It would be nice if Republicans and Democrats could agree on something in healthcare. We’ve grown tired of the lack of progress and lack of solutions that come out of Washington. Fortunately, there is one thing – incentives and rewards for healthier behavior. For all the debate over ObamaCare, the one provision supported by both sides of the aisle was the provision increasing the amounts that can be used for incentives and rewards for consumers from 20 to 30 (and in the case of smoking cessation) 50 percent of premium. In addition, there is a bill in Congress called the Medicare Better Rewards Act of 2013 which rewards Medicare beneficiaries with up to $400 in incentives for healthy behaviors. It is supported by two Democrats – Senator Ron Wyden (Oregon) and Thomas R. Carper (Delaware) -and two Republicans – Rob Portman (Ohio) and Michael B. Enzi (Wyoming).
Why is there consensus over healthcare rewards? The reasons are clear. First, incentives are desperately needed. Healthy programs without incentives generally attract 10 percent of the target population. For example, 60 million Medicare consumers have access to a free annual wellness visit and only 6 percent take advantage. If we added incentives to the program, the numbers could increase exponentially.
Second, incentives pay for themselves. Because incentives are not issued until the desire behavior takes place, they have a built in return on investment. Some of this is immediate (e.g., go to a lower cost MRI provider) and some is longer term (e.g., reduce BMI), but either way incentives are not issued until desired actions occur.
Third, incentives reduce costs. For example, in Florida, medical costs for a healthy baby are approximately $4,551 from birth (including labor & delivery) through the first year. For a preterm baby who needs intensive care, the costs average $49,033. If we gave each woman $500 in incentives to follow their pre-natal care, and we prevented one incident at a cost of $49,033, the cost of 10 women of $5,000 would be well worth it.
Third, they serve the political needs of both parties. For Republicans, it fosters a sense of accountability and personal responsibility by rewarding consumers who perform better. For Democrats, it provides an additional entitlement that aligns to benefits for the individual.
Fourth, they are popular with consumers. What American would not think positively about the government that provided them with financial rewards for being healthy? In a program to drive mammogram and pap tests for women who were given a $25 reward, 89 percent got both tests and 90 percent said that the reward was the primary reason they did. In addition, it might be the one thing in healthcare that consumers don’t have to learn. After all, consumers are used to reward programs in their daily lives through their banking, hotel, airline and retail loyalty programs.
Imagine the press conference from the hallowed halls of Congress with a litany of Republicans and Democrats lining up to support the “Healthy America Rewards Act of 2014.” It is not only possible, but it is necessary.