Wednesday, February 20, 2013

Helping Others Change Their Behavior

A lot of what I blog about related to health economics is about people changing their own behaviors or the government/insurers/employers giving people incentives to change their behaviors.  In this morning's Johns Hopkins Bloomberg School of Public Health newsfeed, there was a link to a New York Times blog piece about wanting to change others' behavior.  In particular, this entry was about changing parens' behavior when "parents" are in their 60's (or older) and are not taking good care of their health.

The blog piece was written almost exclusively from a psychological change point of view, although there were a few references to things that could be done inexpensively.  (For example, a trip to the park with grandchildren that would involve a lot of time walking.)

However, most of the steps could be interpreted hyst as easily in an economic context as in a psychological context.

People make decisions based on the information they have available.  One thing that people may need is more information.

There are varying ways of providing additional information.  Some have a high disutility.  This could be from the way in which the information is shared (a patronizing tone of voice) or the time cost of obtaining the information (here, read this book).  The less disutility from obtaining the information the better.

There are varying costs of engaging in healthier activity.  If a healthier diet could begin with fixing a meal for older parents or taking them out with the family (or just grandkids) for an activity they like anyway that happens to have a health benefit, then the marginal cost of engaging in the healthy behavior is diminished.

So, some simple economic principles--increase information in ways that do not create large disutilities and that involve minimal marginal costs in terms of time or money.  With any of these, people would be expected to make a shift toward the now less costly healthy behaviors.  The key question is how much the behaviors will change in response to the changes in incentives.  And for that, we would need empirical evidence (like elasticities of demand for healthier activities or meals when the time and monetary prices change) to supplement the economic theory.

The key here is, as I raised at the beginning, that instead of complete self-motivation or governmental inposition, we are now relying on private citizens who are willing to use some of their own resources to benefit others.  Thinking from a societal perspective, the final key would be to determine how to avoid having the government (if it also wanted to play a role) crowd out what individuals are willing to do for each other.  

Thursday, February 14, 2013

Baby Boomer Health

The Washington Post published an article earlier this week presenting data that Baby Boomers are in worse health than their parents were at the same age.  In an era of every increasing medical care expenditures this is an interesting phenomenon to observe.

It is important to note that the study is based on survey research.  The survey question is about rating your own health on a scale of excellent, very good, good, fair, and poor.  One thing that may be happening is that people may have higher standards for what "excellent" health in middle age means.  Maybe excellent health in the generation of Baby Boomers' parents was about functionality and work.  While today's Baby Boomers see some of their peers running marathons and participating in other activities that require very high levels of health and fitness.  So, perhaps the fact that this is a relative and not absolute measure obscures some of what is going on as people may say, "I could never do that, so while I'm in pretty good health I must not be in excellent health, so I'll mark very good."  I have no data to back this up.  I am simply pointing to a difficulty with survey research.

Now, there are other important indicators here.  10% more of the Baby Boomers in middle age are obese compared with what their parents were at the same age (39 percent versus 29 percent as reported in the Washington Post article).  Could that make a difference?  You bet!  Does that mean that the Baby Boomers are any less happy?  Perhaps not, because some of what leads to obesity are choices that we make about career and family.  Different careers.  Different family activities.  Different amounts of time spent playing sports rather than watching sports.  Different amounts of time spend in the car rather than walking.  All have an impact on health.  Their impact on happiness is not as clear.

The Washington Post article also pointed out that the study noted different prevalence of diabetes and use of a cane or walker at middle age.

The article also mentioned that this may lead to a longer life with not so healthy extra years.  This is not necessarily the desired outcome.  There has been an enormous amount of work done to try to figure out how to compress morbidity.

The economic choices that we make before middle age have a great impact on out health.  Our health in middle age will shape the economic choices of the rest of our lives.  What lessons will younger generations be able to learn about planning for their future health and economic well-being?  

Wednesday, February 6, 2013

Insurers Covering Contraception

Last week's Wall Street Journal had a piece on new contraception opt out regulations--as a follow-up to what was originally required coverage under the Affordable Care Act. (I am not sure if the link I have provided is for an article free to the public but there are many sources of information on this new regulation.)

Contraceptives have multiple medical uses.  But clearly one use is to prevent unwanted pregnancies.  When it comes to whether this should be a required part of an insurance plan we can set all the religious arguments aside and look at some basic economics.

Insurance is meant to provide reimbursement when the unexpected happens.  Contraceptives are intended to prevent something from happening.  And, while we may have a discussion about just how much control each person in a relationship feels he or she has, pregnancy will only happen if two people choose to have intercourse.  Thus, the thing that is to be prevented is under the control of the individual.  This is different form exposure to the influenza virus where the person can take steps to reduce exposure and to reduce transmission even if he has been exposed, but he cannot completely avoid exposure.  A woman could completely avoid the risk of pregnancy and she has control over how much of that risk she is taking--even without contraceptives.

So, we are asking for insurance to cover something over which we have control.  Let's make an assumption that all women want the contraceptives.  (Debatable, but let's run with it for a moment.)  Then, what are we doing.  We are asking an insurer to cover the cost of something that all women will use.  This involves a layer of administration that would be unnecessary if the women paid for it themselves.

So, as a society we would spend less if women paid for it themselves.  We are setting up a policy that could lead to more spending as a result.  One might ask--aren't there better things to use societal resources on than administering a program to pay for contraception?  Or perhaps more economically speaking--if the government has decided that it is important to subsidize the purchase of a preventive good or service, is there a more efficient way to do that than to wrap it into health insurance.  And, when I think about efficiency, I am thinking about also including the costs of getting it passed in the first place and then regulating it--neither of which has been negligible.

If we want to spread the costs of paying for contraception to those who have more resources available there are other ways to do it.

If I understand what the new regulations say, if an employer opts out, individuals will be able to get an additional insurance policy at no out of pocket costs.  I am not sure of the logic on this one, but it seems like whether people in the employer are paying for it directly (if the employer chooses not to opt out) or indirectly (as I would have to think that a product with no premium would be wrapped into the administrative costs for everyone else), the employees of employers who opt out would still end up with at least some share of the cost for this--it would just be even more diffused.

In this, I am not taking a stand on whether we should be subsidizing contraception for low income mothers.  That is for policy makers, religious, and ethicists who think about the meaning of contraception to decide. What I am trying to emphasize is that this may be more costly than just having women pay for it themselves and we are wrapping what appears to be a public health issues (or at least a population health issue as we look at the health of the population including mothers and newborns) into a private health insurance mechanism that may or may not be the most efficient way or helping to facilitate access if that is the goal.