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Incentives and Changing Consumer Behavior


Summary of Insights
David Mucha
Market Research and Analytics

The Essential Questions

1. How can incentives and messaging be enhanced to achieve


short-term and long-term improvement members health
status?
2. How can incentives and messaging be enhanced to engage
more employees?

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Research Conducted on Behavior Change


and Incentives
Recently Completed Research
Change the Language (Research and Analytics)
EDGE (Research and Analytics)
Simply Engaged (Research and Analytics)
UnitedHealth PremiumSM (Research and Analytics)
Diabetes Health Plan (IRG)
Vital Measures (IRG)
CAI (IRG)
Incentives for Health (IRG)
Market Scan of Incentives (OptumHealth)
There is research currently underway to test new reward systems influence
member engagement
M&R and ASI/AARP have been engaged with the University of
Pennsylvania in a Way to Walk Study research study
Evaluate whether financial incentives and peer networks effectively
encourage sustained increases in walking among older adults

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Typical Barriers in Changing Behavior


No compelling reason to change
Dont recognize relevance
Lack of motivation
Unwillingness to put in time/effort
Competing priorities
Lack of time
Do not set attainable goals
Old habits are hard to break
Lack of money
Medias images of healthy are unrealistic
Lack of family role models
Irrelevant/Overwhelming information
Lack of knowledge (dont know how)

Solutions that address these barriers could lead to new innovations


Source: Various market research studies
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Typical Enablers in Changing Behavior

Have a reason to change behavior


Trigger event
Benefit of change is seen: success builds success
Receiving meaningful incentives
Setting realistic short-term goals
Access to relevant comprehensible information
Have a realistic plan to follow
Be accountable for behavior
Be convenient
Peer pressure

Solutions that address these enablers could lead to new innovations


Source: Various market research studies
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What Have Employers Done to Influence


Employee Behavior?

Soft Sell
- Provide Information
- Embedded Plan Designs

UnitedHealthcare EDGESM

Hard Sell
- Incentives
Even Harder Sell
- Penalties
What is Needed?
-

ROI
Sustainable change
More employee participation
Multi-year wellness strategies

Source: 2011 Health Care Survey: New Paths, New Approaches, Aon Hewit, June 2011
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UHC Incentives Continuum


Product Strategy & Objectives
Incentive products can serve as catalysts to sustained behavior change
Behavior change is targeted to Healthy, Healthy with Risk Factors, and
those with Chronic Conditions
Flexibility & modularity is needed to address client needs, culture, and
demographics
Portfolio of Consumer Incentive Options
Rewarding for Actions
How

Complete a Health Assessment


Complete Online or Telephonic
wellness program
Complete Preventive visit
Participate in biometric
screenings
Complete QuitPower, Healthy
Weight, or Healthy Pregnancy
programs

Examples

UHC SimplyEngaged
UHC Health Rewards
UHC Ortho Decision Support (pilot)
Small Business Wellness (pilot)
Small Business Loyalty (pilot)

Condition-Specific:
Rewarding for
Compliance

Rewarding for
Outcomes/
Health Achievement

100% benefit for


preventive care
100% benefit for compliance with
EBM care for chronic conditions
Waived co-pays for conditionspecific medications
$ for being compliant with EBM
guidelines

$ contingent on biometric
screening results
Richer benefits for
improvement in biometric
measures
Lower premiums on
achieving specific
health goals

UHC DHP & VBID


UHC Pharmacy Designs
UHC Rewards for Action

Sources: UHC Product Team


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UHC SimplyEngaged Plus


UHC Personal Rewards (pilot)
UHC Health Rewards
UHC Incentives for Health (pilot)

Consumer Feedback: Doing Something You are not


Inclined to do is Hard More of the Same will Not Change Behavior
Consumers who use a gym view gym
discounts as a way to pay for their
membership
Those who do not use a gym felt a
discount would not yield sustainable
behavior
One program by itself is not enough to
support consumers healthy behavior
or to modify unhealthy behavior
The key is to offer a combination of
solutions that overcome real
barriers so members can engage in
programs that they find personally
relevant

