Price and saliency in health care: When can targeted nudges change behaviors?

Abstract

This paper takes advantage of a natural experiment to examine the relationship between the price and saliency of health services. A large employer e-mailed individually targeted health education encouraging high-value care to high-risk employees. Weeks before the program launched, a company reorganization affecting about a quarter of employees resulted in employees in that group not receiving the intervention. Using event study, difference-in-differences, and triple differences methods, I find that costlier services are associated with relatively less utilization and that prior use was associated with relatively more utilization following the campaigns. In all cases, the targeted nudges either increased or did not affect utilization, suggesting that while these interventions may increase health care consumption choices for some lower-cost preventative services or for some services previously utilized, it is unlikely to reduce health care costs in the short-run. This research may inform employer, governmental, and health insurer choices concerning low-cost interventions seeking to shift health behaviors, and may also be relevant in other settings in which targeted informational nudges are deployed.