Research about behavioral economics—the study of how people make choices, drawing on insights from psychology and economics—can be extremely useful in designing and communicating employee health plans.
Many health decisions that should be rational are not. In fact, irrational decisions that involve health benefits and health care are prevalent throughout peoples’ lives. The following are a few examples:
• Although children receive numerous public health messages, many young adults still become tobacco and drug users and/or obese and diabetic.
• While people understand the value of preventive health care and like the fact that many health plans now offer preventive care services without deductibles, co-payments or co-insurance, many still fail to get free health screenings or physical exams.
• Few consumers access the substantial amount of data that is available about hospital costs and mortality, readmission and hospital-acquired infection rates when they make decisions about hospitals and surgeons.
• Many people with addictions relapse into addictive behavior following lengthy periods of abstinence and sobriety.
• When some people reach age 65, they ask a friend which of the many Medicare plans to purchase instead of researching the options and making an informed decision.
In each of these examples, behavioral biases cloud rational judgment. Understanding these tendencies can help organizations redesign how they configure and communicate their health benefit plans to nudge people toward better decisions that produce better outcomes for participants and employers.