Wellness Incentives for Obesity: How Much Is Too Much?

Wellness programs offer up promises to improving employee health while decreasing healthcare costs. Most employers use incentives primarily for healthy behaviors, but employers are experimenting with incentives for health improvements. A recent study to assess wellness incentives for weight control provides some insight. Results suggest that large penalties are unacceptable and rewards are preferable.

The Affordable Care Act has increased the permissible levels for wellness incentives attached to health outcomes, so more is at stake for employees and consumers with these potentially larger incentives. Controversy continues over the rules for such incentives. The question of the level of effective penalties and rewards is increasingly important. How large should they be to be fair and successful? While an amount of 20% of the cost of coverage was previously allowable to be used as incentives, starting in 2014, 30-50% may be put at stake. Since little is known about what size incentives motivate health outcomes, Harald Schmidt at the University of Pennsylvania conducted a population-level experiment to provide some answers.

Schmidt created a population level online survey experiment that was fielded to 1,000 U.S. residents to investigate acceptable levels of incentives and the effects of how an incentive program is structured. An 14-item online survey was offered to working-age US residents through a generic email that included an invitation to a health related survey and a link to the study website. Nine percent of those who received the invitation completed the survey.

The experiment presented three scenarios with different incentive structures that tested whether “carrot” or “stick” programs were favored more, and asked respondents to determine the financial amounts they felt were appropriate for incentives. The experiment found that positive incentives were clearly preferred over “sticks,” and respondents in all subgroups had little support for large penalties. While the principle of penalizing people with excess weight and obesity had some support in this study, findings suggest that the acceptable size of penalties is rather small, around $50. This is less than one-tenth of levels favored by people pushing this approach. Reward-based incentives are favored over penalty-based ones by four to one. Additionally, Schmidt pointed out that levels of incentives matter in both the effectiveness of achieving goals and also on fairness grounds. Not all individuals can equally achieve targets to secure rewards or avoid penalties.

Click here to read more on this study from the Commonwealth Fund and click here to read the abstract of this paper in Frontiers in Public Health Services and Systems Research.

Carrot and Stick image © Nevit Dilmen / Wikimedia