When is the last time you took a good, hard look at your health insurance options? Do you know what changes were made to your plan last year?

If the answer is “no,” you are not alone.

According to a new study by Maria Polyakova, assistant professor of health research and policy and Stanford Health Policy core faculty member, most Medicare Part D enrollees do not change their plans from year to year — even though plans can change drastically.

The study, recently published in the American Economic Journal: Applied, asserts that nudging consumers to re-evaluate their coverage could save them around $500 per year in out of pocket spending and premiums.

What is Medicare Part D?

Implemented in 2006, Part D allows Medicare users to purchase prescription drug coverage. Plans are administered by private insurance companies, but are heavily subsidized and regulated by the federal government. Consumers choose from more than 30 plans in their home state and are able to switch during a yearly open-enrollment period.

About 40 million people in the United States are enrolled in a Part D plan.

But Polyakova finds that “people do not seem to be switching contracts very often. At the same time, the contracts are changing quite dramatically every year.”

Though the study does not examine why consumers failed to switch, the data suggests that changing plans can be costly. Not necessarily a financial cost, but likely one of time or energy.

Thoroughly examining more than 30 plans on a yearly basis can be a burden, and changes are not always easy to detect.

“There are many other features of Part D plans that may change, so even if premiums appear the same, insurers may have changed other parts of coverage, such as deductible levels, co-pays and co-insurance, as well as which drugs are included,” said Polyakova.

Because the Part D market as a whole is dynamic, consumers can lose money even when their plan is stable.

“Even if your specific plan doesn’t change much, it is possible that it is not the best plan anymore because other plans change.”

Consumers tend to stick with the plan they picked when they first signed up. As a result, the study observes that individuals with similar needs may find themselves enrolled in very different plans if they made their first enrollment choices in different years.

This suggests that while most people likely try to pick the best coverage initially, they do not tend to re-evaluate their coverage each year in a way that fits their needs.

How can we improve coverage choices?

Polyakova believes that if the U.S. government were to more actively remind people to re-examine their plans during open enrollment, they could save consumers 20 to 30 percent.

Some researchers worry that improving individual choices and encouraging consumers to update their coverage could negatively affect the insurance market through “adverse selection.”

For example, individuals who are fairly healthy might tend to choose less generous plans than those who are relatively sick. If all those in poorer health end up in one plan, and there are no relatively low-spending enrollees to counteract the risk, the generous plan can become unsustainable.

However, the study finds evidence suggesting that for Part D, reminders to re-examine plans are unlikely to cause issues from adverse selection.

The federal government has implemented risk adjustment policies, or ways to combat the negative effects of adverse selection, that work to keep the market from unraveling. The government provides higher subsidies for sicker patients, pays the majority of patient costs and caps insurers’ profits and losses.

“From the point of view of the government, it seems that it is worthwhile to remind people who are already enrolled to reconsider their choices and potentially explain the differences across plans,” said Polyakova.

As the Affordable Care Act (ACA) changes coverage for Part D plans, reminding enrollees to re-examine their choices will become even more important. The ACA will substantially increase coverage, and plans could change considerably as a result.

What does this mean for the health insurance market?

While the study focuses specifically on Medicare Part D, Polyakova believes these findings likely translate to other areas of health insurance, particularly coverage under the ACA, which has many similar policies.

“The idea that we should remind consumers to re-evaluate plans has already been quite influential in the ACA policy debate,” said Polyakova. “Policymakers are tracking whether consumers are switching plans from one year to the next.”

She argues that in a consumer-driven economy, people must be able to easily make choices between products, in this case health insurance plans, for the market to function. But because choosing takes so much time and plan features are not always transparent, the forces driving the market may become weak.

Educating people about the financial benefits of switching plans could help the insurance market get back on track.

“People should try to reconsider their health risk and their insurance choices during every enrollment period,” Polyakova said. “Because if they don’t, it could have serious financial implications.”

The Asia Health Policy Program at Stanford’s Shorenstein Asia-Pacific Research Center, in collaboration with scholars from Stanford Health Policy's Center on Demography and Economics of Health and Aging, the Stanford Institute for Economic Policy Research, and the Next World Program, is soliciting papers for the third annual workshop on the economics of ageing titled Financing Longevity: The Economics of Pensions, Health Insurance, Long-term Care and Disability Insurance held at Stanford from April 24-25, 2017, and for a related special issue of the Journal of the Economics of Ageing.

