Helena Szrek

Choice Set Size and Decision Making: The Case of Medicare Part D Prescription Drug Plans

Background. The impact of choice on consumer decision making is controversial in US health policy. Objective. The authors’ objective was to determine how choice set size influences decision making among Medicare beneficiaries choosing prescription drug plans. Methods. The authors randomly assigned members of an Internet-enabled panel age 65 and older to sets of prescription drug plans of varying sizes (2, 5, 10, and 16) and asked them to choose a plan. Respondents answered questions about the plan they chose, the choice set, and the decision process. The authors used ordered probit models to estimate the effect of choice set size on the study outcomes. Results. Both the benefits of choice, measured by whether the chosen plan is close to the ideal plan, and the costs, measured by whether the respondent found decision making difficult, increased with choice set size. Choice set size was not associated with the probability of enrolling in any plan. Conclusions. Medicare beneficiaries face a tension between not wanting to choose from too many options and feeling happier with an outcome when they have more alternatives. Interventions that reduce cognitive costs when choice sets are large may make this program more attractive to beneficiaries.

Age and the purchase of prescription drug insurance by older adults

The Medicare Part D Prescription Drug Program places an unprecedented degree of choice in the hands of older adults despite concerns over their ability to make effective decisions and desire to have extensive choice in this context. While previous research has compared older adults to younger adults along these dimensions, our study, in contrast, examines how likelihood to delay decision making and preferences for choice differ by age among older age cohorts. Our analysis is based on responses of older adults to a simulation of enrollment in Medicare Part D. We examine how age, numeracy, cognitive reflection, and the interaction between age and performance on these instruments are related to the decision to enroll in a Medicare prescription drug plan and preference for choice in this context. We find that numeracy and cognitive reflection are positively associated with enrollment likelihood and that they are more important determinants of enrollment than age. We also find that greater numeracy is associated with a lower willingness to pay for choice. Hence, our findings raise concern that older adults, and, in particular, those with poorer numerical processing skills, may need extra support in enrolling in the program: they are less likely to enroll than those with stronger numerical processing skills, even though they show greater willingness to pay for choice.

Enrollment in prescription drug insurance: the interaction of numeracy and choice set size

OBJECTIVE To determine how choice set size affects decision quality among individuals of different levels of numeracy choosing prescription drug plans. METHOD Members of an Internet-enabled panel age 65 and over were randomly assigned to sets of prescription drug plans varying in size from 2 to 16 plans from which they made a hypothetical choice. They answered questions about enrollment likelihood and the costs and benefits of their choice. The measure of decision quality was enrollment likelihood among those for whom enrollment was beneficial. Enrollment likelihood by numeracy and choice set size was calculated. A model of moderated mediation was analyzed to understand the role of numeracy as a moderator of the relationship between the number of plans and the quality of the enrollment decision and the roles of the costs and benefits in mediating that relationship. RESULTS More numerate adults made better decisions than less numerate adults when choosing among a small number of alternatives but not when choice sets were larger. Choice set size had little effect on decision making of less numerate adults. Differences in decision making costs between more and less numerate adults helped explain the effect of choice set size on decision quality. CONCLUSIONS Interventions to improve decision making in the context of Medicare Part D may differentially affect lower and higher numeracy adults. The conflicting results on choice overload in the psychology literature may be explained in part by differences amongst individuals in how they respond to choice set size.

TOO SICK TO START: ENTREPRENEUR’S HEALTH AND BUSINESS ENTRY IN TOWNSHIPS AROUND DURBAN, SOUTH AFRICA

Unlike large firms with management teams, small businesses are usually run by one key person, the owner-entrepreneur, who bears almost all of the risks and makes almost all of the decisions related to the business. Because the owner-entrepreneur also embodies most of the firm-specific knowledge capital, health of the owner-entrepreneur is an important factor in the production process. Following a cohort of respondents in townships around Durban, South Africa, over a three-year period, we examined the relationship between an individuals physical health and the decision to start a business. Our results suggest that respondents who were recent business entrants were in better health than respondents who did not start new businesses. Moreover, respondents without a business at the beginning of the study who later opened businesses during the three-year study interval were significantly more likely to have better baseline health than those respondents who never started a new business. Hence, good health among entrepreneurs seems to be an important prerequisite to small business entry.

