How to Maximize the Value of Wellness Incentive Programs

Most U.S. employers and insurers offer financial rewards (and/or penalties) to encourage employees and insureds to make healthy choices like losing weight and quitting smoking. These wellness incentive programs will soon become ubiquitous because the Affordable Care Act endorses them and opens the door for bigger rewards. Trouble is most existing programs are poorly designed and inefficient, achieving too little reward for each dollar spent and often offending employees and insureds with a forceful “Big Brother” pathos that alienates the well-intentioned financier of the program. Many wellness incentive programs include higher healthcare premiums to directly penalize employees who make decisions that are costly and bad for their health—e.g. smoking or maintaining an unhealthy weight. Far from being positive and rewarding, for a typical worker already struggling to be healthier on her own accord, these programs behave like a credit card debt that never seems to go away. These programs occupy the same channel of anxiety that sometimes stimulates the unhealthy behavior that these programs are supposed to be designed to cure. As wellness incentive programs proliferate, forward-thinking employers and insurers have discovered that taking some simple steps to harness forms of positive emotional engagement that are particularly accessible to a financial incentive program—e.g., fun and excitement—readily changes its character from unwelcome authoritarianism to something participants enjoy and appreciate, dramatically increasing its effectiveness. In short, making wellness incentives fun and exciting leads to widespread improvement in results and a morale-boosting charge that makes a hero—rather than a villain—out of the program’s provider. Recent research has demonstrated that the effectiveness of incentives varies tremendously based on how the incentives are designed and delivered. The most-cited academic research of all on wellness incentives, a 2008 medically-supervised University of Pennsylvania study, divided the participants in a weight management program into a control group and an incentives group. The members of the incentives group essentially made a weight loss bet, committing to lose a certain amount of weight and putting some of their own money on the line with the promise of a sizable prize if they lost the weight. The incentives group was three times more successful at losing weight than the control group. That Las Vegas-like approach bears little resemblance to typical wellness incentive programs at U.S. employers and insurers that employ raw financial pressure, but little more, to complex behavioral problems. Financial incentives must be carefully delivered to maximize the desired effect and minimize the amount of money needed to change behavior. The process of making a wellness incentive program fun and thrilling for participants is not particularly difficult. Here are six key elements to include in any wellness incentive program:

1. Write your winners a check.

It’s fun to get a check in the mail! Everyone loves unexpected windfalls. The behavioral economics concept of mental accounting demonstrates that there is a substantial difference between a $200 discount on a large bill (e.g. your $7,000 health insurance bill) and receiving a $200 check in the mail. Calling your employees “winners” and rewarding them with a check will make the incentives more exciting, more fun, and more effective.

2. Reward winners regularly.

It’s fun to check in and collect cash regularly! Making the rewards for good behavior tangible and immediate will make them more effective. For instance, there is a big difference between receiving a reimbursement check at the end of the year if you visit your health club 150 times and receiving a weekly check for visiting the health club three times that week.

3. Incorporate social incentives.

It’s fun to get healthy with friends! A Brown University study recently concluded that social networks (and teamwork) play a significant role in enhancing weight loss outcomes. In particular, the researchers found that having more social contacts trying to lose weight is connected with greater weight loss intentions and that changes in physical activity are similar among teammates in a team-based physical activity campaign. Similarly, Harvard researchers recently concluded: “Weight-loss interventions that provide peer support—that is, that modify the person’s social network—are more successful than those that do not. People are connected, and so their health is connected.” At HealthyWage, we have found great success in rewarding cash incentives as part of team-based challenges. This is because participants are motivated by not letting their team members down. The teamwork is particularly effective when coupled with competition.

4. Make the incentives into a “bet” like suggested by the Penn study.

Las Vegas has figured out the fun factor. Incorporate some of the excitement of Vegas into your wellness program by giving your employees the opportunity to raise their bet and win more money for losing weight. Giving employees the opportunity to put some skin in the game and opt-in to your incentive programs will make them more committed and effective at changing their behavior. HealthyWage has found great success with our 10% Challenge where participants can double their money for losing 10% of their weight after six months. The success rate in the challenge is over 33% and is greater than the success reported in commercial weight-loss programs like Weight Watchers.

5. Have the chance to win a really big prize.

It’s fun to have the chance to win a really big prize! Consumers are more motivated by the chance to potentially win a large prize than a guaranteed small prize. In the same way that consumers like the excitement of a lottery, a really large prize can be very motivating to catalyze behavior change. For instance, the HealthWage team weight loss challenges incorporate a $10,000 grand prize. This $10,000 headline captures employee attention and drives sign-ups and success in the weight-loss challenge.

6. Make incentive goals attainable.

Incentives need to be attainable in order to be fun and change behavior. It is not realistic to expect all employees to get to a healthy weight in one year. Instead, employers and insurers should tie incentives to realistic goals like a 5% or 10% weight reduction.

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