Consumers feel there is an abundance


of information currently available and
most seek it out if they are interested
and have time
This abundance can be overwhelming
and difficult to sort through
Opinions vary on how much true value
more health information would provide
Being part of a group provides two key
benefits: accountability and social
interaction
Some feel they need the social
accountability (peer pressure) to
sustain their activity

Consumers are quick to cite the barriers as reasons for not being
more engaged in their health
Sources: UHC Market Research, 2011
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Customer Needs: Employee Engagement &


Sustainable Change
We need a better strategy to engage
employees- mailing letters and phone
calls with voicemail messages are not
working.
- National Account Customer

Behavior change is a big ask, and


more than just incentives may be
needed to keep employees engaged in
wellness behavior.
- Key Account Customer

There is skepticism about whether the


right employees will participate,
whether they will stay engaged, and
whether any of this will ever make a
difference in cost.
- Key Account Customer

Some features (healthy pregnancy, flu


shots, gym reimbursements, etc.) are
assumed to be standard and offer little
incremental value.
- National Account Customer

Higher employee engagement in wellness programs is #1 stated need


among National Account customers
Sources: National Account Client Satisfaction Study, 2010, Various research studies on health and wellness
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The Opportunity to Differentiate is Huge

A growing number of our large clients


are implementing incentive programs
despite a lack of comprehensive
solutions or proven results. Ideally,
employers would prefer the
administrative simplicity associated
with health plan programs, however,
none of the national carriers are
doing incentives particularly well.
- Hewitt Consultant
The Affordable Care Act may allow
employers to use part of the premium
dollars as incentives for wellness
programs

Employers take their finger to the wind


in selecting incentive programs. There
is demand for better approaches and
appropriate solutions. The secret
sauce is this: How do you figure out
which incentives work best for which
populations and then implement them
in a way thats cost effective? The
Holy Grail is for a company to figure
out and advise a client what the most
effective incentives tactics are for
their population and subpopulations.
- Towers Consultant

Consultants identify a gap in demand effective wellness programs and


the carriers ability to satisfactorily deliver
Sources: National Account Client Satisfaction Study, 2010, Various research studies on health and wellness
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The Opportunity to Differentiate is Huge; The


Question is How
ROI
There is a demand for incentive programs despite lack of ROI
More employers, though, are asking for ROI on Incentive programs
Need for Sustainable Change
Recognize change is slow, yet a positive ROI requires long-term change
More Employee Participation
Especially from the less healthy population

Behavioral Economics
The right incentive and delivery of the incentive
Framing the message
Goal setting
Use of Social Norms
Use of peer pressure / comparisons

How can UnitedHealthcare affect sustainable behavior change and


engage more employees?
Source: Various UnitedHealthcare market research studies
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The Field of Behavioral Economics Offers Some


Suggestions
Behavior Economists believe that incentives are still the best
way to get people to change their behavior
Effectiveness is less about the incentive and more about how
the incentive is delivered

And insurance / health and wellness companies could do better:


o Timing and delivery of rewards
o Framing the message
Source: George Loewenstein, Ph.D. professor of economics and psychology at Carnegie Mellon University, Center for
Behavioral Decision Research
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The Field of Behavioral Economics Offers Some


Suggestions to Change Behavior

Consumer Decision Error

Potential Response / Strategy

Present-bias (would rather have


immediate reward)

Make rewards for beneficial behavior frequent and


immediate

Framing the rewards

$100 reward more effective than $100 discount on


premium

Overweighting small probabilities

Provide probabilistic rewards (e.g., lottery)

Messaging: Regret aversion

Tell people they would have won had they been


adherent

Goal Setting: Optimism bias

Encourage commitment and goal setting based on


expected success

Penalties: Loss aversion

Put rewards at risk if behavior doesnt change

Source: George Loewenstein, Ph.D. professor of economics and psychology at Carnegie Mellon University, Center for
Behavioral Decision Research
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Loewenstein, Brennan, and Volpp, JAMA, 2007 Volpp, Pauly, Loewenstein, Bangsberg, Health Affairs 2009

Obviously, the Programs Must Be Effective

Just as: Good advertising of an underperforming


product can lead to lower repeat sales.

