Half-Baked Idea: Bribe People To Stay Healthy

People have a tendency to behave differently when they have insurance... they are a tad more careless than they should be, because its suddenly "somebody else's responsibility" to pay when things go wrong.

Auto insurance? If somebody scratches your car the insurance company has to pay for the paint job... even if you yourself scratched your paint job a dozen times prior to that. Theft insurance? Maybe you care less if somebody steals your 3-year-old computer, because then you get a new one. Health insurance? Well, then you might demand a CAT scan for every headache, an MRI for a sprained ankle, and expensive drugs instead of just taking a walk once in a while...

If "somebody else" is paying the repair costs, people tend to stop taking care of their stuff... This is what economists call adverse selection, and its a common reason why insurance is more expensive than it should be...

As we move towards health care reform in this country, a lot of people are concerned about this kind of behavior becoming more widespread. We need some kind of system that prods people into being more responsible with their health, but it cannot be coercion, nor can it be preachy nagging. This is the paradox about us: Americans love telling people what to do, but we hate being told what to do.

My solution? Bribe people to stay healthy. It sounds silly, but similar projects have shown promise for different kinds of insurance...

Take a classic case of unemployment insurance. In general -- and barring a widespread economic downturn like today -- most unemployed people find work within the first 2 months of being unemployed... even though they are receiving unemployment benefits. After this, there really aren't many people who get jobs in the 3rd, 4th, or 5th month of unemployment. That's because unemployment insurance lasts 6 months. At the last moment -- right about when the free money dries up -- there's another huge surge of people getting jobs.

In the 1990s, there was something called the Illinois Reemployment Bonus Experiment, where unemployed people got a bonus for getting a job within 60 days. Instead of waiting around for 6 months, most people worked hard to get jobs in 60 days, just to get that bonus. About half of them applied for different jobs with their previous employer. Overall, this decreased the costs of insurance, because they didn't have to pay the extra benefits for the other months. Critics say it could use some more fine-tuning -- many people quit the new jobs right after they held it enough to qualify for the bonus. Nonetheless, they proved their point, and saved a lot of money, despite the cheaters.

Why not try similar experiments with health care? How about instead of wasting money on preachy public service announcements that never work, you give $500 to anybody who quits smoking? How about a $1000 bonus for marathon runners? How about if your health care costs are significantly below average, and yet you still qualify as "healthy" in an annual physical, you get a little bling? How about on your income tax return, you can get a deduction of 300 minus your blood cholesterol?

Naturally, I'm not a doctor, nor an insurance guru, nor a biostatistician... and my friends who are experts seem divided on whether this will work. There are problems with setting the right "bribe," caching cheaters, general fairness, and a feeling that genuinely sick people shouldn't be doubly punished. All valid points, but I'm not talking about individuals; I'm talking about the aggregate.

All I know, is that if we have universal health care -- in ANY form -- there will be no direct economic incentive to stay healthy. Given how generally unhealthy Americans are already, and how we like to overspend on doctors, that's a recipe for big financial problems. I know people "should" just stay healthy because its the "right thing to do," but we also all "should" eat 5 servings of veggies per day. We don't, because the payoff is too vague.

But what if your health insurance provider gave you $500, if you could prove you ate broccoli every day?

I would bet anything that a lot more people would suddenly become more interested in their health...

One sided solutions never work

I wish it was that simple. Unfortunately, this is too one-sided approach to the problem. Needless to say that the components of something like you are proposing are already in place: fitness discount, wellness and health incentive programs have been around for 3-4 years. With modest results to put it mildly. Reason: they focus on Consumer side of the story and ignore other parts of the equation: Payors(Insurers), Providers and Sponsors (Employers). This kind of solutions will always have limited success with the current system that rewards low quality/high price providers and makes commercial insurance (employers and individuals) subsidize non-commercial and under-insured health coverage. Any economic incentive to stay healthy is offset by higher premiums and higher routine and preventive care charges to help less fortunate (health wise) to pay their medical bills.

its not one sided...

