Monday, December 7, 2009

Another Bit for Congress to Chew on Regarding Healthcare Reform

“People are more likely to buckle their seat belt than follow the speed limit”
This is how Washington Post reporter Alec MacGillis starts his article about people’s behavioral response to the new healthcare legislation entitled, “If you build a coverage mandate, will they come?”. He has an interesting speculation that combines the idea of behavioral economics with something that was also spoken about in our class often.
MacGillis begins by setting up his argument against compliance by explaining that the proposal would force all Americans to either receive healthcare through their employer or purchase a plan as an individual. It’s something that we should all think about seeing as a large amount of current college students would have to think about purchasing a plan if they don’t qualify for healthcare through their employer and don’t meet the age requirement to remain on their parent’s plan. Would this be a difficult transition for your average student? MacGillis points out that if noncompliance becomes set as the social norm for the younger generations then a majority of young people would end up, “pay[ing] the penalties [for noncompliance] instead of buying coverage… [which will] upset the legislation's balance, resulting in higher premiums for less-healthy people or bigger costs to the government.” (MacGillis)
MacGillis uses the general opinions of behavioral economists to validate the use of behavioral theories to healthcare. “[Economists] point to the large number of eligible people who fail to take advantage of Medicaid, food stamps and Pell grants as a sign that perceived inconvenience can keep people from taking steps in their economic interest. By contrast, the Medicare drug benefit program has achieved high enrollment partly because low-income Medicare recipients did not need to apply for subsidies if they already qualified for Medicaid.”
His article continues to criticize the proposed health-care bill by attacking the penalties themselves. When a similar mandate for insurance was adopted in the state of Massachusetts they quickly altered their penalty for non-compliance to about $1000 per year, which was taken immediately through use of the state’s tax system. This mandate proved to be successful in Massachusetts raising their percentage of insured residents from 91% to 97%. This type of penalty is not seen in the Federal bill where a penalty will not be enforced until the year after the bill goes into effect and the penalty for noncompliance will slowly increase but only to a max penalty of roughly $750 per year.
However, is it fair to say that these penalties are quite similar? In addition MacGillis’ comparison of the Medicare drug benefit to Medicaid is misleading. Anyone that has applied for Medicaid could tell you that the conditions for approval are less transparent and quite convoluted, a veritable shell game for coverage, while the process itself is not just “inconvenient” but demeaning. Imagine a DMV-esque scenario at the end of which you are processed like a convict. Applicants are forced to be fingerprinted and have a “mug shot” taken despite having a valid photo ID and then, after revealing every detail of their current income and expenses and filling out numerous forms, are released back into the world awaiting an answer in 2 to 3 weeks.
I’m not saying that MacGillis doesn’t have a good point though. As we’ve seen in lecture when reading the report done by Goldstein, Cialdini and Griskevicius social norms can be incredibly powerful influences on behavior. Therefore regardless of your view on his comparisons we should all agree that were it to be generally perceived that applying for healthcare through this new system is difficult and/or not being done by the majority of those without healthcare then it could mean bad news for the planned financing measures of the bill. There is hope though. Just as we did with the switch to digital broadcasting of television and just as Massachusetts did in its mandate of healthcare coverage we can inundate the public with advertising. What better way is there to sway a potential social norm of noncompliance than the use advertising to produce a social norm of compliance and the ease of transition? Therefore I cannot see why this hurdle could not be crossed when we come to it. I wonder what my fellow students would say.
Link to Article-

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