Insurance companies are still trying to come to grips with lifestyle incentive packages in order to attract a larger customer base
According to a representative for corporate giant Walmart, smokers use 25 percent more healthcare services than non-smokers. In an attempt to curb these rising costs, many employers and insurance companies have begun offering incentive programmes for employees. Insurance houses are also jumping on this trend, offering both positive and negative incentives for policyholders, based on their lifestyle and health choices. But do these incentivised programmes really work and how have they affected the financial success of the insurers offering them?
Many insurance houses have decided to embrace the trend of rewarding policyholders for wise health decisions. Humana, Inc. offers free items, such as camping equipment and hotel stays in the Caribbean for policyholders who voluntarily see a doctor and receive standard health screening tests. Blue Shield of California allows its policyholders in Sacramento to save up to $500 on insurance or medical costs if they complete health questionnaires and agree to have medical screenings.
The US government-run Medicare programme, which provides healthcare to the elderly, offers free weight loss counselling and a six-month programme extension for obese members who lose 6.6 pounds. Kaiser Permanente, another insurance giant, is willing to pay its policyholders outright. Members can earn a cash bonus of as much as $150, every three months, if they lose weight and keep it off.
AxaPPP has created the “Health at Hand” scheme, which includes a helpline with free health advice, as well as free screenings for BMI, cholesterol and blood pressure. PruHealth goes a step further, offering lower premium rates and even complimentary gym membership to clients who prove themselves “deserving” by making health and lifestyle changes.
But have incentives really led to company success?
While these programmes are intended to lower costs, not everyone agrees that incentives will be effective in the end. Corporations say that such rewards help them reduce their overall cost of medical care. One Humana executive said of the company’s incentive programme, “This is the next evolution in trying to squeeze costs out by not incurring them in the first place… it’s a giant leap forward in bending the healthcare cost trend.”
Industry analysts are uncertain about the long-term benefits of incentive programmes, since they have not been in use for very long. Other experts have said that the cost benefits from incentives will not appear on insurers’ bottom lines for at least two or three years. In the meantime, the cost of healthcare continues to rise as expected, but the amount of the increase may become smaller when incentive programmes are factored in.
Many analysts agree that offering a positive incentive for healthy behaviour may have a lower impact than “penalising” customers for unhealthy behaviour. Meredith Rosenthal, associate professor for the Harvard School of Public Health, said, “People are much more averse to losing something than they are excited about the possibility of a gain.” On the other hand, some experts have expressed their disagreement with these findings, saying that patients may experience a feeling of failure when they are “penalised” for unwise health decisions. In 2007, a World Health Organisation report stated, “the limited evidence suggests that penalising poor performance may reinforce individuals’ sense of personal failure.”