A December article in Managed Healthcare Executive explores the convergence of behavioral economics in healthcare, including Lowe’s experience with Express Scripts’ Select Home Delivery program.
The article includes quotes from Express Scripts Chief Scientist Bob Nease; Center for Cost-Effective Consumerism advisory board members Alan Garber and David Laibson; ignite09 symposia partners Emma Hoo of the Pacific Business Group on Health and Jeff Munn of Hewitt Associates; and Bob Ihrie of Lowe’s.
Tim Harford takes us on a tour of trust, which turns out to be one of the most valuable side effects of social norms. Some economists believe that trust – defined broadly – fully explains the difference between per capita income across countries. The implication is that 99.5% of our economic output is due to trust, with the remaining 0.5% due to hard work. (I don’t know where alimony fits into that equation.)
Trust operates in all sorts of ways, from saving money that would have to be spent on security to improving the functioning of the political system. But above all, trust enables people to do business with each other. Doing business is what creates wealth.
Center for Cost-Effective Consumerism board member David Laibson makes an appearance as well, describing a laboratory experiment in which trust increases based on some simple social cues (e.g., having a partner).
Following the success of our D.C. Ignite symposium, we’re holdingtwo regional events this month to continue discussion on the convergence of behavioral economics and healthcare. The first, on the Stanford University campus this week, drew 66 attendees and generated lively discussion about the challenges of engaging members in their benefit programs.
Key takeaways from the event include:
Without behavior change, there is no real healthcare reform
The United States spends more money as a percentage of gross domestic product on healthcare than peer countries such as Canada and the United Kingdom, yet our health outcomes don’t measure up — for example, our life expectancy lags behind. Meanwhile, the Medicare system is failing, with costs soaring and bankruptcy looming. Alan Garber — Stanford professor of medicine, general internist, and Center for Cost-Effective Consumerism advisory board member — argues that the time for action is now, before the country faces an emergency that forces dire choices, and that behavior change is a crucial component of healthcare reform.
If you want members to behave a certain way, make it easy now
David Laibson, Harvard professor and Center for Cost-Effective Consumerism advisory board member, shares his experience in improving 401(k) participation rates. He and his colleagues started down the path of rational economics, providing education and communication on the benefits of 401(k) enrollment. When that failed, they tried various default and active choice options, eventually growing participation from about 40% to 80% or higher with opt-out programs. From this specific experience, Laibson offers a generalization: Whatever you want members to do, make it easy now.
Tap the power of latent demand
Most approaches to the pharmacy benefit attempt to change members’ preferred behaviors; we assume they don’t want to use particularly programs and services because they don’t understand the advantages. But Express Scripts’ experience with Select Home Delivery has shown us that many members already prefer the behavior we’d like them to take; they just don’t follow through for some reason (e.g., procrastination, forgetfulness, etc.). The key, then, isn’t sending out more educational materials but modifying programs to tap that latent demand, improving uptake of the preferred behavior without causing any member disruption.
