Incentivized Health Care Programs Driving Behavioral change
Rewards play a critical role in driving behavior within virtually every consumer-focused industry. Restaurants, airlines, credit cards, grocery store chains, pharmacies and retailers of all kinds pour multiple billions of dollars into loyalty programs every year, and consumers’ wallets are bulging with plastic cards. Now it’s the health care industry’s turn.
According to a Welltok survey, 96% of consumers would engage in healthier behaviors if rewarded. More than 85% of respondents said they believed that health care companies should offer consumers rewards for being healthy. The top three preferred reward types are cash (nearly 50%), reduced insurance premiums (nearly 30%) and gift cards (nearly 20%). Fortunately, the Patient Protection and Affordable Care Act (ACA) has opened the door to greater rewards, increasing the limit to 30% of premium dollars (and 50% for smoking cessation programs). With incentives driving health-related behavior change, the potential cost savings are significant. For example:
- Prevent one emergency room visit and the savings can be $1,500 per incident.
- Savings between the lower cost and higher cost MRI in the same market can be as much as $2,000 per test.
- Lifestyle accounts for 75% of total health care cost so smoking, exercise, nutrition, weight and other lifestyle factors can have a large impact.
Health plans that read the writing on the wall and take the lead in offering sophisticated reward programs will create a competitive advantage. Those that don’t will be competing on factors that have become harder to differentiate. It is just a matter of time before every health plan has a rewards program for members—just like every credit card provider, airline, hotel and retailer.
Moreover, the standard for health reward programs will be set not by health care, but by the work done by consumer industry players. What is already table stakes for retailers will soon become de rigeur for health plans—except that health plans need to tailor their programs to individual health conditions, biometrics, demographics, coverage type and more. And the reward levels need to be competitive to motivate consumers to make big lifestyle changes.
Eventually, as health care exchanges start to rate health plans, the ability to offer attractive health rewards will become an important criterion. Experts within the health care industry will continue to tell consumers how they need to act- be healthier; make better provider decisions; choose lower-cost options. But that relationship is about to be turned on its head. Consumer empowerment means not only that consumers will be more accountable for their own health, but that they will also be more demanding of their health plans. And rewards are likely to be high on the list of demands.