Much of the 2010 Affordable Care Act focuses on prevention and shaping the healthcare system to be one that is value-based. This is evidenced by the Act increasing the maximum allowed financial incentive from 20% to 30% of the total cost of coverages and in some instances, such as smoking cessation, permitting incentives as high as 50%.
The problem is that while insurers are now permitted to give out more incentives, consumers are not accustom to being driven by discounts and rewards in healthcare, as they are in the consumer product space. Health insurance companies have traditionally trained consumers not to pay close attention to health care costs. This is one of the obstacles of healthcare consumerization—getting consumers to view the healthcare path to purchase and other healthcare decision journeys the same way they would in making a consumer product purchase decision. With the new cost transparency and market competitiveness created by Individual Exchange market, however, this mentality has begun to alter, with health plans already feeling the pressure of consumers demanding more—more personalized health, more access to care and more digital health tools and self-service options.
In May of 2016, Health Sparq employed M Health, an independent research firm, to conduct a study of 500 people, age 18-64, with high PPO or high deductible health plans to find out if incentives work in health care. Their research found that people require more incentives in order to influence them to participate in longer-term healthcare programs, such as wellness programs. Despite the required investment and resource commitment, insurers are gradually beginning to adopt more expansive and enhanced incentive programs, particularly for longer-term programs, in order to reap the savings—the savings of preventing and lessening the health impact of illnesses that significantly cost them. 85% of the full-time US workforce has at least one chronic illness or is overweight and according to the World Health Organization, individuals with chronic conditions are non-compliant with medication and treatment 50% of the time. Unhealthy behaviors weigh a heavy burden on overall health system costs, and while many U.S. companies are now offering workplace wellness programs, according to The National Business Group on Health, 6 in 10 into do not know how to measure the ROI of them.
While consumers are not currently programmed to fully consider taking advantage of incentive programs in healthcare due to lack of exposure within the space, the M Health study found that in several areas, consumers are in fact more likely to participate in a program if an incentive is offered. Some of these areas include wellness programs, exercise programs, biometric screenings, weight loss and smoking cessation. Also illuminating, is that incentives were proven to be powerful drivers in awareness, trial and purchase, particularly in the three classic examples of watching educational videos, telehealth and screenings. And, it was found that not only are consumers likely to stick with a program even after the limited-time incentive expires, but that relatively small incentives work just as effectively as large ones.
It’s clear that incentives are powerful drivers of behavior in grocery and retail areas, and that such programs do offer the potential to yield similar success when effectively carried over into the healthcare space. Designing an effective incentive program isn’t easy though…it requires the ability to target the right segments with advantages relevant to their unique needs as well as the ability to partner with the right companies to make the incentives truly motivating and healthy lifestyle orientated. Even more importantly, is the ability to then measure the success of them.
The M Health study proves that incentives can be effective tools in influencing the choices healthcare consumers make and while still relatively untapped at this time, they will undoubtedly take on a much larger role in the industry as the consumerization of healthcare and shift to value-based care progresses. The insurers intuitive enough to act on the potential of healthy incentives will be able to profit from the savings and support the holistic health of their members and America’s overall population health.
M Health, Sponsored by Healthsparq,”Do Incentives Work in Health Care?”, May, 2016, IncentivesinHealthcare.pdf.
D. Witters and S Argawal, “Unhealthy U.S. workers absenteeism costs $153,” 2011, http://www.gallup.com/poll/150026/unhealthy-workers-absenteeism-costs-153-billion.aspx.
World Health Organization, “Adherence to Long-Term Therapies: Evidence for Action,” 2003.
Towers Watson and The National Business Group on Health, “Performance in An Era of Uncertainty: 17th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care,” 2012, towerswatson.net, TW-NBGH-Employer-Survey-Towers-Watson.pdf