So to is it that: Good incentives for ineffective programs


will not change long-term behavior.

We must ensure our wellness programs are well designed and effective

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Employers Prevailing Questions about Incentives


Effect on Behavior (Employers Unmet Needs)
Do incentives lead to behavior change? Is change sustainable?
What is the right incentive?
Value / Amount
Cash vs. Something else (prizes, peer pressure)
Disincentives
What is the best way to structure the payouts?
Cash
Lottery
Discounts / Credits
What behavior should be incented?
Activity vs. Outcome
How often do consumers need the incentive?
Timing of incentive (immediate vs. future)
Frequency / Duration of incentive
How can we get more employees to participate in wellness programs?
Identify the target population
Personalized by employee

Source: Various UnitedHealthcare market research studies


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Is behavior change possible? Sustainable?


Many studies have shown that
incentives can influence shortterm behavior1
No studies have demonstrated
long-term positive effects due
to the use of financial
incentives2
Employers say they want
continual or multiple
participatory programs, not
just one 6-week challenge3

The lack of proven sustainable behavior change strongly suggests using a


different approach
1 Source: Financial Incentive-Based approaches for Weight Loss, Journal of American Medical Association, Kevin G.
Volpp, MD, PhD; Leslie K. John, MS; Andrea B. Troxel, ScD; Laurie Norton, MA; Jennifer Fassbender, MS; George
Loewenstein, PhD . December 2010
2 Source: Do Wellness Incentives Work?, Adam Oliver, The Hastings Center, February 18, 2010
3 Source: UnitedHealthcare market research, September 2011
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What is the right financial incentive?


There are many financial incentives being tried or proposed by
employers, consultants, and carriers
Cash is the typical incentive
Premium discounts
Deductible and co-pay reductions
Gift cards
Non-cash rewards are starting to be used more often
Large-ticket prices (luxury vacations, TVs)
Points for prizes
PTO
Disincentives typically used to dissuade bad behavior
Surcharge for smoking

The right incentive is one well aligned with a specific goal and the
employers culture and employee base
Consumers say they prefer cash (who doesnt?), but cash doesnt
necessarily yield effective long-term behavior change
Source: Optum Incentive Research by Blueframe, July 2011
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How often do consumers need an incentive?


Ideally, incentives should provide small and
frequent positive feedback or rewards
End of year payouts are not very likely to
motivate nor sustain behavior change
Behavior change through annual premium
adjustments are unlikely to succeed
because reward is delayed
Programs that promote exercise with a
year-end rebate for gym attendance is
less likely to succeed than one providing
incentives at every visit

Behavior economics suggests frequent immediate smaller rewards more


effective than distant promises of a larger reward
Source: Redesigning Employee Health Incentives, New England Journal of Medicine, Kevin G. Volpp, M.D., Ph.D.,
David A. Asch, M.D., M.B.A., Robert Galvin, M.D., M.B.A., and George Loewenstein, Ph.D. August 2011
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What is the best way to deliver rewards?

Make the reward noticeable and special


A $100 discount on premiums may go unnoticed, but a $100 check in
the mail may be positively seen as an unexpected windfall
Increases or decreases in insurance premiums that are deducted from
paychecks will be less salient than financial incentives provided
separately

Making the reward special will get members attention and engagement
Source: Redesigning Employee Health Incentives, New England Journal of Medicine, Kevin G. Volpp, M.D., Ph.D.,
David A. Asch, M.D., M.B.A., Robert Galvin, M.D., M.B.A., and George Loewenstein, Ph.D. August 2011
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Incentive Behavior or Outcomes?

