Behavioral Economics: Evaluation of a Rewards Program for Preventive Care

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DESCRIPTION (provided by applicant): The Affordable Care Act increased coverage for preventive health services, but research has shown that removing out-of-pocket costs will only have a limited impact on the discrepancy between recommended and actual use. Patient incentives have been promoted as a mechanism to increase receipt of preventive care. The field of behavioral economics demonstrates that individuals' decision making routinely and in predictable ways deviates from assumptions underlying neoclassical economics. Making good decisions becomes particularly hard when choices are complex, involve uncertainty, or involve tradeoffs between current and future costs/ benefits. These are central features of preventive care and contribute to why individuals are less likely to obtain preventive care than (similarly effective) curative services. Incentive programs that incorporate insights from behavioral economics may be more successful, although experience with them is limited. An unusually innovative preventive care incentive program that incorporates many of the lessons of behavioral economics has been pioneered by Discovery, a health insurance company operating in South Africa, the United States, the UK, and China. In their program, the receipt of preventive care services "earns" points and the points can then be used for gifts such as discounted travel and retail items. These types of incentive programs have significant potential to improve preventive care, but there have been no empirical evaluations of their impact. Our proposed project will analyze whether these design features increase the use of preventive services and evaluate whether this could be a cost-effective approach for a health insurer. We will focus our analysis upon recommendations made by the U.S. Preventive Task Force. Our primary statistical approach is a difference-in- difference analysis (pre/post of individuals becoming eligible for new benefits with control groups, i.e. individual only having health insurance, but not participating in the reward program).