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    Where Wellness Incentives Work (and Don't), with Kevin Volpp, MD, PhD

    Where Health Incentives Work (and Don't)

    Master of Health Care Innovation faculty member Kevin G. Volpp, MD, PhD offers insight into employer-based health and wellness programs and incentives in the United States. But how well do they work? And how can we use principles of behavioral economics to improve their effectiveness?

    Early results of worksite health programs were promising. In 2010, for example, Katherine Baicker and colleagues found that they were extraordinarily cost effective, saving more than $3 for every dollar a company spent. But results like these seem too good to be true. And these types of studies have commonly had methodological limitations, including:

    • Using pre-post study designs
      Which simply measure the occurrence of an outcome before and after the implementation of a program or incentive, leaving them open to errors in which observed changes are falsely attributed.

    • Comparing program participants to nonparticipants
      Without sufficiently accounting for different levels of motivation among members of these groups to get and stay healthy.

    • Ignoring program dropouts
      Without accounting for the limitations in these programs that might lead participants to drop out in the first place.

    Regardless of the shaky evidence, workplace health programs—and employee health—have the potential for improvement through principles of behavioral economics. Some examples of strategies to achieve this include:

    • Integrating present bias
      By incorporating frequent feedback for participants.

    • Harnessing mental accounting
      By unbundling rewards from employees’ paychecks in order to make them more visible, and therefore more motivating.

    • Establishing goal gradients
      So that employees are rewarded for improving their health rather than meeting some specific benchmark that may be unattainable for those who need the program most.

    • Leveraging virtual accounts
      In which a reward is allotted at the beginning of the year, and sums are deducted for not meeting benchmarks and goals.

    Too often, health programs and incentives are judged on whether they show a positive short-term return on investment.  More important is improved health, and that the benefit of these programs should outweigh their risk at a reasonable cost. By utilizing principles of behavioral economics, we can design programs that expand their benefits, providing high-value preventative services that decrease the need for costly treatments down the road.

    Learn more about some of the principles of behavioral economics that can help you and your employer turbocharge health incentives by downloading this job aid.