New Ideas About Human Behavior in Economics and Medicine Peter - PowerPoint PPT Presentation

Congressional Budget Office Eighth Annual Marshall J. Seidman Lecture, Harvard Medical School New Ideas About Human Behavior in Economics and Medicine Peter Orszag Director October 16, 2008

Federal Spending Under CBO’s Alternative Fiscal Scenario Percentage of Gross Domestic Product 40 Actual Projected 30 Medicare and Medicaid 20 Social Security 10 Other Spending (Excluding debt service) 0 1962 1972 1982 1992 2002 2012 2022 2032 2042 2052 2062 2072 2082

Learning from Our Mistakes � As we seek to improve the efficiency of the health sector, let’s learn some lessons from economics.

Saving for Retirement, Econ 101 � Retirement saving depends on projected income, projected rate of return, tax preferences, and the company’s matching contribution.

The Effect of Automatic Enrollment on Initial Participation Rates in Companies with 401(k) Plans Percent 100 Without Automatic Enrollment 86 With Automatic Enrollment 80 77 60 45 40 25 20 0 All Workers Income Less Than $30,000 Source: Nesmith, Utkus, and Young.

Share of 401(k) Plans Featuring Automatic Enrollment Percent 60 50 40 30 Companies with 5,000 or More Eligible Employees All Companies 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Data from Profit Sharing/401k Council of America.

Behavioral Economics and Medicine � Are we ignoring the same lessons in health care and medical science?

The Placebo Effect: Mean Improvement on Hamilton Depression Scale, vs. Common Antidepressants 14 Drug 12 Placebo 10 8 6 4 2 0 Fluoxetine Paroxetine Sertraline Venlafaxine Nefazodone Citalopram (Prozac) (Paxil) (Zoloft) (Effexor) (Serzone) (Celexa) Source: Kirsch (2002).

The Placebo Effect: Angina Pectoris Treatment, vs. Surgery 70 Internal Mammary Artery Ligation 60 Skin Incision Only 50 40 30 20 10 0 Patients Reporting Significant Decrease in Nitroglycerin Use Improvement in Chest Pain Source: Cobb and others (1959).

The Placebo Effect: Reduction of Pain After Knee Surgery Mean Knee-Specific Pain Scale Score Source: Moseley and others (2002).

The Placebo Effect: Fitness Outcomes from “Perceived” Exercise Mean Weight BMI Percentage Body Fat 0.28 148 37 36 0.27 146 35 0.26 144 34 142 0.25 33 Waist-to-Hip Ratio Systolic Blood Pressure Diastolic Blood Pressure 0.87 135 85 0.86 130 80 0.85 0.84 125 75 0.83 120 0.82 70 0.81 115 Informed Control Source: Crum and Langer (2007).

The Placebo Effect: The Effect of Price on Effectiveness Mean Difference Source: Waber and others (2008).

Shifting Professional Norms: Catheter Infections in Michigan ICUs After Instituting a Checklist Mean Rate of Infection per 1,000 Catheter Days 8 7 6 5 4 3 2 1 0 At Baseline After 3 Months After 18 Months Source: Provonost and others (2006).

Adherence to Medication Schedule According to Frequency of Dose Percentage of Patients Adhering 100 90 80 70 60 50 40 30 20 10 0 Once Daily Twice a Day Three Times a Day Four Times a Day Medication Schedule Source: Osterberg and Blaschke (2005).

Adherence to Treatment: Nature and Scope of the Problem � Average adherence to medication recommendations for nonacute disorders among both pediatric and adult populations: 50% � Nonadherence is pervasive even under high stakes: – 25% of renal transplant recipients regularly miss doses of antirejection medications – 42% of glaucoma patients persisted in not adhering to treatment—even after losing sight in one eye � Doctors are no more accurate than relying on a coin flip in determining who will adhere to treatment and who won’t (even among patients they know well)

Adherence to Treatment: Bedside Manner � Two-year study on influence of doctors’ behavior on adherence to treatment showed that patients were more likely to adhere if: – Their doctor scheduled definite future appointments – Their doctor answered all of their questions – Their doctor enjoyed his/her job

Adherence to Treatment: Setting Better Defaults � Dosing : Simplicity promotes, while complexity undermines, adherence: e.g., once-a-day dosing. � Drug Choice : Choosing more “forgiving” drugs promotes adherence: e.g., antihypertensive drugs with longer halflives. � Bedside Manner : Seeing patients more often and answering all their questions promotes adherence: e.g., definite follow-up appointments.

Bottomless Soup Bowls: The Premise Source: Wansink (2004).

Bottomless Soup Bowls: Actual and Perceived Intake 300 Actual Calories Consumed 250 Estimated Calories Consumed 200 150 100 50 0 Accurate Visual Cue Biased Visual Cue (Normal Soup Bowls) (Self-Refilling Soup Bowls) Source: Wansink, Painter, and North (2005).

