Evaluation of Rewards Program for Preventive Care

The Affordable Care Act increased coverage for preventive health services, but research has shown that removing out-of-pocket costs may not have a big impact on the discrepancy between recommended and actual use. The emerging field of behavioral economics demonstrates that individuals’ decision making routinely and in predictable ways deviates from assumptions underlying neoclassical economics.  Approaches that incorporate insights from behavioral economics may be more successful, although experience with them is limited.

An unusually comprehensive and high value program has been pioneered by Discovery, a health insurance company operating in South Africa, the United States, the UK, and China. Their Vitality program already incorporates design ideas that have been suggested by behavioral economics, but for which there are no empirical evaluations in the context of prevention. This paper analyzes how these design features (including multiple threshold levels for rewards, separating rewards from routine financial billing, non-monetary incentives) alter the use of preventive services and evaluate whether this could be a cost-effective approach for a health insurer. Our primary statistical approach is a difference-in-difference analysis (pre/post of individuals becoming eligible for new benefits with control groups, i.e. individual only having health insurance, but never participating in the reward program).