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Should Medicaid Incentivize Healthy Behavior?

Critics killed an experiment in West Virginia to incentivize Medicaid patients to be healthier. Some say it's time for states to revisit such ideas if they're serious about controlling health costs.
by | March 6, 2013

About six years ago, West Virginia conducted an unusual experiment: It tried to encourage its low-income Medicaid recipients to be healthier. Not just seek less expensive care, but actually change their behavior. As part of a pilot program, Medicaid beneficiaries signed contracts that gave them full benefits in exchange for certain activities associated with better health, such as regular preventative screenings. Enrollees started with a scaled-back benefits package and then added more through good behavior. Better behavior, more benefits.

It was a novel idea, but the state never got to see it past the pilot stage. Opponents spoke out against the program, arguing that rather than rewarding people for being healthy, it was actually punishing others for not being well. The federal Centers for Medicare & Medicaid Services (CMS) questioned whether it was appropriate for the government to decide what constitutes a healthy behavior and whether it was wise to use state and federal dollars to promote them. So the proposal was stripped from the broader Medicaid reforms that it was a part of.

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As Gail Wilensky, a former health care adviser to President George H. W. Bush, tells it, West Virginia’s failed experiment is one more piece of proof that public insurance, Medicaid in particular, has never really made it a priority to endorse healthy living. Smoking cessation is generally as far as public programs have gotten in terms of promoting wellness.

“It’s not something we’ve ever been serious about doing,” she says. “There is very little willingness to directly involve patients in terms of health outcomes. I don’t know what it will take to change that attitude. There seems to be some reluctance about having strong public expectations about personal responsibility, a lot of debate about whether that’s appropriate to demand or expect.”

Not everybody agrees with Wilensky’s diagnosis, but it’s a thought worth pondering. As concerns about out-of-control health costs mount and doomsayers sound warnings about Medicaid and Medicare driving the federal government into bankruptcy, maybe it’s time to reevaluate whether we should be not only asking but actively pushing people to be healthier.

Just this week, Iowa Gov. Terry Branstad proposed an alternative to the Affordable Care Act’s Medicaid expansion that would incentivize healthy behaviors, such as regular checkups.

Of course, the central question is whether or not we should even try because, as West Virginia’s experience shows, these notions often die well before they get a chance to be implemented. “When states have tried to do this, the pushback has been from the federal government and from advocacy groups that say it’s not fair, that this is a slippery slope,” says Kathleen Nolan, director of state policy and programs at the National Association of Medicaid Directors (NAMD). “They say it’s not the right role for public insurance. They’d say even a positive incentive is a negative incentive for other people.”

That last point partially explains why you can’t really find a political caucus to fully get behind any efforts to promote wellness through Medicaid or Medicare. Conservatives don’t usually love the idea because it’s another example of the ‘nanny state’ meddling with personal responsibility. Liberals don’t really love the idea either because it’s likely that, if an incentive program were implemented, there are a lot of people who wouldn’t reach its goals. So would we be punishing those people for failure, just as much as we’d be rewarding others for success?

Timothy Jost, a health law professor at Washington and Lee University, thinks so. If your health plan offers a $75 reduction in premiums for lowering your blood pressure -- but you don’t -- then that’s pretty much the same as paying $75 for having high blood pressure, he says.

He notes that the Affordable Care Act’s (ACA) reforms are supposed to prevent insurers, public and private, from charging exorbitant rates for sicker people. Incentives, he says, could just be a backdoor way to do that.

“We’re not exactly sure how to encourage [people] to be healthy without punishing them for being sick,” Jost says. “We just don’t have very good evidence yet. You can create actual adversity if you don’t do it right.”

That’s the other variable in the equation. Even if a state could get past the ideological opposition to health incentives, there isn’t a lot of research on what a good program looks like. Should you focus on specific health goals like lower cholesterol or on certain behaviors like exercise? What should an incentive look like? Is a $50 credit for reducing your body mass index really enough to spur an overweight person to change their ways? But, especially with Medicaid under tight budget restrictions, how big can a financial incentive be while still making financial sense?

Those are the questions we don’t yet know the answers to. But Wilensky is optimistic that we could be getting closer to finding them. Health incentives have started to catch on in private insurance plans, and some state and local governments are using them in their employee coverage. Increased co-pays for smokers and discounts for those who sign up for a gym membership are just a couple of the concepts being tested.

A new Health Affairs report concluded that a private company's wellness initiatives -- which included pledges to exercise and eat well -- reduced their employees’ hospitalizations by 41 percent. The overall effect on costs, however, was minimal in the short term.

“The hope would be that if the private sector finds strategies that seem to favorably improve the health of a group, the public sector would adopt it,” Wilensky says.

But we also don’t necessarily have much time to wait for answers. Long-term cost projections are already unwieldy. Last fall, Trust for America’s Health (TFAH) projected that by 2030, every state could have an obesity rate above 44 percent and the country as a whole would be spending an additional $48 billion every year on related diseases. The federal government already expects Medicaid spending to more than double over the next decade.

“I’m frequently amazed at how long we can stall, how long we can delay what seems inevitable and obvious,” Wilensky says. “It will make it very difficult if we're constantly playing catch-up, if we're trying to only treat people after the fact.”

For that reason, some would passionately argue that we can’t delay trying to promote wellness. That same TFAH report estimated that a 5 percent drop in Americans’ average body mass index would save tens of billions of dollars. It might be messy, and states might have to be politically brave to be among the first to test the waters, but that doesn’t mean we shouldn’t try.

“In order for there to be really significant change, there's got to be more than just a crisis,” says NAMD’s executive director Matt Salo. “I would argue that there already is a crisis, but there needs to be a perceived crisis, and I don't think we have that at all. This is not just the nanny state coming down because we know better. This isn’t because we need to nurture you and make decisions for you. But when those decisions have direct fiscal impact on government, then we’d argue, yeah, there is a role. These are lifestyle choices that are costing us the most. And if they go unchecked, it will cripple the nation.”

Checking Up on Health News

  • Arkansas' agreement with CMS to use Medicaid expansion dollars to put people on the insurance exchanges (described by The Washington Post here) could be a game changer. Some in Texas are already taking notice, according to The Texas Tribune.
  • The U.S. Supreme Court issued an important ruling last month that increases the Federal Trade Commission's ability to block public hospital mergers, The New York Times reports.
  • At the nexus of education, mental health and gun control is this Des Moines Register investigation that uncovered the university's practice of sharing private student data with the local sheriff when students applied for gun permits.
  • Not an endorsement, but this Reuters column offers a path forward for conservative health reform within the parameters of the Affordable Care Act.

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