Its only one side of a much larger framework. This still requires the insurers and the government to cut costs, but unless there is a built-in financial incentive for individuals to stay healthy, there will always be a strong pressure to waste "other people's money."

The wellness incentives don't go far enough, IMHO. Although, the only way we can know for sure is to do a mid-sized experiment along the lines of the Illinois Re-Employment experiment.

Any economic incentive to stay healthy is offset by higher premiums and higher routine and preventive care charges to help less fortunate (health wise) to pay their medical bills.

Um... how so? These are totally different problems. The concern is that healthy people waste money on unnecessary tests, so you give them an incentive to not do that. It will need to be tuned so that its significant, but still saves money. That means if you are sick and really need those tests, then there is plenty of money left over for you.

Some Flaws

Great concept. I worry about catching a broad enough spectrum without incurring too much paper-work and overhead for all involved. Though the pay to stop smoking concept has been studied.



Already in the oven

For the last several years, my current employer has required employees to complete a survey to be eligible for a discount on health plan premiums. The survey asks general health questions, and requires (every other year) the completion of an on-site health screen (blood pressure, cholesterol level, etc.). I can't speak as to how the company actually uses the data, but at least the company believes that this survey and checkup provides significant benefits.

We need all pieces in place

We are talking about behavioral change to get people stay healthy. Behavioral changes are hard - you need strong enough incentive so you can see clear economical advantage of healthy lifestyle. Unfortunately, in the current system incenting people economically to be more responsible for their health is like give a bonus with income taxes taking away 80% and inflation eating the rest of it. Let's consider this:

a) So you get $1000 to be a marathon runner or $500 to eat brocolli each day but at the same time

b) With increasing cost of care your employer pushes bigger and bigger portion of health insurance premium and increases cost sharing through higher deductibles and lower benefits. If you buy individual coverage you premium goes up every year and coverage level goes down. Generally, regardless of how healthy you are. Because your premium is calculated based on group age and few other factors and your employer rates are detemined based on group census. And 90% of premium increase comes from increased cost of care at the industry level.

c) When you go to a doctor - you have to see a doctor sometime even if you are exceptionally healthy (e.g. breast cancer screening, vision check, sport activity related injures) - you healthy style stimulus gets another cut. First, you get disproportional charges for preventive and routing care. Secondly, these charges hit deductible so it is all on you. And since you are healthy you have just a few doctor visits so you will not likely to see any health plan payouts. But you still pay the premium.

d) You want to eath healthy. But healthy food is expensive. It is much cheaper to buy junk food.

Re: We need all pieces in place

a) that's just an example... I haven't yet done the hard math to see if those specific numbers make sense.

b) this plan probably won't work without some level of universal coverage. There are a lot of ideas being thrown out here in the USA, economists favor something like what they have in Singapore and Taiwan... I prefer a public/private blend, plus some additional financial pressure to keep everybody healthy.

c) the idea was having to "prove" health... so routine screenings -- 12-month physicals, cholesterol screening, cancer screening -- would be considered a requirement before you'd even qualify for getting cash back. The last thing we want is for an ill person to neglect basic care just to get $500. We are all better off if they get treatment as soon as possible...

d) not always... fresh healthy food is expensive. Frozen veggies, eggs, and dried beans&rice are usually cheaper than junk food... it just takes some planning to do it right.

Excellent post. Theres a

Excellent post. Theres a scheme I've recently become involved in through my health insurance company in the UK called PruHealth.

They have a brilliant system of partnerships with other health related companies like Virgin Active gyms, Polar heartrate monitors, Fitbug pedometers, even Nectar reward points (through Sainsburys supermarket)

Pru Health take over payments for your gym membership, and each time you visit the gym, or buy veg/fruit etc at the supermarket, you accumulate points. As you gain points, you're placed in either a bronze/silver/gold/platinum band, and for each band, you pay less and less for your membership. The cost can be reduced from £50 per month, to £8.

Without trying to sound like an advert, its the kind of logical scheme you wish you had known about earlier. They even have a members website for tracking all your progress, and as an added bonus, you can get up to 40% off holidays through certain firms (like Mark Warner).