The triumph of longevity can pose a challenge to the fiscal integrity of public and private pension systems and other social support programs disproportionately used by older adults. High-income countries offer lessons – frequently cautionary tales – for low- and middle-income countries about how to design social protection programs to be sustainable in the face of population ageing. Technological change and income inequality interact with population ageing to threaten the sustainability and perceived fairness of conventional financing for many social programs. Promoting longer working lives and savings for retirement are obvious policy priorities; but in many cases the fiscal challenges are even more acute for other social programs, such as insurance systems for medical care, long-term care, and disability. Reform of entitlement programs is also often politically difficult, further highlighting how important it is for developing countries putting in place comprehensive social security systems to take account of the macroeconomic implications of population ageing.

The objective of the workshop is to explore the economics of ageing from the perspective of sustainable financing for longer lives. The workshop will bring together researchers to present recent empirical and theoretical research on the economics of ageing with special (yet not exclusive) foci on the following topics:

• Public and private roles in savings and retirement security
• Living and working in an Age of Longevity: Lessons for Finance
• Defined benefit, defined contribution, and innovations in design of pension programs
• Intergenerational and equity implications of different financing mechanisms for pensions and social insurance
• The impact of population aging on health insurance financing
• Economic incentives of long-term care insurance and disability insurance systems
• Precautionary savings and social protection system generosity
• Elderly cognitive function and financial planning
• Evaluation of policies aimed at increasing health and productivity of older adults
• Population ageing and financing economic growth
• Tax policies’ implications for capital deepening and investment in human capital
• The relationship between population age structure and capital market returns
• Evidence on policies designed to address disparities – gender, ethnic/racial, inter-regional, urban/rural – in old-age support
• The political economy of reforming pension systems as well as health, long-term care and disability insurance programs

Submission for the workshop

Interested authors are invited to submit a 1-page abstract by Sept. 30, 2016, to Karen Eggleston at karene@stanford.edu. The authors of accepted abstracts will be notified by Oct. 15, 2016, and completed draft papers will be expected by April 1, 2017.

Economy-class travel and accommodation costs for one author of each accepted paper will be covered by the organizers.

Invited authors are expected to submit their paper to the Journal of the Economics of Ageing. A selection of these papers will (assuming successful completion of the review process) be published in a special issue.

Submission to the special issue

Authors (also those interested who are not attending the workshop) are invited to submit papers for the special issue in the Journal of the Economics of Ageing by Aug. 1, 2017. Submissions should be made online. Please select article type “SI Financing Longevity.”

About the Next World Program

The Next World Program is a joint initiative of Harvard University’s Program on the Global Demography of Aging, the WDA Forum, Stanford’s Asia Health Policy Program, and Fudan University’s Working Group on Comparative Ageing Societies. These institutions organize an annual workshop and a special issue in the Journal of the Economics of Ageing on an important economic theme related to ageing societies.

More information can be found in the PDF below.

Triage nurses typically assign patients to emergency room doctors who are on call or working a shift. But what if the doctors themselves determine whom among them is better suited to take on the next patient?

Classic economic theory predicts “moral hazard” in teams, which means one member behaves inefficiently because in the end someone else will pay the consequences. Yet many successful organizations promote teamwork.

So how does this puzzle relate to health care?

This is the question that Assistant Professor of Medicine David Chan, a core faculty member at Stanford Health Policy, tackles in his new study in the Journal of Political Economy.

Emergency departments (ED) nationwide cost a combined $136 billion to run each year, significantly impacting the growing health-care sector of the U.S. economy. Visits to the emergency rooms are increasing despite the implementation of the Affordable Care Act, causing them to be overcrowded and underfunded.

Chan studied two organizational models: one in which physicians are assigned patients in a nurse-managed system and one in which the doctors divide patients among themselves in a self-managed system.

“I find evidence that physicians in the same location have better information about each other and that, in the self-managed system, they use this information to assign patients,” Chan writes.

He said that by simply allowing physicians to choose patients, a self-managed system reduces emergency room lengths of stay by 11-15 percent, relative to the nurse-managed system.

