When Does a Comprehensive Prevention Strategy Work? On the Relation between Primary and Medical Offered Prevention

Abstract

Rationale: There is an ongoing debate on the effectiveness and the efficiency of medical prevention. In the light of this discussion, recent evaluation results do not really help to develop sustainable prevention strategies. Macroeconomics of prevention, especially the question for cost-savings in the long run, often neglect the discussion on sustainable incentive strategies that could simultaneously incorporate relevant incentives which encompasses monetary as well non-monetary aspects. The latter include information on doing “right forms” of prevention. Hence, we look at the interdependence of adequate insurance contracts and the condition for which distinctive prevention strategies work.

Objectives: Some questions accrue within this problem set: • What are the driving factors for accepting medical offered prevention? Will a premium discount be sufficient? • Given that prevention really saves money will it be efficient to promote such a prevention strategy to all kind of patients? • What is the mix of primary and secondary prevention strategies that can help fostering enduring prevention efforts?

Our special interest is to find some principal types where primary and medical induced prevention could benefit from each other or really mitigate each other. We want to find out some types of prevention measures which must be matched to premium effects and patients´ characteristics.

Methodology: Referring to traditional papers in the line of Becker and Ehrlich (1972) we employ a model of self-protection to analyze impacts of different prevention settings offered by a health insurer. In addition to standard papers, we distinguish between different types of patients with a different affinity for accepting organized prevention. We use comparative statics to elaborate conditions for a successful prevention strategy. As we refrain from typical risk-selection problems, we concentrate on the second-best strategy where the insurer has to choose after the insurance contract is set.

Results: The theoretical model shows the trade-off between medical and non-medical prevention and their strategic dependences. If medical offered prevention saves money, a higher level of prevention supplied by the insurance company usually leads to a reduction of primary prevention. Only in the case when primary prevention and medical offered prevention work as strategic complements it might be possible that additional offers of prevention incite the patient for doing more primary prevention.

Conclusions: In a world of asymmetric information, the insurer reduces the coverage level to give the patient incentives to engage in prevention activities and therefore to reduce the ex ante moral hazard. This means that co-payments are charged in order to balance the incentive structure. These monetary incentives may only work as a necessary condition because of the impact of patient´s prevention type on the effectiveness of prevention.

Keywords: Self-protection model, interrelation between primary and secondary prevention, premium effect