Going beyond life expectancy in assessments of health systems’ performance: life expectancy adjusted by perceived health status

International comparisons of health systems data have been used to guide health policy. Health systems performance is generally evaluated on how different factors contribute to mortality and longevity. Fewer studies scrutinize the factors that determine morbidity in different countries, partly because indicators that assess morbidity on a country level are not as widely available as mortality and longevity data. We introduce a new health status indicator able to combine mortality and morbidity in a single composite measure for each country and gender at a point in time (LEAPHS), yielding the average number of years that men (women) can expect to live in “good” (or better) health. Using the Sullivan method we combine the mortality risk, calculated for specific age and gender groups, with perceived health status for the same age and gender groups, and we estimate how medical care and various socio-economic, environmental and structural, lifestyle, and technological factors affect LEAPHS and life expectancy at birth for a large panel of thirty OECD countries. We find that some variables (alcohol consumption, urbanization) have a significant effect on both LEAPHS and life expectancy, while one variable (the number of hospitals) has a significant effect for both genders on life expectancy only. However, the effects of many other variables (health expenditure per capita, health expenditure per capita squared, GDP growth, and technology) were only significant predictors for LEAPHS. This leads us to conclude that LEAPHS is able to capture the impact of some health determinants not captured by life expectancy at birth. While we believe this new measure may be useful for health economists and statisticians doing cross-country analyses, further comparisons with other measures may be useful.

Depression and social functioning among HIV-infected and uninfected persons in South Africa

Depression and other health problems are common co-morbidities among persons living with human immunodeficiency virus infection/acquired immunodeficiency syndrome (HIV/AIDS). The aim of this study was to investigate depression, health status, and substance use in relation to HIV-infected and uninfected individuals in South Africa. Using a cross-sectional case-control design, we compared depression, physical health, mental health, problem alcohol use, and tobacco use in a sample of HIV-infected (N = 143) and HIV-uninfected (N = 199) respondents who had known their HIV status for two months. We found that depression was higher, and physical health and mental health were lower in HIV-positive than HIV-negative individuals. Poor physical health also moderated the effect of HIV infection on depression; HIV-positive individuals were significantly more depressed than HIV-negative controls, but only when general physical health was also poor. We did not find an association between alcohol or tobacco use and HIV status. These results suggest the importance of incorporating the management of psychological health in the treatment of HIV.

Do Customers Flee From HIV? A Survey of HIV Stigma and Its Potential Economic Consequences on Small Businesses in Tshwane (Pretoria), South Africa

HIV stigma and discrimination affect care-seeking behavior and may also affect entrepreneurial activity. We interview 2382 individuals in Pretoria, South Africa, and show that respondents believe that businesses with known HIV+ workers may lose up to half of their customers, although the impact depends on the type of business. Survey respondents’ fear of getting HIV from consuming everyday products sold by the business—despite a real infection risk of zero—was a major factor driving perceived decline in customers, especially among food businesses. Respondents’ perceptions of the decline in overall life satisfaction when one gets sick from HIV and the respondent’s dislike of people with HIV were also important predictors of potential customer exit. We suggest policy mechanisms that could improve the earnings potential of HIV+ workers: reducing public health scare tactics that exacerbate irrational fear of HIV infection risk and enriching public health education about HIV and ARVs to improve perceptions about people with HIV.ResumenEl efecto discriminatorio y estigma hacia el VIH puede afectar a la búsqueda de ayuda y a la actividad emprendedora. Entrevistamos a 2.382 personas en Pretoria, Sudáfrica. Los encuestados creen que los empresarios con trabajadores con VIH+ conocido pueden perder hasta la mitad de sus clientes, aunque el impacto depende del tipo de negocio. El que los encuestados teman adquirir VIH por el consumo diarios de productos de un negocio, a pesar del riesgo de infección ser nulo, es un factor importante para el declive en el número de clientes, especialmente en el sector alimentario. Otros de los factores que predicen la pérdida de clientes son la percepción de los encuestados de que la satisfacción general de la vida disminuye cuando uno se enferma a causa del VIH y la aversión a las personas con VIH. Sugerimos mecanismos políticos que puedan mejorar el potencial de ingresos de los trabajadores con VIH+: tácticas de reducción de alarma sanitaria que exacerba el miedo irracional de riesgo de infección de VIH y enriquecer la educación de la sociedad en salud sobre el VIH y los ARV para mejorar las percepciones sobre las personas con VIH.