The Impact of Wellness Programs and Incentives on Preventive Services

There is growing belief among employers and health plans that “wellness programs” represent an important tool to increase access to preventive services and promote healthy behavior.  To encourage healthy behaviors, 65 percent of employers offered wellness programs to their employees in 2011.  These programs spanned a wide range of activities, including weight loss programs, gym membership discounts or on-site exercise facilities, smoking cessation programs, personal health coaching, classes in nutrition or healthy living, or wellness newsletters. 

To further promote wellness employers are permitted under federal law to offer financial rewards.  Incentives may be offered to employees who participate in wellness programs and meet certain health-related targets. Further, the permissible amount of incentives relative to total premiums will increase in 2014.  Nonetheless, the use of financial incentives to promote wellness is still relatively uncommon.  In 2011 only 14 percent of firms with health benefits offered financial incentives for employees who participate in wellness programs.  In addition 10 percent of them encouraged employees to participate in health risk assessments using monetary rewards (KFF/HERT, 2011). 

Although the use of financial incentives associated with wellness programs is comparatively novel, economic and behavioral economic theories suggest that they could be effective in promoting participation (Grossman, 1972; Loewenstein, et al, 2007).   Evidence from randomized trials demonstrates the effectiveness of financial incentive of different types and reward structures in the areas of tobacco, preventive care and substance use.  The evidence on the impact of financial incentives offered through wellness programs, as offered by employers is, so far, only suggestive. 

Our study employs a quasi-experimental design in which employers offered wellness programs in combination with financial incentives that were tied to specific health-promoting actions on the part of enrollees.  We are able to observe individual preventive and health promoting behavior before and after the incentives were implemented.  Using health plan enrollment and wellness participation data we are able to estimate the effect of these wellness programs, in combination with financial incentive, on preventive services utilization, and health-promoting behaviors. Further, we test how the structure of the financial incentives affects prevention behavior.