The construction of mental accounts in benefits decision making.

Mental accounting describes the psychological creation of separate accounts or budgets for categories of decisions. This process simplifies complex budget decisions in ways that significantly affect consumer behavior (Kahneman and Tversky 1981, 1984) and has been incorporated into economic theory (Shefrin and Thaler 1988). The impact of mental accounts on benefits decisions is likely to be significant. The creation of these accounts is context dependent, and prior work has demonstrated that the source and timing of payments affects the allocation of resources into mental accounts. Results from this work demonstrate that other normatively unimportant factors of the choice such as presentation order impact the construction of mental accounts. These results describe mental accounting biases within the context of health care benefits and demonstrate that the construction of mental accounts is highly unstable and easily manipulated within this domain.     

Will employee choice and defined contribution health plans salvage the embattled managed care system?

Defined contribution or consumer-driven health approaches will shift to employees not just the risks and rewards of the managed care system, but also decisions that will determine whether that system can survive. This article reviews the current state of the employer-sponsored health care system, describes defined contribution and consumer-driven health plan concepts, and outlines the approaches and steps employers can take to implement them. The author argues that, if fully implemented, such approaches could salvage the embattled managed care system by giving employees a financial stake in controlling medical costs while educating them to wisely take control of health plan spending decisions.     

Health care spending accounts: a flexible solution for Canadian employers

Flexible benefits plans have grown more slowly in Canada than in the United States, largely because of certain legal and regulatory considerations. Health care spending accounts (HCSAs) provide a cost-effective way for Canadian employers to address the health care benefit needs of a diverse workforce. A flexible health care spending account is a versatile and cost-effective instrument that can be used by Canadian employers that wish to provide a full range of health care benefits to employees. The health care alternatives available through an HCSA can provide employees with an opportunity to customize and optimize their benefits program. Regulatory requirements that an HCSA must meet in order to qualify for available tax advantages are discussed, as are the range of health care services that may be covered.     

The Effects of Consumer-Directed Health Plans on Health Care Spending

We use unique data from an insurer that exclusively offers high-deductible, "consumer-directed" health plans to identify the effect of plan features, notably employer contributions to the spending account, on health care spending. Our results show that the marginal dollar contributed by the employer to the spending account is entirely spent on outpatient and pharmacy services. In contrast, out-of-pocket spending was not responsive to the amount the employer contributes to the spending account. Our results represent the first plausibly causal estimates of the components of consumer-driven health plans on health spending. The magnitudes of the effects suggest important health care spending consequences to higher employer contributions to spending accounts. Our findings are most directly relevant to health reimbursement arrangement plan designs, though our results are still of value to health savings account plan designs.     

Performance evaluation inflation and compression

We provide a behavioral account of subjective performance evaluation inflation (i.e., leniency bias) and compression (i.e., centrality bias). When a manager observes noisy signals of employee performance and the manager strives to produce accurate ratings but feels worse about unfavorable errors than about favorable errors, the manager’s selfishly optimal ratings will be biased upwards. Both the uncertainty about performance and the asymmetry in the manager’s utility are necessary conditions for performance evaluation inflation. Moreover, the extent of the bias is increasing in the variance of the performance signal and in the asymmetry in aversion to unfair ratings. Uncertainty about performance also leads to compressed ratings. These results suggest that performance appraisals based on well-defined unambiguous criteria will have less bias. Additionally, we demonstrate that employer and employee can account for biased performance evaluations when they agree to a contract, and thus, to the extent leniency bias and centrality bias persist, these biases hurt employee performance and lower firm productivity.     

政府卫生支出的差异性评估:基于省际、区域和城乡的实证研究

本文聚焦政府卫生支出的差异性,运用基尼系数、泰勒指数等方法,定量研究省际、区域间和城乡间政府卫生支出的不均衡状况和程度,研究发现,经济发展水平决定了各地政府卫生支出的水平和居民医疗卫生服务的水平.医疗卫生资源的配置不当和制度缺陷是造成目前政府卫生支出不均衡的主要原因.在新医改的背景下,调整发展思路,完善相关制度有助于改善政府卫生支出不均衡的状况.但是,制度的惯性和体制的约束决定了不均衡状况的改变将是一项长期的工作.     