Currently, most incentives are aimed at participation


Completing a health assessment
Participating in an employee challenge
Getting an annual preventative exam
There is trend toward outcome base rewards
Actual smoking cessation, not just class participation
Achieving specific biometric goals

May need both, though improved health outcomes is the ultimate goal
Source: Optum Incentive Research by Blueframe, July 2011
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How can we get more employees to participate in


wellness programs?
Not one size fits all; Employers desire customized programs based upon:
Employee composition (age, gender, education)
Job Conditions (at desk, in field)
Company culture
Employee Segments
Hesitancy for some employers to offer programs because they feel
those already healthy / active will be the employees who participate
Employers need help in creating a more inclusive wellness culture

Demonstrate health and wellness is important to the company (make


wellness part of company culture)
o Executives must be visibly active in the programs
o Provide employee testimonials
Source: Various UnitedHealthcare market research studies
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How can we get more employees to participate in


wellness programs?
Engaged

20%*

Moveable Middle

Unengaged

60%
60%*
*

20%*

Employee populations are diverse and respond differently


o Some will respond to everything; other will never respond
o We need to understand what will influence the moveable middle
* Denotes an estimate
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How can we get more employees to participate in


wellness programs?
Engaged

Moveable Middle

Unhealthy

Unengaged

Healthy

More importantly, we need to influence the unhealthy moveable middle


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Wellness programs must target a variety of


barriers and types of employees
Key Barriers:

Time

Money

Knowledge

Motivation

Accountability

Examples of
Barriers

Busy lifestyles,
long commutes
Family obligations
(caring for kids,
parents, etc.)

Feel very stressed


for cash
Feel they cannot
afford to make
healthy food
choices

Like to control
information
Not sure where to
get the best
information

Not Competitive
Exercise is not fun
/ is hard work
Exercise is boring

Need someone to
answer to

Principles of
what makes an
appealing
program

Short duration
Easy to
accomplish
Integrated into
current routines
(dont cause them
to make extra trips
or go someplace
new)

Incentives for
activities that
seem meaningful
or accessible
On a stated basis,
cash is most
popular incentive

Information is
personalized and
highly relevant
Be able to opt-in
to get information
List the pros and
cons: builds trust

Group-based
programs
Have a game-like
aspect
Continual or
recurring
Unexpected /
Exciting rewards

High visibility
Group-based
Not letting
someone down

Type of
programs that
may have appeal

Health info via


electronic media
Rewards for
buying healthier
foods at major
grocery chains

Discounts for
buying healthier
foods at stores
like Whole
Foods, etc.
Rewards for
buying healthier
foods at major
grocery chains

Health info via


electronic media
Website to sign up
tailored health
information
Health coach

Employee
challenges
Health coach
The trip of a
lifetime

Employee
challenges
Health coach

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Messaging: Areas to Explore

Use more emotion, less facts


- Motivation: Do it for your loved one
Play to the your not alone motivator
Highlight the loss of money
The Medium is the Message:
- Does the source of message matter? Yes.
Research Question: Is the future health state a motivator?

Correctly framing the message can have a large affect on engagement


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Is Health for Healths Sake an Incentive?


