title: Incentives for wellness: tackling issues of effectiveness, biology, scope, and cost shifting.
abstract: Morgan Downey raises several interesting issues in his essay. We agree on several points, for example, that current regulations are "really quite porous," with the result that enrollees will be able to get the rewards even if they do not alter their health behaviors. There are also several areas of disagreement that merit further discussion, and I focus on those in this essay. To provide context, my position is that financial incentives for healthy behavior can improve social welfare by internalizing the external costs of risky behaviors and help people with time-inconsistent preferences to adhere to a healthier lifestyle. To achieve the goal of increasing social welfare, the penalties for risky health behaviors should be set equal to the external costs. The design of the rewards (in terms of their frequency, salience, and the amount of loss aversion they invoke) may be critical in determining their effectiveness.
authors.affiliation: Department of Policy Analysis and Management, and the Department of Economics, and the Institute for Health Economics, Health Behaviors and Disparities at Cornell University, 2312 MVR Hall, Ithaca, NY 14853, USA. JHC38@cornell.edu
authors.forename: John
authors.initials: J
authors.lastname: Cawley
mesh_terms: D004649:Employee Incentive Plans; D005378:Financial Support; D015438:Health Behavior; D006293:Health Promotion / Q000191:economics* / Q000331:legislation & jurisprudence*; D006801:Humans; D007348:Insurance, Health / Q000191:economics*; D009765:Obesity / Q000628:therapy*; D058991:Patient Protection and Affordable Care Act / Q000191:economics*; D010818:Practice Patterns, Physicians' / Q000191:economics* / Q000331:legislation & jurisprudence*; D012201:Reward; D015431:Weight Loss; D061217:Weight Reduction Programs / Q000191:economics* / Q000331:legislation & jurisprudence*