Category: Behavioral Economics

A calculator, a stethoscope, and a stack of money rest on a table.

Why Our Health Care Is Incomplete: Review of “Exposed” (Part I)

Daniel G. Aaron Leave a comment

By: Daniel Aaron

Just last month, Professor Christopher T. Robertson, at the University of Arizona College of Law, released his new book about health care, entitled Exposed: Why Our Health Insurance Is Incomplete and What Can Be Done About It. This book review will offer an analytical discussion of “cost exposure,” the main subject of his book.

What is cost exposure in health care?

Cost exposure is payments people make related to their medical care. There are many ways patients pay – here are a few common ones.

  • Deductible – Patient is responsible for the first, say, $5,000 of their medical care; after this point, the health insurance kicks in. Resets each year.
  • Copay – Patient pays a specific amount, say $25, when having an episode of care.
  • Coinsurance – Patient pays a specified percentage, say 20%, of care.

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What’s Missing From Biotech Graduate Education? With Free Course, RA Capital Attempts to Fill the Gaps

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By Jessica Sagers

As a PhD student in the life sciences at Harvard, I attended almost every career seminar that came through my inbox. I had no idea what I wanted to do after finishing my research doctorate, but I was certain that it wasn’t more cell culture.

The walls of my academic bubble were so thick that even as a budding cell biologist, I’d managed to hear almost nothing about Boston’s booming biotech industry. “Going into industry” was regarded as an “alternative career,” to the point where it sounded like taking a job outside of academia was tantamount to abandoning science. Besides, all my training had been in basic science. The coursework I’d excelled in, from neurobiology to biophysics, did not equip me to translate what I’d learned to the business world.

During my final PhD year, curiosity about the biotech sector drove me to accept an internship at RA Capital Management, a life science-focused investment firm in Boston. Dr. Peter Kolchinsky (Harvard Program in Virology, ’01), Founder and Managing Partner of RA Capital, brought me and a group of fellow PhD students on board to help achieve his vision of providing more pragmatic, focused training to scientists and professionals interested in working in biotechnology. Together, we designed a short, advanced course on the business of biotech designed to fit the practical needs of late-stage graduate students and early-career professionals.

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Eighth Annual Health Law Year in P/Review: Looking Back & Reaching Ahead

I. Glenn Cohen Leave a comment

This post is part of our Eighth Annual Health Law Year in P/Review symposium. You can read all of the posts in the series here. Review the conference’s full agenda and register for the event on the Petrie-Flom Center’s website.

By Prof. I. Glenn Cohen and Kaitlyn Dowling

The Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics is excited to host the Eighth Annual Health Law Year in P/Review to be held at Harvard Law School December 6, 2019. This one-day conference is free and open to the public and will convene leading experts across health law policy, health sciences, technology, and ethics to discuss major developments in the field over the past year and invites them to contemplate what 2020 may hold. This year’s event will focus on developments in health information technology, the challenge of increasing health care coverage, immigration, the 2020 election, gene editing, and drug pricing, among other topic areas.

As we come to the end of another year in health law, the event will give us both a post-mortem on the biggest trends in 2019 and also some predictions on what’s to come in 2020.

Among the topics we will discuss: Read More

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Nudges or Shoves in the Secondary Use of Health Data: What is the More Desirable Approach? (Part I)

Marcelo Corrales Leave a comment

By Marcelo Corrales Compagnucci, Janos Meszaros & Timo Minssen

Empirical studies in behavioral economics have demonstrated how people are biased and often make poor decisions against their best interests. This has led policy makers to promote choice-preserving approaches, a.k.a. nudges. However, there has also been an increasingly vocal group of legal scholars who are interest in asking whether mandates and bans can be more effective than nudges. As pointed out by Cass R. Sunstein and others, the rationale behind this question is very simple: If we know that people make mistakes, why should we insist on adopting approaches that preserve freedom of choice?

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Rethinking Organ Donation: When Altruism Isn’t Enough

Gali Katznelson Leave a comment

By: Gali Katznelson

The demand for donated organs greatly outweighs the supply. In the United States alone, there are roughly 115,000 people waiting for an organ transplant. Every ten minutes, a new person is added to the recipient list, and every day, 20 people on the list die waiting. To be an organ donor in most states, residents can choose to add their names to the donor registry through a simple online or in-person process. But this “opt-in” system is failing to entice enough people to become organ donors. Currently, 54% of Americans are on the donor registry, but very few registrants are available to donate at a given time, in large part because the vast majority of registered donors have opted to do so posthumously. Better policies are needed to encourage more people to donate, both as living donors and as registered posthumous donors. It’s time to consider a non-monetary incentive system that prioritizes those who have signed up as organ donors.

