The Illusion of Choice in Health Care Consumerism

The rhetoric of “choice” has been pervasive in U.S. health care reforms and the consumerist health care culture for a long time. The idea is that giving patients more choices over doctors and insurance plans would increase competition in the industry and consequently improve the quality of health care patients receive. However, Allison Hoffman made a convincing case debunking this seemingly intuitive idea in this week’s HLS health law workshop. She argued that reform efforts aimed at increasing consumer choice often fail to empower patients to make better health care choices, and instead, create a wasteful market bureaucracy that is anathema to free market ideals. Her argument reminds me of one of my earlier blog posts on U.S. drug prices, where I compared insurance companies to the Central Planner in a socialist economy. Indeed, there are ironically many institutions and features in the so-called market-driven U.S. health care system that resemble authoritarian and technocratic practices that are directly against the principles of a laissez-faire health care economy.

I will expand Professor Hoffman’s argument by making a few additional points. First, her presentation discusses a number of revealing ways in which the market-based competition creates a false sense of choice in health care. Even Obamacare, which is supposed to offer patients more choices in the Exchange, fails to transcend the falsity of consumer choice. Most patients do not make the best available choice, even when they’re “nudged” by experts in the decision-making process. I’d like to also point out that even if consumers are capable of making the best choice for themselves, whether by thinking with perfect rationality or by accepting “expert opinions,” the choice they ultimately make could still be suboptimal or even disastrous. To understand why this might be the case, it is important to realize that the target population for Obamacare is the minority of people who do not have adequate employer-sponsored plans. Thus, many people enrolled in Obamacare may not have stable jobs and income levels. Nonetheless, the mechanism that determines how much premium for which one qualifies is predicated on an estimation of that individual’s projected annul earnings – a number that is hard to know in advance for those without stable income levels. Hence, a person who made the “right choice” by selecting a silver plan with only $100 monthly premium after receiving a $900 subsidy to cover a $1,000 plan at the beginning of a year may find herself owing the federal government thousands of dollars at the end of the tax year, if she happens to end up with a much higher income level. Had she known the future outcome, she would have chosen a less expensive plan to begin with, but either choice would be a gamble for her. This arbitrariness must be attended to in future health reforms.

Second, the “moral hazard” rationale – that patients would engage in behaviors that undermine their own health if they are insured or that they would abuse their insurance during sickness – could actually influence consumer behaviors. To counter moral hazard, many advocate increasing patients’ cost-sharing obligations so that they would be less likely to abuse their insurance. While it is true that no one is likely to deliberately hurt themselves just because they have insurance to cover losses, some moral hazard based insurance policy may actually cause patients to behave differently or prevent people with “unhealthy” behaviors from joining. In my own research on HCSMs – alternative “non-insurance” cost-sharing ministries run by evangelical Christians “bearing each other’s medical costs” – have strict eligibility requirements and reimbursement restrictions on lifestyle choices. For example, medical costs resulting from tobacco or alcohol would not be reimbursed. Thus, if someone has tobacco-induced lung cancer, no cost sharing might be available. Additionally, STDs caused by sexual activities outside of heterosexual marriage would not be covered. These “moral hazard” policies could have a large deterrence effect on individual behaviors – making them strong “arbiters of morality.” Thus, under HCSMs, the costs to build a censoring mechanism based on moral hazard turn out to be saving these ministries a significant amount of money. Yet, the autocratic element of such measures remains strongly inconsistent with free market ideas.

Lastly, I’d like to suggest a rather radical idea that may be too far-fetched to even think about in our current political environment. I wonder whether the fact that market competition fails to produce good health care outcomes has more to do with the market itself than the principle of competition. In other words, could competition work better if a competitor with significant competitive edge enters the deadlocked American health care marketplace? What if, hypothetically, insurance companies from Canada and Mexico start contracting with American providers and provide appealing, low cost choices for consumers? Or, these transnational insurance companies could even create border-crossing incentives for American patients to use foreign providers at a significantly cheaper cost? Since drug prices and medical expanses are significantly lower in other developed countries, allowing transnational health care access might create competitions that would not be possible for any American insurance company. I know that many Taiwanese Americans seek healthcare back in Taiwan, where high-quality universal health care is the norm. If such transnational health-seeking endeavors could be happening much more frequently and closer to American borders, it might be able to disrupt existing norms in the U.S. market and potentially drive health care costs down. Similarly, a radically cheaper federal-insurance option or single-payer system might also create such disruptions and norm-shifting competitions. Nonetheless, these conversations can never happen unless there is enough political will to seriously question some fundamental assumptions our current health care system relies on.

