under non-linear insurance contracts? Our paper tests the neoclassical prediction that a fully forward-looking agent only responds to their expected end-of-year price. Our unique identification strategy studies families during the year of childbirth who will likely satisfy their annual deductible, thereby knowing their expected end-of-year price. We find that during the year of a childbirth, fathers increase medical spending by 11% per month after their deductible is satisfied, rejecting the null of fully forward-looking consumers. This behavior cannot be explained by fathers increasing utilization in response to the childbirth itself. Furthermore, this myopia translates to a 21-24% decrease in total annual medical spending, relative to the counterfactual of fully forward-looking behavior, and is concentrated in elective procedures; we find no response in low value or urgent care. Our findings suggest the need for modeling non-linear incentives while accounting for myopic behavior when studying the medical utilization responses to health insurance.

Effects of expanding outpatient benefit package on the rationality of medical service utilisation of patients with hypertension: a quasi-experimental trial in rural China

OBJECTIVE

To estimate the effects of expanding outpatient benefit package on ameliorating the issues of over-reliance on inpatient services and seeking higher level medical services in rural China.

DESIGN

A quasi-experimental design.

SETTING AND PARTICIPANTS

1673 pairs of patients with hypertension were selected after using propensity score matching from Dangyang county (intervention group) and Zhijiang (control group) county, Hubei province.

INTERVENTION

The outpatient annual reimbursement capping line was expanding from ¥300 to ¥600, daily capping line from ¥10/12 to ¥150. The compensation scope and institution were also enlarged from January 2016.

OUTCOME MEASURES

The difference-in-differences model was used to estimate the effects on medical service type selection. χ2 test was used to verify the effects on medical institution selection. We also examined the effects on health outcomes through the length of stay and blood pressure changes.

RESULTS

The intervention was associated with 3.225 times (p=0.001) increase in total visits. Outpatient visits increased by 3.3 times (p=0.008), whereas the township level presented a maximum increase of 1.932 times (p=0.001). The inpatient visits declined by 0.075 times (p=0.000), whereas county-level inpatient visits reached a maximum decrease of 0.042 times (p=0.033). Meanwhile, the township level exhibited a maximum proportion growth of 14.8% in outpatient (p=0.000) and 13.3% in inpatient visits (p=0.048). Outpatient visits at the county level dropped at 13.2% (p=0.000), whereas inpatients visits declined by 7.7% (p=0.040). The length of stay and blood pressure were decreased, respectively, compared with the control group.

CONCLUSION

Improving outpatient benefit package alleviated patient dependence on inpatient services through motivating outpatient service utilisation, consolidated the primacy of township health centres and guided patients to return to primary medical institutions. The health insurance reform should 'take the long view' in the future, and more attention should be paid to the rationality of medical service utilisation.

Externalities and Taxation of Supplemental Insurance: A Study of Medicare and Medigap

Most health insurance uses cost-sharing to reduce excess utilization. Supplemental insurance can blunt the impact of this cost-sharing, increasing utilization and exerting a negative externality on the primary insurer. This paper estimates the effect of private Medigap supplemental insurance on public Medicare spending using Medigap premium discontinuities in local medical markets that span state boundaries. Using administrative data on the universe of Medicare beneficiaries, we estimate that Medigap increases an individual's Medicare spending by 22.2 percent. We calculate that a 15 percent tax on Medigap premiums generates savings of $12.9 billion annually with a standard error of $4.9 billion.

Present bias and health

This study uses a dynamic discrete choice model to examine the degree of present bias and naivete about present bias in individuals' health care decisions. Clinical guidelines exist for several common chronic diseases. Although the empirical evidence for some guidelines is strong, many individuals with these diseases do not follow the guidelines. Using persons with diabetes as a case study, we find evidence of substantial present bias and naivete. Counterfactual simulations indicate the importance of present bias and naivete in explaining low adherence rates to health care guidelines.

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.

Managing imperfect competition by pay for performance and reference pricing

I study a managed health service market where differentiated providers compete for consumers by choosing multiple service qualities, and where copayments that consumers pay and payments that providers receive for services are set by a payer. The optimal regulation scheme is two-sided. On the demand side, it justifies and clarifies value-based reference pricing. On the supply side, it prescribes pay for performance when consumers misperceive service benefits or providers have intrinsic quality incentives. The optimal bonuses are expressed in terms of demand elasticities, service technology, and provider characteristics. However, pay for performance may not outperform prospective payment when consumers are rational and providers are profit maximizing, or when one of the service qualities is not contractible.