“This effect occurs primarily by reducing a `foot-dragging’ moral hazard, in which physicians delay patient discharge to forestall new work,” Chan writes. A triage nurse is often in another room and has a difficult time observing true physician workload, whereas peer physicians who work together can.

“So, for example, if there are two physicians working at a time when there are a whole bunch of patients in the waiting room, then each physician knows that the minute he discharges a patient, he is more likely to get another one,” Chan said in an interview. This might lead the physician to dilly-dally on the release of that patient, knowing that he’ll immediately be signed another before he gets a break.

However, two physicians who can observe how busy the other one truly is will be less likely to stall, even if they want to avoid new patients.

Chan studied a large, academic emergency room that treated 380,699 patients over a six-year period. He looked at length of stay, measuring each physician’s individual contribution. He also observed patient demographics and used the Emergency Severity Index, an ED triage algorithm based on a patient’s pain level, mental status, vital signs and medical condition.

Besides measuring the effect of the self-managed system in this large hospital, Chan combined evidence to support the hypothesis that teamwork improves outcomes because of mutual management with better information.

He found that the only difference in outcomes between the two organizational systems was foot-dragging. Clinical outcomes or even the number of tests ordered were about the same under a self-managed or nurse-managed system.

Moreover, the foot-dragging behavior grows as physicians may anticipate future work by the number of patients in the waiting room, even if they end up seeing the same number of patients.

Finally, physicians refrain from this behavior when being watched by another physician in the same location, even in the nurse-managed system, when that other physician does not otherwise have any role in the physician’s patient care.

“I think the biggest takeaway is that such efficiency gains can be widespread in health care, particularly because there is so much at stake hidden behind information in patient care that is not transparent,” Chan said.

“Even if we don’t fully anticipate all of these gains, we could still achieve a lot by tinkering and using these changes as natural experiments to figure out what works and what doesn’t,” Chan said. “We can further use these results, particularly the evidence pointing at a mechanism, to think of what other innovations might work.”

Nearly 100 health economists from across the United States signed a pledge urging U.S. presidential candidates to make chronic disease a policy priority. Karen Eggleston, a scholar of comparative healthcare systems and director of Stanford’s Asia Health Policy Program, is one of the signatories. 

The pledge calls upon the candidates to reset the national healthcare agenda to better address chronic disease, which causes seven out of 10 deaths in America and affects the economy through lost productivity and disability.

Read the pledge below.

This season, “Downton Abbey's” plot line has health policy wonks on the edge of their seats: a heated debate about hospital consolidation that closely parallels what’s going on in the U.S. health care system today.

If you’re not a Downton fan, here’s a quick plot recap by Kaiser Health News reporter Jenny Gold: It’s 1925 for the lords and ladies at Downton Abbey. Think flapper dresses, cocktail parties and women’s rights. And a big hospital in the nearby city of York is making a play to take over the Downton Cottage Hospital next to the posh estate.

As Maggie Smith’s character, the Dowager Countess of Grantham, sees it, “The Royal Yorkshire county hospital wants to take over our little hospital, which is outrageous!”

Stanford Health Policy’s Kathy McDonald — an unabashed fan of the popular PBS period piece — says things haven’t changed that much today. There has been an uptick in hospital consolidations since 2010, with about 100 taking place each year, she says.

You can listen to McDonald’s interview with Gold, who took the Downton debate to the American Public Media radio show, “Marketplace.”

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Millions of women in India give birth at home, where they don’t have easy access to medical help if things go wrong. And things go wrong often. The country has one of the world’s highest rates of maternal and neonatal deaths.

To curb this problem, the government pays eligible pregnant women to deliver their babies in an accredited medical facility. With both a financial incentive and the promise of a safer childbirth, it would stand to reason that most Indian women should choose to deliver their babies in a hospital.

But that’s not the case.

Most babies are still born in homes. Early numbers from the financial incentive programs show less than half of eligible women are choosing to participate.

Stanford researchers Grant Miller and Nomita Divi think the answer to this quandary—and so many other well-intentioned policies that fall short—needs to first be considered from the perspective of patients, doctors and other health care providers. And that, they say, is a different approach than most health interventions take.