Making a Moral Case for Regulation

Valerie Braithwaite’s chapter in the ANU’s Press’s new Regulatory Theory: Foundations and Applications provides a general introduction to looking at regulation through a social lens.  If regulation is so great, she asks, why do so many people approach it with fear and loathing?

I won’t rehearse her argument here, but instead skip to some key points about how we who appreciate the social good provided by regulation can best make that case. One of ten suggestions she concludes with was particularly resonant to me: “Engage with dissent on moral grounds. Is it right morally to steer the flow of events in the way proposed?”

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NOW AVAILABLE FOR PRE-ORDER! Nudging Health: Health Law and Behavioral Economics

This volume, edited by I. Glenn Cohen, Holly Fernandez Lynch, and Christopher T. Robertson, stems from the Petrie-Flom Center’s 2014 Annual Conference “Behavioral Economics, Law, and Health Policy.” Pre-order your copy today!

Nudging HealthBehavioral nudges are everywhere: calorie counts on menus, automated text reminders to encourage medication adherence, a reminder bell when a driver’s seatbelt isn’t fastened. Designed to help people make better health choices, these reminders have become so commonplace that they often go unnoticed. In Nudging Health, forty-five experts in behavioral science and health policy from across academia, government, and private industry come together to explore whether and how these tools are effective in improving health outcomes.

Behavioral science has swept the fields of economics and law through the study of nudges, cognitive biases, and decisional heuristics—but it has only recently begun to impact the conversation on health care. Nudging Health wrestles with some of the thorny philosophical issues, legal limits, and conceptual questions raised by behavioral science as applied to health law and policy. The volume frames the fundamental issues surrounding health nudges by addressing ethical questions. Does cost-sharing for health expenditures cause patients to make poor decisions? Is it right to make it difficult for people to opt out of having their organs harvested for donation when they die? Are behavioral nudges paternalistic? The contributors examine specific applications of behavioral science, including efforts to address health care costs, improve vaccination rates, and encourage better decision-making by physicians. They wrestle with questions regarding the doctor-patient relationship and defaults in healthcare while engaging with larger, timely questions of healthcare reform.

Nudging Health is the first multi-voiced assessment of behavioral economics and health law to span such a wide array of issues—from the Affordable Care Act to prescription drugs.

Read the introduction on SSRN and pre-order your book now!

Two Cheers for Corporate Experimentation

Rubin's vase2By Michelle Meyer

I have a new law review article out, Two Cheers for Corporate Experimentation: The A/B Illusion and the Virtues of Data-Driven Innovation, arising out of last year’s terrific Silicon Flatirons annual tech/privacy conference at Colorado Law, the theme of which was “When Companies Study Their Customers.”

This article builds on, but goes well beyond, my prior work on the Facebook experiment in Wired (mostly a wonky regulatory explainer of the Common Rule and OHRP engagement guidance as applied to the Facebook-Cornell experiment, albeit with hints of things to come in later work) and Nature (a brief mostly-defense of the ethics of the experiment co-authored with 5 ethicists and signed by an additional 28, which was necessarily limited in breadth and depth by both space constraints and the need to achieve overlapping consensus).

Although I once again turn to the Facebook experiment as a case study (and also to new discussions of the OkCupid matching algorithm experiment and of 401(k) experiments), the new article aims at answering a much broader question than whether any particular experiment was legal or ethical. Continue reading

Bioethicist Art Caplan: Deep-Fat Fryers in Schools is Business, Not Freedom

A new piece by contributor Art Caplan on NBC News:

How bad is the obesity epidemic among kids in America?