Q. Is a persons future health state a motivator for behavior change?
A. No
- Consumers who view their health as a high priority currently have expansive
definitions of healthy, such as: watching portion sizes and correct nutrition,
partaking in more intense and regular workouts, having personalized workout
routines, seeking out expert tips and advice, and talking about fitness
Their future health state is a key motivator for their behavior today; goals
center on fitness - being active, travel, be around for their grandkids, etc.
- Consumers who do not view health as a high priority have simplistic definitions
of healthy: eating healthy foods, feeling good, going for walks, and not being ill
Their definition of healthy in the future means maintaining their current
health status and/or not being sick when they are older
The future state of their health is not a motivator for their behavior today

The engaged population is already motivated to be healthy in order to be


healthy in their retirement years
The unengaged are not motivated to change their behavior in order to
have a healthy retirement
Sources: a) Asymmetric Paternalism to Improve Health Behaviors, Journal of the American Medical Association,
George Loewenstein, Ph.D. et al., November 27, 2007
b) UnitedHealthcare market research, Health Now vs. Health in the Future, September 2011
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Social Norms: Home Energy Use Experiment

Pilot study to reduce home electricity


consumption
Residents got a flyer, with 1 of 4 messages:
Protect the environment
It is the right thing to do: Benefit society
Lower your energy bills: Save money
Your neighbors are reducing their energy
consumption: Peer Pressure
Control group did not get a message

Source: Vlad Griskevicius, Assistant Professor of Marketing: Evolutionary psychology and consumer behavior,
University of Minnesota
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Home Energy Use Experiment

Average Energy Consumption During Test Period


14.5

Social
Norming
Lowered
Energy
Usage

14.0
13.5
13.0
12.5

Control

Benefit
Protect
Environment Society

Save
Money

Neighbors
Doing It

Source: Vlad Griskevicius, Assistant Professor of Marketing: Evolutionary psychology and consumer behavior,
University of Minnesota
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Social Norms: Towel Reuse Experiment

Pilot study to increase towel reuse in hotels


Condition 1: Standard Environment Appeal
- Help save the environment. You can help
by reusing your towels during your stay.
Condition 2: Social Obligation Appeal
- Join your fellow guests in helping the
environment. 75% of guests reuse towels
at least once during their stay.

Source: Vlad Griskevicius, Assistant Professor of Marketing: Evolutionary psychology and consumer behavior,
University of Minnesota
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Percentage of Guests Reusing Towels

Social Obligation Generated More Compliance


(Engagement)
50%
48%
46%
44%
42%
40%
38%
36%
34%
Save the Environment

Social Obligation
Appeal

Source: Vlad Griskevicius, Assistant Professor of Marketing: Evolutionary psychology and consumer behavior,
University of Minnesota
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Percentage of Guests Reusing Towels

Personal Obligation Generates Even More


Compliance (Engagement)
75% of the guests
staying in your room
reused their towels

50%
48%
46%
44%
42%
40%
38%
36%
34%
Environment

Other Guests
Reuse

Guests in Same
Room

Source: Vlad Griskevicius, Assistant Professor of Marketing: Evolutionary psychology and consumer behavior,
University of Minnesota
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Home Energy Use Experiment #2

First measured how much energy


each home uses per month
Then, place door hangers on front
doors with two pieces of feedback
You are using more energy
than your neighbors
You are using less energy than
your neighbors

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Individuals Like to be Normal

+30

Change in Monthly Energy Use


(kWh)

You use MORE than avg.


house in neighborhood

+20

You use LESS than avg. house in


neighborhood

+10

-10

-20

-30

Problem:
Consumers
Reverted to the
Norm

Consumers who used less,


started using more energy
Consumers who used
more, started using less
energy
The net effect was no
change

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Social Feedback Has Positive Effect

+30

Change in Monthly Energy Use


(kWh)

You use MORE than avg.


house in neighborhood

+20

+10

-10

-20

You use LESS than avg. house in


neighborhood
You use LESS than avg. house in
neighborhood Keep it up!

Consumers who used less


energy got a Good Job
message
Their usage stayed low

-30

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Potential Next Steps:


What You Can Do To Increase Engagement?

Engage and Learn from Behavioral Economics


Consult with behavioral change experts
Test the effectiveness of Social Norm messaging
Conduct new research to better understand what would
influence the Unhealthy Moveable Middle
Explore Innovation ideas to overcome barriers or leverage
enablers

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