Loaded with incentives Featured

6:56am EDT November 29, 2005
In the Pacific Northwest, an employer gave his employees an interesting choice. They could undergo a cholesterol screening, or they could pay up to $1,000 more out-of-pocket for their health care coverage.

In New England, a life insurance company gave its employees a different kind of choice. They were invited to participate in educational courses, work out at fitness clubs and/or make preventive care physician visits and earn up to $345 toward their health care expenses.

A local company established a wellness program called My Health. A key component of the program is an online health risk assessment. In order to provide an incentive, employees could waive a deductible if they participated in the Web-based screening. This positive incentive, coupled with thorough communication, resulted 94 percent participation.

Spurring participation
Financial incentives — be they negative or positive — are increasingly being seen by employers as an ideal method of changing employees’ behaviors and ultimately bringing down health care costs. The effectiveness of the incentives in terms of saving money in health care costs is not always immediately visible, but the long-term positive impact indicates the effort is well worth it.

“While there will always be legitimate debate over the costs and benefits of particular health promotion and disease prevention endeavors,” the Department of Health and Human Services wrote, “the nation simply cannot afford not to step up efforts to reverse the growing prevalence of chronic disorders. ... The stakes are so great that the challenges must be met.”

About 41 percent of American companies employ incentive plans to encourage healthy behavior, USA Today reported in August, 2005. This compares to 34 percent in 1996. Eight out of 10 of the top executives at the nation’s 150 largest companies indicated that the best option for reducing costs is to offer financial incentives that encourage healthier lifestyles.

Helen Darling, the president of the National Business Group on Health in Washington, D.C., told the Detroit Free Press in May, 2005, that she expects a majority of U.S. companies to offer financial incentives to encourage their employees to live healthier lives. “We’re just on the cusp of an explosion of employers and employees saying we want healthy lifestyles,” Darling said.

Embracing incentives
There are two reasons financial incentives are being embraced. One, over time the most effective way to reduce health care costs is to promote healthy habits. Two, financial incentives have been shown to be the most effective way to get employees to change habits. Certainly, more information about healthy lifestyles is important, too, but information alone has not proven to be an effective way to change behavior.

Financial incentives have certainly been shown to be an effective way to get people started, but of course, they carry no guarantee of long-term success. Still, financial incentives are a necessary first step. Employers must make participation in wellness programs or initiatives worth it for employees or they simply won’t get involved.

Incentive programs do carry some risks, however. First, employers need to have any incentive plan reviewed by a labor lawyer to ensure that there will be no inadvertent violations of Employee Retirement Income Security Act laws, Health Insurance Health Insurance Portability and Accountability Act laws or other pertinent state or federal statutes or regulations.

Employers must also understand that use of sticks, rather than carrots, can carry long-range implications. Sometimes, disincentives create bad PR in a company and can generate negative feelings about future initiatives.

The purpose of financial incentives is to encourage healthy behaviors. It might not be the perfect way to do it, but it is increasingly becoming a critical step in the process.

Michael Taylor is executive director, marketing & communications, for UPMC Health Plan. The Health Plan, with more than 435,000 members, is part of the University of Pittsburgh Medical Center’s integrated medical delivery system and is the only provider-led health plan in Western Pennsylvania. Contact Taylor at (412) 454-7534.