Bad enough that 69 percent of young adults in Minnesota cannot serve in the military due to obesity-related health problems, according to a recent report “Too Fat, Frail and Out-of-Breath to Fight,” from a group of retired generals.

And how is one public official responding to the child obesity crisis? With a call for more fried foods in school. The Texas Agriculture Commissioner, Sid Miller, says he wants to restore deep-fat fryers in Texas school cafeterias. In his mind, this “isn’t about french fries, it’s about freedom.”

The freedom to develop cardiovascular disease?

School cafeterias are the front line on the battleground for childhood obesity prevention. They serve as test kitchens for interventions designed to increase the consumption of fruits and vegetables and decrease the intake of processed and fried foods. In 2012 the USDA and First Lady Michelle Obama announced standards for more nutritious school food. As part of the rules, schools are expected to serve fruits, vegetables and whole grains daily, and limit calories in servings. […]

Read the full article here.

Exploring The Significant State-To-State Variation In Marketplace Enrollment

This new post by the Petrie-Flom Center’s Academic Fellow Matthew J. B. Lawrence appears on the Health Affairs Blog, as part of a series stemming from the Third Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 30, 2015.

What role did geography, advertising, community, Navigators, and the controversy surrounding the Affordable Care Act (ACA) play in consumers’ decisions whether to purchase health insurance in the individual marketplaces? The percentage of potential exchange marketplace enrollees who actually made use of the marketplace to purchase insurance varied widely from state to state for 2014 and 2015.

As of February 22, 2015, for example, there were eight states with enrollment at 50 percent or greater and eight states with enrollment at 25 percent or lower. (Per the Kaiser Family Foundation, the top eight were Vermont, Florida, Maine, DC, Delaware, Pennsylvania, New Hampshire, and North Carolina. The bottom eight were Colorado, Ohio, Alaska, Hawaii, North Dakota, Minnesota, South Dakota, and Iowa).

It would be an interesting and challenging task to explain this variation empirically. Generating reliable statistical inferences from inter-state comparisons is notoriously difficult, and the variables at play here range from the easily measured (percent of population eligible for subsidies, navigator grant amounts, number of participating insurers, premiums) to the not-so-easily measured (enthusiasm for Obamacare, efficacy of state or federal outreach efforts, geography, education, availability and usefulness of charity care and emergency Medicaid, functionality of state exchange website, population health, availability of health services). […]

Read the full post here.

Going for gold: behavioral science reveals new biases in ACA exchange shopping

A new New England Journal of Medicine commentary by Peter A. Ubel, M.D., David A. Comerford, Ph.D., and Eric Johnson, Ph.D. highlights significant flaws in the way information is presented to insurance shoppers on state and federal exchange websites. The authors present original survey data to support the argument that subtle aspects of current website designs inappropriately bias decision making. The authors make their case most strongly in an analysis of the well-known gold, silver and bronze labels:

Consider the decision to lump health plans into categories with names such as bronze (for low monthly premiums and high out-of-pocket costs) and gold (for higher monthly premiums and lower out-of-pocket costs). These labels could have unintended effects on people’s attitudes toward which plans are best. After all, gold, silver, and bronze convey best, second best, and third best through association with sporting events, but the best plan for one enrollee will be different from the best plan for another.

To test whether such associations might influence people’s perceptions of insurance plans, two of us recruited a convenience sample of participants from public buses in Durham, North Carolina, and asked them which category of plans they would look at first if they were shopping for health insurance. To half the people, we described the gold plans as having higher monthly premiums and lower out-of-pocket costs — the language used by many exchanges. For the other half, we switched the gold and bronze plans, describing the gold plans as having lower monthly premiums and higher out-of-pocket costs.

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Book Review Review: Sunstein’s “Valuing Life”

A couple weeks ago the Financial Times ran a book review (behind a pay wall) by Mark Vandevelde of Cass Sunstein’s “Valuing Life: Humanizing the Regulatory State” (linked here). The book review carries the tagline “Beware the paternalist in libertarian garb.” I happen to have read the book and, since the Financial Times beat me to the job of reviewing, I thought I would use the holiday lull to review the review.

