By Lisa Ward
That’s the idea behind so-called choice architecture, or presenting options in a way that subtly encourages people toward a desired decision. Based on psychology and behavioral economics, it aims to encourage people to make better choices without openly limiting their options.
Often referred to as a “nudge,” choice architecture is widely used in personal finance. To encourage people to invest in 401(k)s, for example, many employers automatically deduct contributions from paychecks unless a worker specifies otherwise.
Now, health-care providers and payers increasingly are incorporating principles of choice architecture in their dealings with patients and doctors, with the aim of cutting costs while preserving patient autonomy.
For example, some states encourage child vaccinations by making it difficult for parents to opt out. They may require a doctor’s signature or a trip to a government office to sign an unvaccinated child up for school. Elsewhere, insurers and hospitals may encourage doctors to prescribe a generic drug over an expensive one by displaying the generic more prominently on a form.
While research suggests that choice architecture can be a powerful tool, it also raises concerns that it could be used by insurers and hospitals to advance their own interests rather than the patient’s.
That question is the among the issues examined in a recent book, “Nudging Health: Health Law and Behavioral Economics,” edited by Christopher T. Robertson, an associate dean and law-school professor at the University of Arizona; I. Glenn Cohen, professor at Harvard Law School and faculty director of the law school’s Petrie-Flom Center; and Holly Fernandez Lynch, executive director of the Petrie-Flom Center.
The Wall Street Journal spoke with Prof. Robertson about using choice architecture in health care. Edited excerpts follow:
WSJ: How can choice architecture be used to help people make better health-care decisions?
PROF. ROBERTSON: Only about 30% of Americans have advance-care directives where they make decisions about future treatment in case they are ever incapacitated. One way to get more people to do advance directives is by making it a condition for buying health insurance or a way to earn a discount on their policies. Research shows that individuals [with such directives] often chose care that’s less intensive, invasive, and therefore less expensive, than is otherwise presumed. So this is an example of where policy makers have an interest in helping people make decisions that better reflect their own preferences.
WSJ: Do nudges work when people have an array of options from which to choose?
PROF. ROBERTSON:Think of a corporate cafeteria. If the company wants employees to eat more fruits or vegetables, it should put them at eye level. It also can place sugary desserts off to the side where people have to seek them out. One important aspect of choice architecture, based on key insights from behavioral science, is to make the good choice the easy choice.
There also is an assumption that it is better to have more choices, but studies from behavioral science show people are often befuddled by too many choices. They can suffer from overload and become stressed and confused, so the added choices don’t improve outcomes or satisfaction.
So I think curating choices can add a lot of value. For example, buying health insurance is impossibly complex because there are thousands of options, but by creating levels of coverage—bronze, silver, gold—the Affordable Care Act simplified the process. Patients may end up having only a handful of plans from which to choose, but they can make apples-to-apples comparisons and buy a plan better reflecting their actual preferences.
WSJ: Why is choice architecture better than traditional incentives?
PROF. ROBERTSON: To get doctors to prescribe more generic drugs, they could be offered a carrot, like a bonus based on the number of generic drugs prescribed, or a stick, forbidding them to write more than a certain number of brand-name prescriptions. But these incentives are demeaning. They overtly undermine physicians’ discretion, and it’s hard to calibrate the quality of the decision, especially because it creates a conflict of interest. But nudges, in which physicians are required to scroll down farther or sign an extra form to prescribe a name-brand drug, create a small inconvenience that might shift physician behavior toward a path of least resistance, but it maintains their discretion.
WSJ: One critique of choice architecture in health care is that it may work in the best interests of the government, hospital system or insurer, rather than the patient. Do you see that as a problem?
PROF. ROBERTSON: With health care, all decisions have larger implications. If a physician is writing too many brand-name prescriptions, it isn’t just the patient’s interest. Everyone in the same insurance pool and the taxpayers subsidizing the insurance pool [would benefit] if the doctor prescribed fewer brand-name drugs. So it is perfectly fair to keep all perspectives in mind.
It’s also important to understand that there is often no way to avoid choice architecture—people are pushed in a direction to make a decision regardless. The question is: Are you doing it accidentally or purposely? Why is it OK to do this accidentally, without a plan, and do patients harm, but it isn’t OK to better facilitate decisions?
WSJ: Can you provide an example?
PROF. ROBERTSON: In the U.S., people have to go out and find health-insurance coverage, and the path of least resistance is to not get it. In other countries people are covered automatically. That’s the irony of the Affordable Care Act. Although it has a mandate to get coverage, it really has preserved the option to not be covered since it requires people to opt in to avoid the penalty. A slightly stronger version would default people into coverage, charging a premium rather than a penalty, while allowing people to opt out. There have been proposals as part of health-care reform to do this because it would repeal the mandate and preserve the choice to be uninsured, while at the same time potentially causing more people to be insured through automatic enrollment.
WSJ: Can choice architecture go awry?
PROF. ROBERTSON: Nudges can be designed poorly. Several states require people applying for a driver’s license to decide if they want to be organ donors. It turns out the DMV isn’t a very good place to make such decisions. People are in a hurry and the last thing they want is to spend more time contemplating their own deaths. When forced into a corner, people are more likely to just say no, which undermines the policy goal. So the nudges backfired.
One of the larger themes of the book is that these are just ideas or proposals that need to be first tested in the lab and then tested in the field. The science of nudging itself is still in its infancy, and we are learning a lot more about what works and where.
WSJ: Are there other pitfalls?
PROF. ROBERTSON: Nudges may have a small effect when there are structural or systematic problems that need to be addressed.
Merely putting healthy food in the right places or disclosing nutrition information on food labels is unlikely to solve [the obesity problem because the U.S. has] larger, fundamental problems: The government subsidizes unhealthy food, and many people lack access to fresh fruits and vegetables.
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