One of the primary goals of the Affordable Care Act’s implementers will be to create a health care system that encourages consumers to make more prudent choices while driving doctors and insurers to provide health care more efficiently. In this ongoing project, the insights of behavioral economics will be crucial. While traditional economic models treat health care as a simple consumption good, about which rational consumers can efficiently make reasoned decisions in light of their preferences, a wide range of empirical studies demonstrates that health care markets are vulnerable to a panoply of market failures. Behavioral economics can help explain some of these failures while suggesting more efficient structures for future health care markets.
This Note proceeds in two parts. In Part I, I review the behavioral economics literature and develop two key themes that should inform policy makers’ thinking about efficient health care markets. In Part II, I apply these themes to three prongs of the ACA and outline ways in which the teachings of behavioral economics can make implementation of the ACA a more effective public-policy endeavor.
The author is a third-year student at the Yale Law School.