In short, for reasons I explain in perhaps too much detail below, the review misses the mark in a way foreshadowed by the tagline. The review takes issue with Sunstein the libertarian paternalist, the Sunstein who advocated a class of choice-respecting regulations in his book “Nudge.” But “Valuing Life” is not “Nudge”; it is about the nitty-gritty of how we quantify the costs and benefits of all sorts of regulations, not the desirability of any particular sort of regulation (or even regulation in general). On the latter topic Sunstein has much to say in his book, Vandevelde’s review not so much.

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Inaugural SG Global Chat: Harvard Effective Altruism Expanding to HSPH

SG Global Chat
Harvard Effective Altruism — Using Evidence and Reason to Maximize the Impact of Efforts to Make the World Better

October 8, 2014 12:30-1:20pm, Kresge G-2

Harvard Effective Altruism (HEA) is a student group at Harvard College and Harvard Business School. The group is dedicated to spreading the ideas of effective altruism to better the global community. Previous HEA speakers include Peter Singer, Nick Bostrom, Max Tegmark and Thomas Pogge. This year, HEA plans to became a Harvard University-wide student organization. Come to the first SG Global Chat of the year to hear more about HEA, the events the group has planned, and ways to get involved. Presented by Anders Huitfeldt (ScD Candidate in Epidemiology) and Eric Gastfriend (Student at Harvard Business School).

Light lunch provided. Any questions email studentgov at hsph.harvard.edu.

Conference on Digital Experimentation (CODE) at MIT Sloan

Screenshot 2014-09-30 18.19.55Another stop on my fall Facebook/OKCupid tour: on October 10, I’ll be participating on a panel (previewed in the NYT here) on “Experimentation and Ethical Practice,” along with Harvard Law’s Jonathan Zittrain, Google chief economist Hal Varian, my fellow PersonalGenomes.org board member and start-up investor Ester Dyson, and my friend and Maryland Law prof Leslie Meltzer Henry.

The panel will be moderated by Sinan Aral of the MIT Sloan School of Management, who is also one of the organizers of a two-day Conference on Digital Experimentation (CODE), of which the panel is a part. The conference, which brings together academic researchers and data scientists from Google, Microsoft, and, yes, Facebook, may be of interest to some of our social scientist readers. (I’m told registration space is very limited, so “act soon,” as they say.) From the conference website:

The ability to rapidly deploy micro-level randomized experiments at population scale is, in our view, one of the most significant innovations in modern social science. As more and more social interactions, behaviors, decisions, opinions and transactions are digitized and mediated by online platforms, we can quickly answer nuanced causal questions about the role of social behavior in population-level outcomes such as health, voting, political mobilization, consumer demand, information sharing, product rating and opinion aggregation. When appropriately theorized and rigorously applied, randomized experiments are the gold standard of causal inference and a cornerstone of effective policy. But the scale and complexity of these experiments also create scientific and statistical challenges for design and inference. The purpose of the Conference on Digital Experimentation at MIT (CODE) is to bring together leading researchers conducting and analyzing large scale randomized experiments in digitally mediated social and economic environments, in various scientific disciplines including economics, computer science and sociology, in order to lay the foundation for ongoing relationships and to build a lasting multidisciplinary research community.

Research Assistant III: Work with Professors Eyal, Hammitt, Freedberg, Kuritzkes, and collaborators on HIV cure studies’ risks, risk perceptions, and ethics

The research assistant will work with the principal investigator Nir Eyal and collaborators from the Harvard TH Chan School of Public Health, Duke University, Massachusetts General Hospital, and the Brigham and Women’s Hospital as well as the ACTG HIV trial site network. The multidisciplinary team uses methods of clinical epidemiology, economics, simulation modeling, and normative theory to predict risks in early-phase HIV cure studies, assess how much likely candidates for participation understand those risks, and make ethical recommendations on the conduct of HIV cure studies.