A Review of Major Influences on Employee Retirement Investment Decisions

The recent retirement plan debacle of the Enron employees has caused regulators and lawmakers to think about new ways to protect and help retirement plan participants. When investigating participant investment decisions, researchers have traditionally studied the retirement plan characteristics and employee characteristics. More recently, some researchers have extended the analysis to social influences, such as social norms and peer affects. Others have expanded into behavioral finance and examined the role of various psychological biases. This paper combines and summarizes these four sets of influences so that researchers and policy makers can better understand all the influences affecting an employee when making retirement plan contribution and investment decisions.     

Optimum Allocations to Health Care Flexible Spending Accounts

Abstract

Models used to derive optimal contributions to health care flexible spending accounts (FSAs) typically assume an employee’s household annual out-of-pocket health care expenses are an absolutely continuously random variable. This assumption, however, ignores the fact that some employees may be able to accurately predict a portion of their household annual out-of-pocket health care expenses and often actually incur only those expenses during the plan year, implying that a mixed random variable may be more appropriate. In addition, data have shown that employees are setting contributions at lower levels than existing absolutely continuous models would suggest is optimal. Using a mixed model of household annual out-of-pocket health care expenses we prove that it is often optimal for employees to contribute an amount equal to their household annual predictable out-of-pocket expenses, thus avoiding the risk of forfeiture. We also propose a practical rule of thumb that employees may use for setting their FSA contributions. Overall, we recommend that employees use their FSAs to cover only their highly predictable out-of-pocket health care expenses rather than use their FSAs as a contingency fund to pay for unlikely or unexpected outof-pocket health care expenses.     

Hospital use behaviors and associated costs in a health insurance organization, Japan

Physicians are known to play an important role in the rise of health care costs. But patients--the other side of the chain of health care systems--have been given little attention. The present study utilized the outpatient claims (in the belief that the outpatient hospital visits are mainly decided by the patients) from a health insurance organization in Japan (the Fukuoka Prefecture public service mutual aid association for government employees who serve in small cities, towns, and villages) to analyze the employee behaviors in the use of hospital care and the costs associated with these behaviors. Number of diseases diagnosed for an employee, number of claims an employee submitted for one disease, number of hospitals an employee visited, number of claims an employee had from one hospital, and the total number of claims an employee submitted were used to describe the hospital use behaviors. Results showed that some employees exhibited unusual behaviors, characterized by having an extremely large number of diseases diagnosed, visiting a large number of different hospitals, having a large number of claims, etc. Higher medical expenditures were associated with such behaviors. The findings of this study suggest that the patients' role in the rise of health care costs cannot be ignored, and cost-containment strategies targeting modification of patient behaviors in the use of hospital care may prove to be very useful.     

Employee contributions: a primer on their use, historical trends and overall fit within benefits strategy

This article focuses on the use of employee contributions as a strategic tool within employee health plans. While most employers require some form of employee contributions for health care, there is no clear "one-size-fits-all" solution. A myriad of strategies are in place, some active and some passive. This article reviews both common and emerging strategies and how they differ based on industry, employer size and region; discusses how employee contribution strategy fits within overall benefits strategy; and provides a strategic framework for approaching employee contributions in the future.     

Integrating benefits decision making

Integrated employee benefit decision making helps employees use their benefits more wisely and identify opportunities to balance their immediate benefits needs (such as health care) and future benefits needs (such as retirement). This article discusses how employers can overcome employees' behavioral barriers to making integrated employee benefit decisions by changing the ways benefits are communicated and employees are presented with action decisions. Undertaking these steps allows employers to not only improve their employees' overall financial perspectives, but also furthers plan sponsors' goals of actively promoting personal responsibility with respect to retirement funding and changing employee behavior with respect to controlling health care costs.     

Health Benefit Downward Rigidity: Employers’ Responses to Rising Insurance Costs

The article examines employers’ responses to rising insurance costs using Census Bureau Medical Expenditure Panel Survey–Insurance Component data from 1997 to 2005. The findings confirm that employers did not take dramatic actions to reduce benefit in response to the rising insurance cost during our study period. Most employers did not drop health insurance coverage, reduce workers’ eligibility for insurance, or substantially scale back their health insurance coverage. Instead, companies controlled the insurance cost in more subtle ways by adopting cost‐efficient health plans and requesting employee contribution to the insurance premium and out‐of‐pocket expenses for medical treatments. Our results show that the effect of those tactics was limited. The share of employee spending did not rise along with the growth of insurance premiums. Employers absorbed a large portion of the increased insurance cost.     

