Obesity – and its related illnesses – endangers the lives of millions across the world. While healthier, more physically active lifestyles can mitigate this, the question remains of how policymakers can get people to switch from being couch potatoes to keen runner beans. This column presents new evidence suggesting that for many even a nudge may suffice.

Although policymakers have increasingly turned to provider report cards as a tool to improve health care quality, existing studies provide mixed evidence that they influence consumer choices. We examine the effects of providing consumers with quality information in the context of fertility clinics providing Assisted Reproductive Therapies (ART). We report three main findings. First, clinics with higher birthrates had larger market shares after relative to before the adoption of report cards. Second, clinics with a disproportionate share of young, relatively easy-to-treat patients had lower market shares after adoption versus before. This suggests that consumers take into account information on patient mix when evaluating clinic outcomes. Third, report cards had larger effects on consumers and clinics from states with ART insurance coverage mandates. We conclude that quality report cards have potential to influence provider behavior in this setting.

Abstract

The Technological Change in Health Care Research Network collected unique patient-level data on three procedures for treatment of heart attack patients (catheterization, coronary artery bypass grafts and percutaneous transluminal coronary angioplasty) for 17 countries over a 15-year period to examine the impact of economic and institutional factors on technology adoption. Specific institutional factors are shown to be important to the uptake of these technologies. Health-care systems characterized as public contract systems and reimbursement systems have higher adoption rates than public-integrated health-care systems. Central control of funding of investments is negatively associated with adoption rates and the impact is of the same magnitude as the overall health-care system classification. GDP per capita also has a strong role in initial adoption. The impact of income and institutional characteristics on the utilization rates of the three procedures diminishes over time.

The incidence of obesity has increased dramatically in the U.S. Obese individuals tend to be sicker and spend more on health care, raising the question of who bears the incidence of obesity-related health care costs. This question is particularly interesting among those with group coverage through an employer given the lack of explicit risk adjustment of individual health insurance premiums in the group market. In this paper, we examine the incidence of the healthcare costs of obesity among full time workers. We find that the incremental healthcare costs associated with obesity are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages. Obese workers in firms without employer-sponsored insurance do not have a wage offset relative to their non-obese counterparts. Our estimate of the wage offset exceeds estimates of the expected incremental health care costs of these individuals for obese women, but not for men. We find that a substantial part of the lower wages among obese women attributed to labor market discrimination can be explained by the higher health insurance premiums required to cover them.

A variety of recent theoretical and empirical advances have renewed interest in monopsonistic models of the labor market. However, there is little direct empirical support for these models, even in labor markets that are textbook examples of monopsony. We use an exogenous change in wages at Veterans Affairs hospitals as a natural experiment to investigate the extent of monopsony in the nurse labor market. In contrast to much of the prior literature, we estimate that labor supply to individual hospitals is quite inelastic, with short-run elasticity around 0.1. We also find that non-VA hospitals responded to the VA wage change by changing their own wages.

Economics influences how medical care is delivered, organized, and progresses. Fee-for-service payment encourages delivery of services. Fee-for-individual-service, however, offers no incentives for clinicians to efficiently organize the care their patients need. Global capitation provides such incentives; it works well in highly integrated practices but not for independent practitioners. The failures of utilization management in the 1990s demonstrated the need for a third alternative to better align incentives, such as bundling payment for an episode of care. Building on Medicare's approach to hospital payment, one can define expanded diagnosis-related groups that include all hospital, physician, and other costs during the stay and appropriate preadmission and postdischarge periods. Physicians and hospitals voluntarily forming a new entity (a care delivery team) would receive such bundled payments along with complete flexibility in allocating the funds. Modifications to gainsharing and antikickback rules, as well as reforms to malpractice liability laws, will facilitate the functioning of the care delivery teams. The implicit financial incentives encourage efficient care for the patient; the episode focus will facilitate measuring patient outcomes. Payment can be based on the resources used by those care delivery teams achieving superior outcomes, thereby fostering innovation improving outcomes and reducing waste.

The small sample size of contingent valuation (CV) surveys conducted in patients may have limited the use of the single-bounded (SB) dichotomous choice format which is recommended in environmental economics. In this paper, we explore two ways to increase the statistical efficiency of the SB format: (1) by the inclusion of proxies in addition to patients; (2) by the addition of a follow-up dichotomous question, i.e. the double-bounded (DB) dichotomous choice format. We found that patients (n=223) and spouses (n=64) answering on behalf of the patient had on average a similar willingness-to-pay for earlier alleviation of flu symptoms. However, a patient was significantly more likely to anchor his/her answer on the first bid as compared to a spouse. Finally, our original DB model with shift effect and heterogeneous anchoring reconciled the discrepancies found in willingness-to-pay statistics between SB and DB models in keeping with increased statistical efficiency.

Who pays the healthcare costs associated with obesity? Among workers, this is largely a question of the incidence of the costs of employer-sponsored coverage. Using data from the National Longitudinal Survey of Youth and the Medical Expenditure Panel Survey, we find that the incremental healthcare costs associated with obesity are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages. Obese workers without employer-sponsored insurance do not have a wage offset relative to their non-obese counterparts. A substantial part of the lower wages among obese women attributed to labor market discrimination can be explained by their higher health insurance premiums.

'Personalized medicine' promises to increase the quality of clinical care and, in some cases, decrease health-care costs. Despite this, only a handful of diagnostic tests have made it to market, with mixed success. Historically, the challenges in this field were scientific. However, as discussed in this article, with the maturation of the '-omics' sciences, it now seems that the major barriers are increasingly related to economics. Overcoming the poor microeconomic alignment of incentives among key stakeholders is therefore crucial to catalysing the further development and adoption of personalized medicine, and we propose several actions that could help achieve this goal.