Before jumping into an incentive-based system, let’s consider other options: namely “opt-out” and “mandated choice.” Following in the footsteps of 25 countries, including Spain and Wales, states such as Connecticut and Texas have made attempts to implement “opt-out” policies. In an “opt-out” system, each person is presumed to be an organ donor unless they explicitly choose not to be. Countries with opt-out policies have donor registration rates averaging 90%. But attempts to pass such legislation in the US have been met with fierce opposition. Likely, this is due to Americans’ unique emphasis on individual rights and skepticism of government control. Moreover, in such a system, family members may question the wishes of the deceased if they are unsure that the person was aware of the policy. In such cases, the family’s wishes will likely override the seemingly ambiguous wish of the deceased.

Alternatively, a “mandated choice” system is one in which people are faced with a compulsory choice regarding organ donation. In the US, Texas first tried this in the 1990s, where checking “yes” or “no” to organ donation became a condition for obtaining a driver’s license. Without adequate public education, 80% of people chose not to donate and the law was eventually repealed. More recently, Illinois experienced success with a mandated choice system. There, anyone receiving or renewing a driver’s license or an identification card is faced with the choice of becoming an organ donor. As a result, 60% of adults have now agreed to donate. This is a good start, but we can do better.

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The Accessibility Police: How the ADA Education and Reform Act Hinders ADA Enforcement and Burdens Americans with Disabilities

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By Shailin Thomas

Recently, the House of Representatives voted on and passed the ADA Education and Reform Act of 2017 — an update to the Americans with Disabilities Act of 1990 (42 U.S.C. § 12101 et seq.). The bill changes the process by which private citizens with disabilities and disabling medical conditions can bring lawsuits to enforce statutory access requirements for places of public accommodation. Under Article III of the ADA, “No individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation.” 42 U.S.C. § 12182. This covers attempts to explicitly discriminate against those with disabilities, refusals to make reasonable modifications to accommodate them, and failures to remove physical barriers to access for them — unless removing those barriers is not “readily achievable.” 42 U.S.C. § 12182(b)(2)(A). One of the primary enforcement mechanisms for these provisions is private litigation brought against non-compliant establishments by those negatively affected by violations. See 42 U.S.C. 12188.

As of late, however, there has been growing concern in Congress that this private enforcement avenue is too often abused by plaintiffs bringing unjustified or opportunistic lawsuits, and this is the issue the ADA Education and Reform Act of 2017 seeks to address. Under the proposed bill, lawsuits can no longer be immediately brought against non-compliant establishments. Instead, someone aggrieved by a failure of adequate access must send formal, written notification to the establishment and provide at least four months for the owner to begin dismantling the offending access barrier. Only then — if the owners fail to start the necessary improvements for four months — can a lawsuit be brought. Proponents of the bill believe these additional barriers will curb frivolous and abusive ADA lawsuits brought to enforce accessibility requirements against unsuspecting businesses unaware of their violations.

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The Illusion of Choice in Health Care Consumerism

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By Aobo Dong

The rhetoric of “choice” has been pervasive in U.S. health care reforms and the consumerist health care culture for a long time. The idea is that giving patients more choices over doctors and insurance plans would increase competition in the industry and consequently improve the quality of health care patients receive. However, Allison Hoffman made a convincing case debunking this seemingly intuitive idea in this week’s HLS health law workshop. She argued that reform efforts aimed at increasing consumer choice often fail to empower patients to make better health care choices, and instead, create a wasteful market bureaucracy that is anathema to free market ideals. Her argument reminds me of one of my earlier blog posts on U.S. drug prices, where I compared insurance companies to the Central Planner in a socialist economy. Indeed, there are ironically many institutions and features in the so-called market-driven U.S. health care system that resemble authoritarian and technocratic practices that are directly against the principles of a laissez-faire health care economy.

