Boost health, lower costs with behavioral economics


Insurers can use behavioral economics, which examines why people make certain decisions and then determines how to influence said decisions, to compel members to improve their health, according to research from the Robert Wood Johnson Foundation.

"I don't think there's any question that behavioral economics approaches have a lot of potential to contribute to healthcare," Kevin Volpp, director of RWJF's behavioral economics program said Tuesday in a statement. "At the same time it's also true that there's a lot of work that needs to be done to figure out how those approaches can optimally contribute to healthcare."

Experts in behavioral economics believe people don't always behave in their own best interest, which is why so many people overeat and don't exercise, for example. Volpp also stated people tend to take the "default option," or whichever option requires the least amount of effort. So policymakers and healthcare organizations hope to encourage constructive decisions. 

"Behavior is at the root of many of our biggest healthcare problems," Peter Ubel, a physician and behavioral scientist, explained in the report. "If you're trying to change behavior, you need to understand behavior, and interventions need to take advantage of what you understand about behavior."

To that end, insurers can apply behavioral economics by offering a "choice architecture" that influences healthy, cost-effective behavior without precluding all options. For example, one study tested the effect of color-coding a menu in a hospital cafeteria to promote healthy eating habits. Green labels signified healthy items while red labels meant unhealthy foods. When using such color-coding, the amount of food items sold marked with green labels rose from 41 percent at baseline to 46 percent, and the purchases of red labeled foods decreased from 24 percent to 20 percent.

By incorporating some behavioral economic theories to engage moderate-risk members, insurers could address their risk factors early on, including obesity, diabetes, sleep apnea and hypertension, and help lower costs and utilization rates, FierceHealthPayer previously reported.

To learn more:
- here's the RWJF statement and study (.pdf)

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