The research assistant will help prepare, conduct and analyze a pilot survey expected to take place in a US site of the AIDS Clinical Trials Group (ACTG). The survey will assess perceptions of HIV cure and of cure study risks. The research assistant will also promote other research and grant-related activities, through literature reviews and assistance in the preparation of abstract, poster, and manuscripts for publication, grant applications, a simple project website (using Harvard’s user-friendly OpenScholar platform), and slides for lectures and seminars. The research assistant will be in touch with top researchers in HIV cure, medical decision making, and ethics from around the country, to facilitate our meetings, a workshop, and regular conversations to plan the research and debate ethical issues around early-phase HIV cure studies.

For the full job ad:
https://jobs.brassring.com/1033/asp/tg/cim_jobdetail.asp?partnerID=25240&siteID=5341&AReq=33776BR

Of Morals and Smartphones

By Emily Largent

Although many lament that the ubiquity of smartphones has contributed to a recent decline in etiquette, a study published this week in Science suggests that smartphones’ ubiquity may make them a valuable–if surprising–tool for studying modern morality.

Most moral judgment experiments are lab-based and driven by hypotheticals. By contrast, this was a field experiment that focused on the moral judgments people make in their daily lives. The authors recruited 1,252 adults from the U.S. and Canada. Participants were contacted via text message five times each day over a three-day period. Each time, they were asked “whether they committed, were the target of, witnessed, or learned about a moral or immoral act within the past hour.” For each moral or immoral event, participants described via text what the event was about; provided situational context; and provided information about nine moral emotions (e.g., guilt and disgust). Political ideology and religiosity were assessed during an intake survey.

Participants reported a moral or immoral event on 28.9% of responses (n = 3,828). Moral and immoral events had similar overall frequencies.  The authors found political ideology was reliably associated with the types of moral problems people identified.  Liberals mentioned events related to Fairness/Unfairness, Liberty/Oppression, and Honesty/Dishonesty more frequently than did conservatives.  By contrast, conservatives were more likely to mention events related to Loyalty/Disloyalty, Authority/Subversion, and Sanctity/Degradation.  Continue reading

To Watch: Rural Enrollment on Exchanges

As we gear up for a second year of exchange marketplace enrollment, one issue to keep an eye on is the success we have at getting people who live in rural areas onto the healthcare rolls.  As pointed out in today’s Kaiser Health News write-up (here), there is potential for the ACA to increase rural health disparities, even while it gets more people insured, because many of the efforts to encourage enrollment–think navigators, enrollment centers, advertising, and outreach–just work better in urban areas.  For some reading on this issue, see the Kaiser Family Foundation’s posting here, the HHS’s Health Resources and Services Administration’s report here, and the Rural Health Foundation’s roundup here.

Harvard Effective Altruism: an event today, Michael Kremer on Sept. 10, and a fellowship opportunity

A message from Harvard Effective Altruism:

On Saturday, Sept. 6 at 3pm in Sever 111, we are holding a giving game / donation discussion and an information session for Harvard students interested in our organization. We’ll explain what effective altruism is and what HCEA does here on campus. If you’re new to HCEA, you should definitely check it out!

Wednesday, Sept. 10 at 4:30pm in Science Center Hall A: Prof. Michael Kremer – a development economist at Harvard – will give a talk entitled “How can individuals reduce global poverty?” He’ll discuss the ways that individuals can use both their money and their careers to contribute to poverty reduction and international development.

All semester long! HCEA is hosting its third Philanthropy Fellowship program for Harvard undergrads and graduate students. Fellows will attend talks from speakers like Harvard professor Steven Pinker, Rob Mather of the Against Malaria Foundation, and Center for Applied Rationality president Julia Galef; learn about effective altruism at weekly dinners with other fellows and speakers; get to know likeminded students at discussions and social events; and fundraise for effective charities! You can find more information and apply on our website before 11:59pm on Sunday, Sept. 14th.

We hope to see soon! Altruistically yours,
Ales and John

Michelle Meyer: Misjudgements Will Drive Social Trials Underground

Michelle Meyer has a new piece in Nature – an open letter on the Facebook study signed by a group of bioethicists (including PFC’s Executive Director Holly Fernandez Lynch) in which she argues that a Facebook study that manipulated news feeds was not definitively unethical and offered valuable insight into social behavior.