I will expand Professor Hoffman’s argument by making a few additional points. First, her presentation discusses a number of revealing ways in which the market-based competition creates a false sense of choice in health care. Even Obamacare, which is supposed to offer patients more choices in the Exchange, fails to transcend the falsity of consumer choice. Most patients do not make the best available choice, even when they’re “nudged” by experts in the decision-making process. I’d like to also point out that even if consumers are capable of making the best choice for themselves, whether by thinking with perfect rationality or by accepting “expert opinions,” the choice they ultimately make could still be suboptimal or even disastrous. To understand why this might be the case, it is important to realize that the target population for Obamacare is the minority of people who do not have adequate employer-sponsored plans. Thus, many people enrolled in Obamacare may not have stable jobs and income levels. Nonetheless, the mechanism that determines how much premium for which one qualifies is predicated on an estimation of that individual’s projected annul earnings – a number that is hard to know in advance for those without stable income levels. Hence, a person who made the “right choice” by selecting a silver plan with only $100 monthly premium after receiving a $900 subsidy to cover a $1,000 plan at the beginning of a year may find herself owing the federal government thousands of dollars at the end of the tax year, if she happens to end up with a much higher income level. Had she known the future outcome, she would have chosen a less expensive plan to begin with, but either choice would be a gamble for her. This arbitrariness must be attended to in future health reforms. Read More

Making a Moral Case for Regulation

Scott Burris 2 Comments

Valerie Braithwaite’s chapter in the ANU’s Press’s new Regulatory Theory: Foundations and Applications provides a general introduction to looking at regulation through a social lens.  If regulation is so great, she asks, why do so many people approach it with fear and loathing?

I won’t rehearse her argument here, but instead skip to some key points about how we who appreciate the social good provided by regulation can best make that case. One of ten suggestions she concludes with was particularly resonant to me: “Engage with dissent on moral grounds. Is it right morally to steer the flow of events in the way proposed?”

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NOW AVAILABLE FOR PRE-ORDER! Nudging Health: Health Law and Behavioral Economics

The Petrie-Flom Center Staff Leave a comment

This volume, edited by I. Glenn Cohen, Holly Fernandez Lynch, and Christopher T. Robertson, stems from the Petrie-Flom Center’s 2014 Annual Conference “Behavioral Economics, Law, and Health Policy.” Pre-order your copy today!

Nudging HealthBehavioral nudges are everywhere: calorie counts on menus, automated text reminders to encourage medication adherence, a reminder bell when a driver’s seatbelt isn’t fastened. Designed to help people make better health choices, these reminders have become so commonplace that they often go unnoticed. In Nudging Health, forty-five experts in behavioral science and health policy from across academia, government, and private industry come together to explore whether and how these tools are effective in improving health outcomes.

Behavioral science has swept the fields of economics and law through the study of nudges, cognitive biases, and decisional heuristics—but it has only recently begun to impact the conversation on health care. Nudging Health wrestles with some of the thorny philosophical issues, legal limits, and conceptual questions raised by behavioral science as applied to health law and policy. The volume frames the fundamental issues surrounding health nudges by addressing ethical questions. Does cost-sharing for health expenditures cause patients to make poor decisions? Is it right to make it difficult for people to opt out of having their organs harvested for donation when they die? Are behavioral nudges paternalistic? The contributors examine specific applications of behavioral science, including efforts to address health care costs, improve vaccination rates, and encourage better decision-making by physicians. They wrestle with questions regarding the doctor-patient relationship and defaults in healthcare while engaging with larger, timely questions of healthcare reform.

Nudging Health is the first multi-voiced assessment of behavioral economics and health law to span such a wide array of issues—from the Affordable Care Act to prescription drugs.

Read the introduction on SSRN and pre-order your book now!

Two Cheers for Corporate Experimentation

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Rubin's vase2By Michelle Meyer

I have a new law review article out, Two Cheers for Corporate Experimentation: The A/B Illusion and the Virtues of Data-Driven Innovation, arising out of last year’s terrific Silicon Flatirons annual tech/privacy conference at Colorado Law, the theme of which was “When Companies Study Their Customers.”

This article builds on, but goes well beyond, my prior work on the Facebook experiment in Wired (mostly a wonky regulatory explainer of the Common Rule and OHRP engagement guidance as applied to the Facebook-Cornell experiment, albeit with hints of things to come in later work) and Nature (a brief mostly-defense of the ethics of the experiment co-authored with 5 ethicists and signed by an additional 28, which was necessarily limited in breadth and depth by both space constraints and the need to achieve overlapping consensus).

Although I once again turn to the Facebook experiment as a case study (and also to new discussions of the OkCupid matching algorithm experiment and of 401(k) experiments), the new article aims at answering a much broader question than whether any particular experiment was legal or ethical. Read More