Lose Weight, Earn Money?

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Earlier this week, researchers presenting at the International AIDS Conference announced major success in reducing the spread of HIV among girls in South Africa. Their strategy? Cash payouts.

In accepting monetary incentives, poverty-stricken younger women who might otherwise take up with financially secure older men—a common scenario—were more likely to abstain from sex longer and, when they did have intercourse, it was with more age-appropriate companions. It’s a novel solution to the gender and class inequity that fuels the spread of AIDS in developing nations.

But in the U.S., health incentives, as they’re called, are also effective, helping replace peoples' addiction to unhealthy behaviors with an addiction to winning. These programs are now being used by companies trying to motivate employees to adopt healthy behaviors and to save on health-care costs.

These incentives are particularly effective when it comes to one-time behaviors, like flu shots or mammograms. But for more long-term changes, the data are mixed.

Smoking shows more success than weight loss, for instance. “Financial incentives are very good at getting people to lose weight initially, but like all other behavior programs, people tend to gain weight over time,” says Kevin Volpp, director of the Center for Health Incentives at the University of Pennsylvania School of Medicine and the Wharton School of business.

In one study, participants who received financial incentives along with lifestyle counseling lost between 13 and 14 pounds, compared with the group that received only counseling, which lost 3.9 pounds. But when the incentive program stopped the weight returned, as it did in the other group.

Still, this kind of short-term progress can serve a specific purpose. Stephen Higgins, a professor of psychiatry at the University of Vermont, found that counseling coupled with financial incentives—this time in the form of gift cards to local retail outlets—was effective in helping pregnant women quit smoking. “A lot of people aren’t too good when faced with things that are immediate and enjoyable vs. longer term, probabilistic; they often go for the short term,” he says. “We’re trying to use the very bias that makes smoking attractive to promote healthier behaviors.” His team was able to quadruple quit rates, which lead to bigger, healthier babies. The women also show a moderate benefit after the incentives stop, with cessation rates tripled (15 percent vs. 5 percent) 12 months after the program ended.

Higgins saw similar success with cocaine addicts, who were rewarded with points to be spent on items aiding in recovery. For instance, a patient who enjoyed fishing before his addiction grew out of control might purchase a rod and reel, with the goal of spending his weekends on the lake, not in the club.

For many people, it’s the act of winning, not the prize itself, that’s appealing, especially when that prize is cumulative. Both Higgins and Volpp often use rewards that build on peoples’ fear of losing what they’ve already earned rather than promising them something new, a psychological principle called “loss aversion.” Subjects in Higgins's studies earn increasingly better rewards week after week, but can lose them all after one instance of relapse. Volpp sometimes has test subjects deposit their own money, matched by the researchers, as a stake in the program. “Driven by loss aversion, people know that once they put their own money at risk, they’re going to try really hard not to lose it.”

The system of rewards is also structured to trigger the human brain’s need for novelty. Rather than giving subjects a straight cash payment, Volpp uses lottery-style payouts. Instead of receiving $3 a day, for instance, people get a one-in-five chance of winning $10 that day. “That has a lot of entertainment value and it keeps people engaged,” he says. “It’s called variable reinforcement, and it's an effective way of encouraging motivation because it’s inherently unpredictable.” (In his weight-loss study, those who were in the lottery group lost 13.1 pounds, and those in the deposit group lost 14 pounds.)

Outside of the lab, corporations looking to save money on insurance premiums, reduce absenteeism, and increase productivity have turned to health incentives with mixed results. Fifty-eight percent of companies surveyed by Buck Consultants, a human-resources consulting firm, say they currently offer some sort of incentive program, with about 20 percent of employers saying they plan to implement one in the near future. The average payout: $163 per employee per year. But that number may be misleading, says Barry Hall, a principal at Buck Consultants. “The spread is really wide: 30 percent were giving $10 or less, 12 percent were giving more than $500.” One company offered health-insurance discounts valued at about $1,400, plus another $1,400 for a spouse who participated.

Most of these programs are participation-based—employees receive incentives by attending classes on healthier living or taking part in walking programs. But Hall says more companies are starting to look toward programs that reward results, not just initial effort. “Employers are saying, ‘How do we move beyond having nice activities for people? How do we have skin in the game and get results? We tried incentives for getting involved, and still the population is overweight. How do we move to the next level of accountability?’ ”

New regulations in health-insurance reform allow employers to use additional funds for these achievement-based programs. Previously restricted to a cap of 20 percent of an employee's health-care expenditure, companies can now spend 30 percent on these programs, with the potential to go as high as 50 percent at the discretion of the Department of Health and Human Services.

The catch, says Harald Schmidt, the Harkness fellow in health-care policy and practice at the Harvard School of Public Health, is ensuring that all companies use these programs fairly. “If you look at the main reasons why people use incentives, it’s to improve health, to reduce health-care expenditure, and to improve productivity,” he says. “Ideally, the stars are aligned and you can achieve these three things, and that’s great. But we have a problem with people pushing these programs motivated by just one of these factors.”

When the focus becomes primarily cutting employee costs, Schmitt says, these incentives can become more like inducements. The fear is that people who can’t meet the stated goals will be punished, not rewarded, by things like artificially inflated health-care costs that are “discounted” for people who comply with the incentives program.

He also warns that focusing too much on the incentive is bad for both the employer and the employee. “The incentive should be the occasion, but not the full reason [for change]. If you only do it to get money, you will at best secure short-term behavior change.”

So far, many employers haven’t even been able to do that. “A good number of employers have really great results,” says Hall of Buck Consultants. “But a huge number are trying the same things and haven’t got it figured out yet. We have a saying: what works at one company works at one company.” In other words, there’s no consistent approach that’s proven to be successful, and many companies are still in the trial-and-error stage.

Still, says Hall, the enthusiasm for these programs continues. “Most employers are really earnest about trying to do the right thing," he says. "If it works, it’s best for everyone. The trick is figuring out what works.”

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