Fortunatly im already fairly active so can readily take advantage of these schemes, however i'm not sure how you could motivate people who are generally 'couch potatoes'? These are the people who really need to have their habits changed to help reduce the burden placed on healthcare systems.

Great concept. I worry about

Great concept. I worry about catching a broad enough spectrum without incurring too much paper-work and overhead for all involved. Though the pay to stop smoking concept has been studied.

It's the getting people to do routine screenings that's the deal

The general concept isn't bad at all... and as one response points out, about 71% of US employers provide some sort of incentives for wellness. The deal is, they aren't sticky. On average they are about $192 per employee (forget about dependents) and can range from gym memberships to grocery store coupons. But the sticky factor - or lack of it - is that the incentives are there to get you to do something like take a health risk assessment (HRA) or engage in other wellness programs sponsored by the employer or health plan, e.g. smoking cessation, or diabetes management, or weight management.

Statistically if you are among the 87% of the population that is either 'actively' or 'passively' well, you aren't likely to spend the time or energy to get a giftcard unless you are under the age of 26. The rest of us just think it's too much trouble. And oh by the way, even if we do take the HRA, we don't do anything else because what is offered in the 'programs' has no relevance for us. And now consider that your employer or whoever else sponsors your insurance benefits is paying money over and above the insurance premium for those incentives and programs to be available to you. All part of the cost of healthcare in America today.

What is missing is the incentive to get you to go to your physician and dentist for routine wellness visits and screenings. But why don't you do that anyway? Most people say it's just too much trouble and takes too much time. Those who are asking for MRIs and other 'over-testing' are generally among the 13% of the population who spend 60% of the healthcare dollar because they have some chronic condition - or are just hypocondriacs (sp). Yet these folks show up at the docs office no matter how much trouble it is.

Jim Fixx - the father of modern day running - dropped dead of a heart attack in his early fifties (Actively well). Tim Russert we lost last year because like many of us, he believed he was just fine - maybe a little overweight, but likely was convince that ate reasonably well and generally felt pretty good (passively well). Incentives wouldn't have worked for either of these guys I suspect. But the lessons of just getting in and doing the stuff we should on a routine are very real - and in the case of Russert, did in fact 'find' the problem, albiet too late. According to Dr. Dee Edington who has researched the topic for a decade or more, just doing this could take $1T out of our nearly $3T annual healthcare spend in the US through prevention of things that could be seen way earlier, and coaching that could and should happen with your primary care provider under you health insurance premium (and usually paid at 100% so nothing out of your pocket to do it).

Your mention of the lack of parallel to other types of insurance for us in the US is a very valid one. When we don't take our care in for routine maintenance we run the risk of the warranty expiring. I think that if we don't take our bods in for routine maintenance we should expect our healthcare benefits to expire right along with the natural physical decline that comes with the aging process. Your parts wear out just like the car. Auto and home insurance is for really bad stuff and is just a financial back-up.

We treat our health insurance and all the related responsibility as someone else's problem with the EXPECTATION that we are don't have to do much to prevent the bad stuff as we do with our cars and our homes. I know why I clean the gutters out at my house - because insurance won't pay for the wood rot and the termite extermination that will naturally occur if I willfully neglect a simple maintenance procedure. Same should be true of healthcare, I think. And if we can make it easier for you to be reminded to do those checks, or easier to get in to see the doc (like a fast pass at Disney - or toll transponder on the roadways) I think we might begin to manage our own health in a different way.

But that's just my opinion.... I could be wrong....

Incentives MUST be based on RESULTS

The problem with every "wellness" program I've ever seen is that they reward you for getting a gym membership, instead of rewarding you for using the gym. Any sort of incentive program MUST be tied directly to results. Better heart rate, lower weight, less spiky glucose levels, quitting smoking in the long term, etc.

If your numbers are correct, and basic preventative care would save us $1 trillion annually, then we could reasonably give a $3,000 bonus for everybody who stays healthy, and still break even.

Hell... a lot of folks would probably take that offer...

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