Miller and Divi are spearheading the Stanford India Health Policy Initiative, a program that seeks to rethink health interventions based on Indian health care users’ and providers’ motivations for seeking care. And to get there, the initiative’s focus comes from the people who confront these problems every day.

The program, which is connected to the International Policy Implementation Lab at Stanford’s Freeman Spogli Institute, first brings together community leaders for an in-depth discussion of where best to focus efforts. Next, teams (including students) take these recommendations and spend several months conducting fieldwork to understand health care decision-making, both from the side of patients and providers.  From this foundation, the initiative produces reports detailing the behavioral motivations for why certain dimensions of health care are or are not working.

“To really understand why health policies succeed or fail, you have to see the world through the eyes of the providers and patients,” said Miller, an associate professor of medicine and a core faculty member of FSI’s Center for Health Policy and Primary Care Outcome Research. “A lot of programs are created because they seem logical from the outside. But if you don't understand a patient’s priorities or motives, your program may not work.”

Miller and Divi first applied this approach to the very issue of childbirth in India. Why weren’t more women giving birth in hospitals when there were seemingly logical reasons to do so?

Over the summer, Miller, Divi, their Indian partners, and Stanford graduate and medical students set out to answer this question. During seven weeks of field interviews and subsequent analysis, the students—with guidance from Miller and Divi —identified reasons for why Indian women weren’t accepting a stipend to have their babies in the hospital. Some of these reasons included hidden costs of delivering a baby (like the transportation cost to the hospital or unexpected medical expenses), pressure from mothers-in-law to follow tradition and deliver at home, and fear of unwanted medical procedures like Caesarean sections or sterilization.

This understanding of why patients and providers don’t always make seemingly logical health care decisions is exactly what the India Health Policy Initiative is after.

“So much academic research is driven by donors or journal articles that we read,” Miller said. “So it seemed like we were starting from the wrong place in identifying health policy challenges that we should work on.”

In January, Miller and Divi convened a group of Indian health policy leaders, health care workers, academics and entrepreneurs to understand the challenges they faced in their daily work, and what health care questions they would most like to know more about. From this two-day meeting, the group identified two focus areas for the India Health Policy Initiative over the coming year: understanding more deeply the motivations and activities of both formal and informal health care providers, and what Indians value about care from the informal sector. These informal providers are often doctors or nurses with little or no medical training that are used by many low-income Indians.

To help answer these questions and provide opportunities for students, the Stanford India Health Policy Initiative engages top students from across the university. “We want to provide our students with an experience that will hopefully shape the way they think in their future careers,” said Divi, the initiative's project manager. “And we try to achieve this by training our students to help make sense of urgent health delivery challenges, immersing them in an intensive field experience, and teaching them how to generate insights.”

To better understand providers’ motivations, as well as patients’ perspectives on both the informal and formal providers, Miller and Divi will work with this new team to carry out qualitative fieldwork this summer.

Miller explained that the approach is very anthropological.

”To be able to understand these issues, we all have to see the world through another person’s eyes, whether that be a formal or informal health provider or a patient,” he said. “This approach fundamentally relies on strong collaboration with Indian partners.”

The initiative’s teams will spend their weeks interviewing different health care providers and patients in a handful of Indian villages, taking copious notes and ultimately translating hundreds of interviews into findings.

Roshan Shankar, MS/MPP ’14, worked as part of the initiative’s team last summer, focusing on understanding pregnant women’s decisions about where to deliver their babies. After considering several summer internships with consulting firms and international organizations, Shankar declined these opportunities, instead opting to work with the Stanford India Health Policy Initiative.

Shankar is from New Delhi and has always planned to move back to his home country and work in government after school. He said the India Health Policy Initiative was a way to better understand his nation and the pressing challenges facing it.

“I’m used to sitting at a table and not venturing out,” Shankar said. “This experience showed me that things are much more different on the ground than on paper.”

After his work with the Stanford Health Policy Initiative, Shankar said he is now certain he wants to return to India and work in government.

“It was a humbling and enlightening experience. I think the way we did this entire analysis will affect the way I do any work there,” he said. “It will ensure that I do a more effective evaluation of the policies and programs that I work on, and start by going to see people who use them.”

The Stanford India Health Policy Initiative is supported by several organizations including the Center for Innovation in Global Health and the Office of International Affairs.

Teal Pennebaker is a freelance writer.