Influence of Container Size on the Consumption of Stale Popcorn 100 80 60 40 20 0 Medium Container (120 grams) Large Container (240 grams) Source: Wansink and Kim (2005).

Some Behavioral Avenues for Reform in Federal Nutrition Programs � 20 percent of Americans participate in a federal nutrition program � Supplemental Nutrition Assistance Program – Disbursing benefits more frequently could reduce stockpiling and bingeing � School Lunch Program – Placing healthier foods at the front of cafeteria lines could increase their prominence and consumption – Decreasing the size of tables could reduce distraction-driven overeating Source: Just, Mancino, and Wansink (USDA, 2007).

Increase in Life Expectancy, and Increase in Difference in Life Expectancy by Economic Status Years 4 Increase in Average Life Expectancy, 1980–2000 Increase in Difference in Average Life Expectancy 3 Between Lowest and Highest Decile, 1980–2000 2 1 0 At Birth At Age 65 Source: Data from Singh and Siahpush (2006) and CDC.

Sources of Growth in Projected Federal Spending on Medicare and Medicaid Percentage of GDP 20 15 Effect of Excess Cost Growth Alone 10 Interaction Effect of Aging Alone 5 0 2007 2022 2037 2052 2067 2082

Estimated Contributions of Selected Factors to Long-Term Growth in Real Health Care Spending per Capita, 1940 to 1990 Percent Smith, Heffler, and Cutler Newhouse Freeland (2000) (1995) (1992) Aging of the Population 2 2 2 Changes in Third-Party 10 13 10 Payment Personal Income Growth 11-18 5 <23 Prices in the Health Care Not 11-22 19 Sector Estimated Administrative Costs Not 3-10 13 Estimated Defensive Medicine and Not 0 0 Supplier-Induced Demand Estimated Technology-Related Changes 38-62 49 >65 in Medical Practice

Excess Cost Growth in Medicare, Medicaid, and All Other Spending on Health Care Percentage Points Medicare Medicaid All Other Total 1975 to 1990 2.9 2.9 2.4 2.6 1990 to 2005 1.8 1.3 1.4 1.5 1975 to 2005 2.4 2.2 2.0 2.1

Before We All Get Too Depressed… � Embedded in the nation’s central long-term fiscal challenge appears to be a substantial opportunity. � Can we reduce health care costs without impairing health outcomes?

Medicare Spending per Beneficiary in the United States, by Hospital Referral Region, 2005

Variation in State-Level Medicare and Overall Health Care Spending per Capita Coefficient of Variation 0.25 0.20 Variation in Medicare Spending per Beneficiary 0.15 Variation in Total 0.10 Health Spending per Capita 0.05 0 1974 1979 1984 1989 1994 1999 2004 Source: Based on data from CMS.

Contributions of Major Service Categories to State- Level Variation in Medicare Spending per Beneficiary Coefficient of Variation 0.25 0.20 Outpatient 0.15 Post-Acute Care 0.10 Physician and Laboratory Hospital 0.05 0 1974 1979 1984 1989 1994 1999 2004 Source: Based on data from CMS.

Geographic Variation in Health Care Spending per Capita in Selected Countries Coefficient of Variation 0.14 United States 0.12 United 0.10 Kingdom Canada 0.08 0.06 0.04 0.02 0 1975 1980 1985 1990 1995 2000 2005 Source: Based on data from CMS, HM Treasury (U.K.), and the Canadian Institute for Health Information.

Variations Among Academic Medical Centers Use of Biologically Targeted Interventions and Care-Delivery Methods Among Three of U.S. News and World Report ’s “Honor Roll” AMCs UCLA Massachusetts Mayo Clinic Medical General (St. Mary’s Center Hospital Hospital) Biologically Targeted Interventions: Acute Inpatient Care CMS composite quality score 81.5 85.9 90.4 Care Delivery ― and Spending ― Among Medicare Patients in Last Six Months of Life Total Medicare spending 50,522 40,181 26,330 Hospital days 19.2 17.7 12.9 Physician visits 52.1 42.2 23.9 Ratio, medical specialist / primary care 2.9 1.0 1.1 Source: Elliot Fisher, Dartmouth Medical School.

Variations Among Academic Medical Centers Supply-Sensitive Care: Days in the Hospital for Patients During the Last Six Months of Life Source: John Wennberg, Dartmouth Medical School.

The Relationship Between Quality of Care and Medicare Spending, by State, 2004 Composite Measure of Quality of Care, 100 = Maximum 90 85 80 75 0 0 5 6 7 8 9 10 Annual Spending per Beneficiary (Thousands of dollars)

What Additional Services Are Provided in High-Spending Regions? Source: Elliot Fisher, Dartmouth Medical School.