Frictions or Mental Gaps: What’s Behind the Information We (Don’t) Use and When Do We Care?

Consumers suffer significant losses from not acting on available information. These losses stem from frictions such as search costs, switching costs, and rational inattention, as well as what we call mental gaps resulting from wrong priors/worldviews, or relevant features of a problem not being top of mind. Most research studying such losses does not empirically distinguish between these mechanisms. Instead, we show that most highly cited papers in this area presume one mechanism underlies consumer choices and assume away other potential explanations, or collapse many mechanisms together. We discuss the empirical difficulties that arise in distinguishing between different mechanisms, and some promising approaches for making progress in doing so. We also assess when it is more or less important for researchers to distinguish between these mechanisms. Approaches that seek to identify true value from demand, without specifying mechanisms behind this wedge, are most useful when researchers are interested in evaluating allocation policies that strongly steer consumers towards better options with regulation, traditional policy instruments, and defaults. On the other hand, understanding the precise mechanisms underlying consumer losses is essential to predicting the impact of mechanism policies aimed primarily at reducing specific frictions or mental gaps without otherwise steering consumers. We make the case that papers engaging with these questions empirically should be clear about whether their analyses distinguish between mechanisms behind poorly informed choices, and what that implies for the questions they can answer. We present examples from several empirical contexts to highlight these distinctions.

Effect of reducing cost sharing for outpatient care on children's inpatient services in Japan

BACKGROUND

Assessing the impact of cost sharing on healthcare utilization is a critical issue in health economics and health policy. It may affect the utilization of different services, but is yet to be well understood.

OBJECTIVE

This paper investigates the effects of reducing cost sharing for outpatient services on hospital admissions by exploring a subsidy policy for children's outpatient services in Japan.

METHODS

Data were extracted from the Japanese Diagnosis Procedure Combination database for 2012 and 2013. A total of 366,566 inpatients from 1390 municipalities were identified. The impact of expanding outpatient care subsidy on the volume of inpatient care for 1390 Japanese municipalities was investigated using the generalized linear model with fixed effects.

RESULTS

A decrease in cost sharing for outpatient care has no significant effect on overall hospital admissions, although this effect varies by region. The subsidy reduces the number of overall admissions in low-income areas, but increases it in high-income areas. In addition, the results for admissions by type show that admissions for diagnosis increase particularly in high-income areas, but emergency admissions and ambulatory-care-sensitive-condition admissions decrease in low-income areas.

CONCLUSIONS

These results suggest that outpatient and inpatient services are substitutes in low-income areas but complements in high-income ones. Although the subsidy for children's healthcare would increase medical costs, it would not improve the health status in high-income areas. Nevertheless, it could lead to some health improvements in low-income areas and, to some extent, offset costs by reducing admissions in these regions.

Wearable Technologies and Health Behaviors: New Data and New Methods to Understand Population Health

We study a randomized control trial in a large employer population of access to “wearable” technologies and the associated planning and monitoring tools on improved health behaviors (sleep and exercise). Both ITT and IV estimates based on actual plan enrollment for the treatment group suggest statistically significant but economically small changes in behavior after three months. We then implement machine learning-based models to assess treatment effect heterogeneity. We find little evidence for heterogeneous treatment effects base on observables. We also present detailed data on sleep patterns underscoring the value of this new data source to researchers.

Gatekeeping and the utilization of physician services in France: Evidence on the Médecin traitant reform

In 2005, France implemented a gatekeeping reform designed to improve care coordination and to reduce utilization of specialists' services. Under this policy, patients designate a médecin traitant, typically a general practitioner, who will be their first point of contact during an episode of care and who will provide referrals to specialists. A key element of the policy is that patients who self-refer to a specialist face higher cost sharing than if they received a referral from their médecin traitant. We consider the effect of this policy on the utilization of physician services. Our analysis of administrative claims data spanning the years 2000-2008 indicates that visits to specialists, which were increasing in the years prior to the implementation of the reform, fell after the policy was in place. Additional evidence from the administrative claims as well as survey data suggest that this decline arose from a reduction in self-referrals, which is consistent with the objectives of the policy. Visits fell significantly both for specialties targeted by the policy and specialties for which self-referrals are still allowed for certain treatments. This apparent spillover effect may suggest that, at least initially, patients did not understand the subtleties of the policy.

