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ANALYSIS & COMMENTARY

Health AffairsVol. 32, No. 7: States, Medicaid & Countdown To Reform
ANALYSIS & COMMENTARY


BEHAVIORAL ECONOMICS HOLDS POTENTIAL TO DELIVER BETTER RESULTS FOR PATIENTS,
INSURERS, AND EMPLOYERS

 * George Loewenstein
   ,
 * David A. Asch
   , and
 * Kevin G. Volpp

Affiliations
 1. George Loewenstein ( gl20@andrew.cmu.edu ) is a professor of economics and
    psychology at Carnegie Mellon University, in Pittsburgh, Pennsylvania, and
    director of behavioral economics at the Center for Health Incentives and
    Behavioral Economics at the Leonard Davis Institute, University of
    Pennsylvania, in Philadelphia.
 2. David A. Asch is a member of the Center for Health Equity Research and
    Promotion at the Philadelphia Veterans Affairs Medical Center. He is also a
    professor at the Perelman School of Medicine and the Wharton School and
    director of the Center for Health Care Innovation, all at the University of
    Pennsylvania.
 3. Kevin G. Volpp is a member of the Center for Health Equity Research and
    Promotion at the Philadelphia VA Medical Center. He is also a professor at
    the Perelman School of Medicine and the Wharton School and director of the
    Center for Health Incentives and Behavioral Economics at the Leonard Davis
    Institute, all at the University of Pennsylvania.

PUBLISHED:July 2013No Accesshttps://doi.org/10.1377/hlthaff.2012.1163
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ABSTRACT

Many programs being implemented by US employers, insurers, and health care
providers use incentives to encourage patients to take better care of
themselves. We critically review a range of these efforts and show that many
programs, although well-meaning, are unlikely to have much impact because they
require information, expertise, and self-control that few patients possess. As a
result, benefits are likely to accrue disproportionately to patients who already
are taking adequate care of their health. We show how these programs could be
made more effective through the use of insights from behavioral economics. For
example, incentive programs that offer patients small and frequent payments for
behavior that would benefit the patients, such as medication adherence, can be
more effective than programs with incentives that are far less visible because
they are folded into a paycheck or used to reduce a monthly premium. Deploying
more-nuanced insights from behavioral economics can lead to policies with the
potential to increase patient engagement and deliver dividends for patients and
favorable cost-effectiveness ratios for insurers, employers, and other relevant
commercial entities.

TOPICS
 * Patient engagement
 * Premiums
 * Co-payments
 * Health insurance benefit design
 * Pharmaceuticals
 * Affordable Care Act
 * Health care providers
 * Payment
 * Cost-effectiveness
 * Costs and spending



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ARTICLE METRICS

Citations: Crossref 120




--------------------------------------------------------------------------------

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--------------------------------------------------------------------------------

History

Published online 1 July 2013



--------------------------------------------------------------------------------

Information

Project HOPE—The People-to-People Health Foundation, Inc.

--------------------------------------------------------------------------------

ACKNOWLEDGMENTS

All three authors have consulted for VAL Health, a health consulting company.
George Loewenstein and Kevin Volpp have consulted for CVS Caremark and have done
research with support from Humana, CVS Caremark, Discovery, and Weight Watchers.
The opinions expressed are those of the authors and not the Department of
Veterans Affairs.

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