Engaging employees in health care can contain costs and improve quality

Employers need to do much more to change some of the deep-seated employee attitudes and behaviors that are driving health care costs. This article debunks common employer misconceptions about employees' attitudes and behaviors with regard to health care. It then discusses the results employers can obtain by taking specific initiatives that provide employees with the motivation and resources they need to effectively manage health risks and make informed health care decisions.     

Single-payer health care systems: the roles and responsibilities of the public and private sectors

Health care systems all over the world are experiencing some change as they look for a new balance between supply and demand. This article provides context for the U.S. health care financing debate by examining the health care systems of five other countries: Canada, the United Kingdom, Australia, China and India. The authors show that, with few exceptions, countries around the world have seen an increase in both government and private health care spending between 1998 and 2002. The authors also demonstrate that employers throughout most of the world are becoming more, rather than less, involved in the funding and delivery of health care to employees and their dependents-even among nations with so-called single-payer health systems.     

The Health Economy and Health Insurance Research in the JRI

College professors typically expend a considerable amount of time, energy, and effort on academic research. But only one study to date has demonstrated the societal benefit of such research by showing that the content of academic research responds to real-world problems. This article adds to this scant literature by investigating empirically if the prevalence of health insurance articles in the Journal of Risk and Insurance ( JRI ) can be explained by the state of the health economy. According to the findings, both the uninsured rate and health care spending share are directly related to the percentage of health insurance articles published in the JRI . Thus, the empirical results suggest that the research decisions of insurance economists are influenced at the margin by real-world problems.     

The Effects of Information and Cognitive Processes on Decision Making

This article examines the efficacy of a two-stage cognitive model of decision making within the context of loan decisions. A covariance structural analysis of the cognitive processes that loan officers and MBA students used to reach loan decisions was examined through measures designed to test the proposed two-stage processing model. The results indicated that, during the first stage of cognitive processing, conceptually-driven and data-driven perceptual biases caused different assessments of loan information. The results also indicated that judgments made during the second phase of processing significantly affected decision choice. The well documented conservatism bias was also evident in the results. The result was that experienced loan officers did not out-perform novice students on most of the loan decisions. The relative usefulness of the two-stage model is discussed and general suggestions for future decision making research are offered.     

An Examination of the Biases in Estimating the Benefit of Debt Insurance

This paper examines the biases in previous studies of estimating the benefit of debt insurance. We identify three possible sources of estimation biases: selection bias, marketability bias, and premium bias. Our findings indicate that both the selection bias and the marketability bias cause an underestimation of the actual benefit of bond insurance, while the premium bias results in an overestimation. Future research could benefit from this study by explicitly accounting for these estimating biases in obtaining a more accurate evaluation of the role of debt insurance in the market.     

How do low-income enrollees in the Affordable Care Act marketplaces respond to cost-sharing?

The Affordable Care Act requires insurers to offer cost-sharing reductions (CSRs) to low-income consumers on the marketplaces. We link 2013–2015 All-Payer Claims Data to 2004–2013 administrative hospital discharge data from Utah and exploit policy-driven differences in the actuarial value of CSR plans that are solely determined by income. This allows us to examine the effect of cost-sharing on medical spending among low-income individuals. We find that enrollees facing lower levels of cost-sharing have higher levels of healthcare spending, controlling for past healthcare use. We estimate demand elasticities of total health care spending among this low-income population of approximately −0.12, suggesting that demand-side price mechanisms in health insurance design work similarly for low-income and higher-income individuals. We also find that cost-sharing subsidies substantially lower out-of-pocket medical care spending, showing that the CSR program is a key mechanism for making health care affordable to low-income individuals.     

Direct provider contracting: one employer's experience.

Employers and unions typically offer an array of health care options to their plan participants including many managed care options. However, until recently, few have considered contracting directly with an integrated delivery system (IDS), therefore circumventing health plans altogether. This article offers a case study of one employer's experience with direct IDS contracting, including employee contribution strategy, benefits design and evaluation of the delivery system.     

Employee communications and health care reform

The Patient Protection and Affordable Care Act (PPACA) has made health care reform a reality. Although many of PPACA's details are still unclear to many employers, and most of the act's major reforms will take effect over the next several years, companies have reason to begin preparing for change and enough information to begin a communications effort with employees. The authors describe a number of immediate actions that employers should take to make the most of their own understanding of PPACA as it develops, as well as help their employee benefits leaders make the most informed decisions about when and how to communicate with employees about the law and its impact on their group health plan coverage.