Insurers, employers offer incentives to promote healthful habits
American Express Co. paid thousands of employees to exercise this summer, giving each $200 toward their healthcare expenses simply for walking 21/2 miles a day.
Health insurance giant Humana Inc. has begun offering camping gear, cameras and even hotel rooms in the Caribbean to customers who see the doctor and undergo tests for blood pressure and cholesterol.
And when the new year arrives, Blue Shield of California will introduce its new Blue Groove plan offering breaks of up to $500 on insurance premiums or healthcare costs to policyholders in the Sacramento area who fill out health questionnaires and get medical screenings.
Growing numbers of employers and insurance companies, stung by continued hikes in healthcare costs, are offering employees money and merchandise to lead healthier lives. Advocates of the approach are betting that preventive action will keep workers productive and hold down healthcare bills for expensive diseases like cancer and diabetes.
Economists say it’s too soon to tell whether rewards will be successful in the long run, but corporate leaders say the strategy is already paying off by helping to slow the growth of their medical costs.
And experts expect President Obama’s healthcare overhaul to expand the use of incentives by upping the amount of money employers can use to entice workers to see the doctor.
“This is the next evolution in trying to squeeze costs out by not incurring them in the first place,” said Sean Slovenski, chief executive of the firm handling rewards for Humana, which expects to enroll nearly 1 million customers in its incentive program in the coming months.
“It’s not the holy grail, but it’s a giant leap forward in bending the healthcare cost trend,” Slovenski said.
Thousands of insured workers are jumping at incentives, even though employees at some sites complain about preferential treatment for colleagues healthy enough to win money or prizes.
American Express travel manager Carmen Macias signed up for the company’s Walk This Way program in July, lured by an offer of $200 to pay for healthcare expenses.
Macias logged 2 1/2 miles a day for 12 weeks on a pedometer walking around her Irvine neighborhood. Once the program ended, she kept exercising, nearly doubling the distance she covers on weekdays while adding hiking and biking on weekends.
“It got me off the couch and away from the computer,” Macias, 45, said of the program she credits for reducing her stress level and weight. “A whole new window has opened up.”
The expanding use of incentives comes as employers grapple with record spending on healthcare.
The average price of employer-sponsored health insurance for families reached $15,073 this year, more than twice the cost a decade ago, the nonprofit Kaiser Family Foundation recently reported. This year’s costs jumped 9% over 2010, with employers shouldering most of the increases.
Many companies are passing more costs along to employees, while some are reducing or canceling insurance altogether. Incentive programs offer an alternative.
National surveys highlight the changes underway.
One study by benefits consultant Towers Watson and the National Business Group on Health found that 58% of large employers are offering money, insurance discounts or other inducements this year to workers who manage their weight or engage in other activities to improve their health. That’s up from 52% in 2010 and 49% in 2009.
Another survey by Buck Consultants found that 62% of large companies offered incentives in 2010, and that 25% more plan to do so in the future.
“There is tremendous interest from employers,” said Barry Hall, a principal in the consulting firm. “We’ve got this big surge in wellness programs, and incentives are the fastest-growing aspect of that.”
Jennifer Baca Morris’ employer, California tech giant Intel Corp., offered to cut her insurance premiums $250 for going to the doctor and losing weight.
After learning that she was obese at more than 200 pounds last year, the 43-year-old started running three times a week and replaced fatty cheeses and high-carb breads with fruits and vegetables. Morris has since shed 65 pounds.
“The program changed the way I live,” she said.
The incentive programs are likely to get a boost from the federal healthcare overhaul, which will allow employers in 2014 to reimburse workers as much as 30% of the cost of health insurance for losing weight, controlling cholesterol levels or meeting other health targets. Currently, the federal reimbursement limit is 20%.
Health insurers in California and elsewhere are rushing to capitalize on the growing interest.
One insurer, SeeChange Health, launched insurance plans in July that give workers at small and medium-size businesses up to $500 toward medical costs for undergoing blood tests, completing health questionnaires and getting checkups. The San Francisco insurer also caps rate increases for employers who sign up most of their workers.
SeeChange executives say they believe that the upfront investment in preventive care will pay off. They also note that workers’ spouses are eligible for financial incentives.
“We’re ultimately going to pull large spending out of the system over time,” Chief Executive Martin Watson said.
But not everyone is sold on the idea.
Some healthcare experts say that rewards are unfair to low-income workers who struggle to stay healthy because they may work longer hours, have limited access to high-quality food and endure more stress from economic insecurity.
The result, critics say, is that disadvantaged employees may wind up paying more for health benefits than colleagues with access to gyms and other amenities. Charging one group of workers more for insurance is a violation of the new healthcare law.
“I worry about vulnerable populations -- people living in poor neighborhoods, people prone to certain health conditions,” said Sabrina Corlette, a research professor at the Georgetown University Health Policy Institute. “They face more challenges trying to meet a target than an upper-middle- class professional.”
Some successful incentive programs have met criticism within corporate ranks.
Nonsmokers at General Electric Co. complained about not getting a financial break for their healthful behaviors after the company paid more than 400 workers as much as $750 each to stop smoking as part of a 2006 experiment.
Although the effort yielded promising results (smokers who got the cash incentives were about three times more likely to quit than those who received no award), GE scrapped the rewards and last year began imposing an annual $625 insurance surcharge on smokers while also providing them with free nicotine replacement therapy.
“If you don’t pick the right health behaviors, it’s going to cost you more because you cost us more,” said Virginia Proestakes, director of health benefits for the Fairfield, Conn., company.
Most corporate incentive programs steer clear of penalties.
DreamWorks Animation provides free Weight Watchers courses, picks up the cost of health club memberships and spends as much as $2,500 on programs for employees to give up smoking. It also opened health clinics last year at its offices in Glendale and Redwood City, Calif.
Before the incentive programs were put in place three years ago, the company’s insurance costs were rising 10% to 12% a year. Now, costs are increasing at about half that rate.
“This has already paid for itself in terms of the money we put into these programs,” said Dan Satterthwaite, DreamWorks’ head of human resources. “We’ve seen huge positive outcomes.”
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