I’m resuscitating TIE’s “reading lists” of yore—each week, I’ll link to (mostly) recent publications and perspective pieces. In case you’re interested in more of a news roundup, I’ll take this opportunity to plug “Wonkbites” over at Project Millennial, another Friday staple.
Complexity, Public Reporting, and Choice of Doctors: A Look Inside the Blackest Box of Consumer Behavior by Mark Schlesinger, David E. Kanouse, Steven C. Martino, Dale Shaller, and Lise Rybowski (Medical Care Research and Review)
Health care consumers often make choices that are imperfectly informed and inconsistent with their expressed preferences. Past research suggests that these shortcomings become more pronounced as choices become more complex, through either additional options or more performance metrics. But it is unclear why this is true: Consumer choice remains a “black box” that research has scarcely illuminated. In this article, we identify four pathways through which complexity may impair consumer choice. We examine these pathways using data from an experiment in which consumers (hypothetically) selected a primary care physician. Some of the loss of decision quality accompanying more complex choice sets can be explained by consumers’ skills and decision-making style, but even after accounting for these factors, complexity undermines the quality of decision making in ways that cannot be fully explained. We conclude by discussing implications for report designers, sponsors, and policy makers aspiring to promote consumer empowerment and health care quality.
Perverse Reverse Price Competition: Average Wholesale Prices and Medicaid Pharmaceutical Spending by Abby Alpet, Mark Duggan, and Judith K. Hellerstein (The National Bureau of Economic Research)
Generic drugs comprise an increasing share of total prescriptions dispensed in the U.S., rising from nearly 50 percent in 1999 to 75 percent in 2009. The generic drug market has typically been viewed at the wholesale level as a competitive market with price approaching marginal costs. However, the large presence of third party payers as final purchasers may distort prices at the retail level relative to what a standard model of price competition would predict. In this paper, we investigate how generic drug producers compete in the presence of the procurement rules of the Medicaid program. Medicaid reimbursement to pharmacies, like that of other payers, is based on a benchmark price called the average wholesale price (AWP). The AWP is reported by generic producers themselves, and until recently has been subject to essentially no independent verification. As a result, generic producers have had an incentive to compete for pharmacy market share by reporting AWPs that exceed actual average wholesale prices, as this “spread” leads to larger pharmacy profits. In 2000, after a federal government audit of actual wholesale prices of generic products, states were advised to reduce Medicaid reimbursement by as much as 95% for about 400 generic and off-patent drug products. We use variation induced by the timing of this policy along with its differential impact on drug products’ Medicaid reimbursement to estimate the impact of this exogenous price change on the market share of targeted products. Our findings indicate that pharmacies did respond to the perverse incentives of the Medicaid program by dispensing products with the highest AWPs. Overall, the Medicaid market share fell by about 45% for targeted drug products as a result of the policy.
Patient-centered financial incentives for health: Can employers get change for their dollars? by Jeffrey T. Kullgren, Geoffrey C. Williams, and Lawrence C. An (Healthcare)
While employer-sponsored financial incentives for healthy behaviors have demonstrated the potential to promote short-term employee behavior change, the effectiveness of such incentives in promoting long-term health behavior change has often been disappointing. This paucity of sustained change could be explained by the many factors that shape employees’ health behaviors, only some of which may be influenced by incentives. We discuss how employer-sponsored incentives for healthy behaviors could become more patient-centered, and thus perhaps more effective, by integrating insights from self-determination theory and health behavior theories, targeting employees’ capacity for change, and using tailoring.
What healthcare reform means for rural America by Bob Roehr (British Medical Journal)
Only the Beginning — What’s Next at the Health Insurance Exchanges? by Henry J. Aaron and Kevin W. Lucia (New England Journal of Medicine)
Less Tinkering, More Transforming: How to Build Successful Patient-Centered Medical Homes by David Margolius (JAMA Internal Medicine)