Among states, there is growing interest in offering insurance incentives to those enrolled in public health plans. The insurance incentives should promote healthy behaviors. Many states are developing programs to motivate enrollees to curtail smoking, lose weight, and access vaccines and prenatal care. By providing rewards for healthy behaviors, these states are giving members a greater stake in improving their health status. The goal is for the incentives to help enhance prevention and health outcomes, and reduce program costs.

The Concept

To reduce payer claim costs, would you pay members to go see their doctor once a year?  That’s the premise for a wave of patient incentive programs currently being offered by health insurance companies. For healthcare insurance payers, it’s just good business to have a healthy member base.  This starts with annual preventive care visits.

Minuteman Health

Minuteman Health is a non-profit HMO which serves the Massachusetts and New Hampshire individual and small business marketplace. Cook, as CMO, has been a strong proponent of the MinuteMember Wellness Rewards program.

Members who establish PCP relationships have overall lower healthcare costs. Preventive care allows physicians to monitor and manage chronic diseases and proactively identify emerging health issues. The subsequent decrease in ER visits and specialty referrals also reduces payer expenses.

According to Cook, three main objectives of a wellness incentive program are to get members to establish a close relationship with their in-network PCP, to receive recommended screenings and immunizations, and to offer providers the opportunity to intervene with any health issues before they advance to chronic or life threatening levels. “Having members establish a relationship with an in-plan PCP is a good first step in identifying chronic medical issues,” said Cook.

States are using a variety of incentives to encourage healthy behaviors, primarily among Medicaid populations but also in the State Children’s Health Insurance Program (SCHIP) and state-funded programs. Incentives can take the form of reduced cost-sharing, or vouchers or coupons for health-related products such as over-the-counter medications, as in Florida.


In addition to the individual incentive programs, Wisconsin has developed a voluntary member pledge. By signing the pledge, families will promise to practice healthy behaviors; in turn, health plans will promise to support members in these efforts, in part through the incentive programs. The state is currently conducting focus groups with approximately 100 current BadgerCare members to learn what types of incentives might be effective, how they should be structured, and, perhaps even more important, what it would take to get people to participate in voluntary programs.


While Wisconsin is on track to embark on its incentive program next April, other states are in the planning stages. Some states are considering incentive programs as part of larger Medicaid reform efforts.

For example, in Michigan, both the executive and legislative branches are planning to incorporate incentives into the state’s Medicaid program. Governor Granholm has introduced the Michigan First Health Care Plan, which would require Medicaid health plans to offer education, support, and financial incentives for lifestyle changes. Features of this plan include:

  • Asking enrollees to complete a health risk appraisal within 90 days of enrollment and having them follow up with a primary care physician;
  • Waiving copayments on important maintenance drugs for chronic diseases;
  • Offering incentives to members to use behavior change/wellness programs; and
  • Setting performance measures for participating health plans.

Do Insurance Incentives Work?

It remains to be seen whether incentives for promoting healthy behaviors among Medicaid and other public program populations will have a significant effect on health outcomes and costs. A review of the literature by the Center on Budget and Policy Priorities (CBPP) found that no rigorous studies have been conducted to determine whether incentive programs achieved their goals, and the few existing studies did not look specifically at the Medicaid population.

What’s more, environmental factors play a role in unhealthy behaviors—an issue that incentives or other efforts cannot address. Low-income individuals face considerable barriers to obtaining healthy foods and getting sufficient exercise and activity. Creating programs targeted not just at individuals’ behavior but also at the unhealthy environments in which they reside will require enormous creativity and energy from states hoping to promote healthy lifestyles.