That was the message at ignite09, a May 27 symposium sponsored by the American Benefits Council, PBM Express Scripts and Hewitt Associates.
So why should benefits professionals care about these principles? By applying them to benefits package designs and wellness programs, you can overcome common obstacles to compliance and participation.
For example, with a goal of 90% employee participation in their wellness program, Nationwide Insurance Co. offered employees a $35 credit for completing an HRA. When that only got 30% participation, they tried adding $10 to the bi-weekly paycheck of participating employees the next year. That got them 60% participation. There was no money to up the incentive, so Nationwide rethought their carrot-only approach — this time invoking the principles of both hyperbolic discounting and loss aversion.
This year, the company "doubled the financial incentive," Jack Towarnicky, Nationwide's associate VP of benefits planning told attendees, by introducing a $260 added contribution for medical coverage that they then waived for wellness program participants. Consequently, participation rose to 85%.
"A lot of other companies who only use carrots, who only use positive incentives, many of them didn't achieve their participation and utilization goals as well," Towarnicky said. "Because using only positive incentives allows non-participants the option to maintain the status quo."
Listen to our podcast with attendee Cyndy Nayer, president of the Center for Health Value Innovation, as she shares why behavioral economics are integral to optimizing health care for employers.