From the piece:

“Some bioethicists have said that Facebook’s recent study of user behavior is “scandalous”, “violates accepted research ethics” and “should never have been performed”. I write with 5 co-authors, on behalf of 27 other ethicists, to disagree with these sweeping condemnations (see go.nature.com/XI7szI).

We are making this stand because the vitriolic criticism of this study could have a chilling effect on valuable research. Worse, it perpetuates the presumption that research is dangerous.”

Read the full article.

Art Caplan: Facebook Experiment Used Silicon Valley Trickery

Art Caplan has a new opinion piece on NBCNews about a recently published study in The Proceedings of the National Academy of Sciences, where a  Facebook scientist teamed up with two academics to subtly tweak the news feeds of nearly 700,000 Facebook users.

From the piece:

“The question of whether or not an experiment is ethical hinges upon the question of “informed consent.” Generally, this means that a subject in a study needs to have basic information about the study he’s participating in, understand the nature of the experiment and its risks and benefits, and have the ability to withhold his consent without fear of harm or retribution.

The authors of the study argue that they obtained subject consent: Their manipulation of Facebook users’ emotions was “… consistent with Facebook’s Data Use Policy, to which all users agree prior to creating an account on Facebook, constituting informed consent for this research.” This is nonsense; it’s not informed consent. It is an old Silicon Valley trick for systematically eliminating the legal rights of its customers.”

Read the full article.

Sunstein Keynote at Petrie-Flom Annual Conference featured in Harvard Law Today

sunstein-atlanticHarvard Law Today has posted a feature on Cass Sunstein’s keynote address at the 2014 Petrie-Flom Center Annual Conference, “Behavioral Economics, Law, and Health Policy.” Sunstein, who is the Robert Walmsley University Professor at Harvard Law School and the co-author of Nudge: Improving Decisions About Health, Wealth, and Happiness, addressed the opening day of the conference on May 2, 2014, on the subject of “Choosing Not to Choose.”

Full video of the conference will be available soon via the Petrie-Flom Center’s website. In the meantime, you can read about and view Sunstein’s keynote address here.

#BELHP2014 7: Defaults in Health Care

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

Our esteemed moderator Gregory Kurfman of the New England Journal of Medicine oversaw a session that dug deep into how defaults work and why. The result was a better understanding of the regulatory tool most associated with soft paternalism, but doubt about whether its operation in healthcare is as libertarian or asymmetrically paternalistic as advertised.

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#BELHP2014 Plenary 3, Michael Hallsworth, UK Behavioral Insights Team

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

Today’s lunchtime plenary, Applying Behavioural Insights in Theory and in Practice, was presented by Michael Hallsworth, Principal Advisor, The Behavioural Insights Team (BIT)

Michael described the BIT as a “social purpose” company, originally founded within the UK government, but separated from it (in part) in February 2014.  The company is now partly owned by government, partly owned by its employees, and partly owned by the innovation charity, Nesta.  Michael indicated that when the Team was started, there was genuine doubt about whether behavioral interventions could make a difference or whether this was just a trendy new fad.  The Team responded by implementing rigorous methods of testing, measuring, and evaluating its proposals.

What does the BIT do?  Michael explained that its goal is to incorporate empirical findings about behavior into policy making. Although it has been colloquially referred to as the “Nudge Unit” and Richard Thaler does indeed advise them, the BIT is not actually a nudge unit.  Its first question is not how to nudge but rather how to solve policy problems.  It is a fact that policy tends (and is intended to) influence behavior.  Behavioral insights can allow governments and other policymakers to enhance and assess policy options, and offer new ones.  Put another way, Michael explained that there is not a distinction between policy-making and influencing behavior, they are one and the same.

Michael also argued that we should use behavioral insights as a lens through which to see all government action.  Moreover, whenever the government has decided to act, it should do so in way that it is actually most effective; there is a moral duty to maximize effectiveness and to spend limited government resources wisely.

Michael then went on to describe seven different ways of applying behavioral analysis to show that the best option is to:

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