What do airlines, coffee shops and health plans have in common?
By Michael Dermer
Rewards for healthy behaviors have been growing at leaps and bounds as a way to reduce healthcare costs for several years. In 2009, employers offered employees $260 in rewards for making healthy choices. Now, companies are projecting to spend $594 per employee on wellness incentives. ObamaCare added fuel to the fire. It increased the allowable amount of rewards from 20 to 30 (and in the case of smoking cessation) 50 percent of annual insurance premium.
There is a bill in front of Congress as we speak offering all Medicare beneficiaries up to $400 in tax-free rewards for healthy behaviors supported by several Republicans and Democrats. Health Trends named “health rewards” as one of the top 5 health IT trends in 2014. “Incentive Driven Healthcare” is here to stay.
Why don’t health plans want consumers to know this? It seems like a win-win. Well in some ways they do. Health plans win by reducing costly behavior through prevention and lifestyle changes. Consumers benefit not only by getting healthier and making better health decisions, but by receiving rewards. This is all true. But in some ways they don’t. Once consumers truly realize that purchasing health insurance, while incredibly personal, is nothing more than purchasing another consumer product, the healthcare marketers of the world will be faced with a health rewards competition.
ObamaCare created “exchanges” or “marketplaces” through which health insurers compete for the business of individuals and businesses. These marketplaces were established with a series of pre-packaged health plan options, which limit the variations in using traditional levers such as coverage and networks. Health plans that were used to competing on these levers are left with a single lever - price. Selecting from gold, silver and bronze hardly creates differentiation among United, Cigna, Aetna, Humana, Wellpoint, the Blues and many other plans in the United States.
Think of your credit card, hotel, airline or favorite retailer. It is a sure fire way to create loyalty, brand affinity and engagement. Let’s be honest, you are more inclined to use specific services or retailers if they provide a robust rewards program. The average American consumer belongs to 7.4 reward programs. When marketers of consumer products ask themselves “what tools do I need to attract, retain, and generate loyal customers?” the answer inevitably comes to reward programs.
As further evidence, consumers across multiple demographics were interviewed on what they wanted from their health plan. The only item that appeared in every demographic was “rewards for healthy behavior.” Would you have a more positive opinion of your health plan if they sponsored an a program that rewards consumers for healthy behaviors? According to a Welltok survey, 75% of respondents agree. Furthermore, 81% said that access to such a program positively influences their decision to renew with their current plan. Not to mention, the fact that incentives are a proven means to motivate health choices and change behaviors. More than 96% of consumers would engage in healthier behaviors if rewarded.
Health plans are entering a new competitive landscape. Rewards will not only be an essential component, but will also drive a healthier population – creating a win-win situation for all.