Impact of Patient Reimbursement Timing and Patient Out-of-Pocket Expenses on Medication Adherence in Patients Covered by Private Drug Insurance Plans

BACKGROUND

Adherence to prescribed medications used in the treatment of chronic diseases is suboptimal, and drug insurance plans can have an impact on adherence. There is little evidence on the impact of patient reimbursement timing on medication adherence.

OBJECTIVE

To compare adherence to prescribed medications in privately insured patients from Quebec, Canada, with different patient reimbursement timing and levels of patient out-of-pocket expenses.

METHODS

A retrospective cohort was constructed by selecting privately insured patients aged 18-64 years from the reMed database (2008-2012) who filled at least 1 prescription for a medication belonging to 1 of the 10 most prescribed drug classes for chronic diseases. Patient reimbursement timing was classified as immediate (immediate patient reimbursement at the point of service of the portion of the medication cost covered by the insurer) or deferred (patient reimbursement at a later time). Patient outof-pocket expenses related to the medication under study at cohort entry (available only for the immediate patient reimbursement group), which included the deductible and the coinsurance, were categorized into 5 levels (null category and quartiles): $0, $0.01-$3.59, $3.60-$8.11, $8.12-$14.40, and $14.41-$89.99. Adherence was measured with the proportion of days covered (PDC) over 1 year among new users of the medication under study. Linear regression models were used to estimate the adjusted mean difference of PDC between groups.

RESULTS

There was no difference in medication adherence between the immediate (n = 1,345) and deferred patient reimbursement (n = 437; difference, 0.0%; 95% CI, -3.0 to 3.0). Patients with the highest patient out-of-pocket expenses were less adherent than those with the lowest patient out-of-pocket expenses (difference, -19.0%; 95% CI, -24.0 to -13.0); however, patients with no patient out-of-pocket expenses were less adherent than those with low patient out-of-pocket expenses (difference, -9.0%; 95% CI, -15.0 to -2.0).

CONCLUSIONS

Medication adherence appeared to be unaffected by patient reimbursement timing but was affected by the level of patient out-of-pocket expenses. The absence of a correlation between medication adherence and timing of patient reimbursement might be explained by the relatively rapid reimbursement of expenses by insurance companies in Canada. Subjects with no patient out-of-pocket expenses at the point of service might be less adherent because they place less value on their medications than do patients who must pay even a small amount.

DISCLOSURES

This study was funded by Pfizer Canada, Montréal, Québec, Canada. Blais received research grants or honorarium from AstraZeneca, Pfizer Canada, Sanofi, Novartis, Almirall, GlaxoSmithKline, and Merck for research projects and co-chairs the AstraZeneca Endowment Pharmaceutical Chair in Respiratory Health. Després, Kettani, and Forget have no competing interests to declare. All authors contributed to the concept and design of the study. Data were collected by Blais and Forget. Data analysis was conducted by Després. The manuscript was written by Després and revised by all authors.

The Questionable Value of Having a Choice of Levels of Health Insurance Coverage

In most health insurance markets in the United States, consumers have substantial choice about their health insurance plan. However additional choice is not an unmixed blessing as it creates challenges related to both consumer confusion and adverse selection. There is mounting evidence that many people have difficulty understanding the value of insurance coverage, like evaluating the relative benefits of lower premiums versus lower deductibles. Also, in most US health insurance markets, people cannot be charged different prices for insurance based on their individual level of health risk. This creates the potential for well-known problems of adverse selection because people will often base the level of health insurance coverage they choose partly on their health status. In this essay, we examine how the forces of consumer confusion and adverse selection interact with each other and with market institutions to affect how valuable it is to have multiple levels of health insurance coverage available in the market.

SOURCES OF GEOGRAPHIC VARIATION IN HEALTH CARE: EVIDENCE FROM PATIENT MIGRATION

We study the drivers of geographic variation in US health care utilization, using an empirical strategy that exploits migration of Medicare patients to separate the role of demand and supply factors. Our approach allows us to account for demand differences driven by both observable and unobservable patient characteristics. Within our sample of over-65 Medicare beneficiaries, we find that 40-50 percent of geographic variation in utilization is attributable to demand-side factors, including health and preferences, with the remainder due to place-specific supply factors. JEL: H51, I1, I11.