The Dis Side of Incentives

A few days ago, I blogged about the link between education and health, and the ideas propounded by James Heckman of the University of Chicago and Robert Kaestner of the University of Illinois at Chicago -- the need for early childhood intervention and a good education to, as Kaestner put it, "make it easier for people to obtain and process information about the causes and consequences of health."

I'm writing more about that in my health column in the September issue of Governing.

But today I saw a report on West Virginia's Medicaid "redesign." This is the one where the state rewards those who sign a "personal responsibility" agreement ("I will do my best to stay healthy.") and punishes those who do not by restricting their access to certain health services.

For children, it means the parents have to sign. Turns out, a lot of parents did not. One year into the plan, nine out of ten West Virginia children with Medicaid have had benefits restricted.

I can't help but think about the Heckman and Kaestner theories as some sort of explanation for why parents failed to sign the agreement. (It didn't help that the state did not do a good job in  explaining the program and advising parents about what was at stake.)

Not only have West Virginia's changes resulted in limiting benefits primarily for children, they have also, according to a study by Georgetown University's Center for Children and Families, had "no discernible impact on the stated goals of improving beneficiaries' health and increasing healthy behavior."

As the report also notes, "Programs designed to change personal behaviors based on positive or negative incentives can be valuable but they are complex and are dependent on beneficiary understanding and active participation."