Healthy Behavior Incentives May Win Over Medicaid Expansion Holdouts, but Fail as Health Promotion Policies

By Patrick Wise


As conservative states continue to resist Medicaid expansion, pro-expansion advocates may be tempted to use healthy behavior incentives (HBIs) as an homage to conservative ‘personal responsibility’ values to win over conservative politicians.  This post describes Medicaid HBIs, their incentives, recent research findings on their outcomes, and the policy implications of their adoption. It finds that states considering adopting HBIs as part of their Medicaid expansions should seriously consider that the costs of implementing such programs will likely outweigh the benefits.

HBIs – what and why?

Healthy behavior incentives arise from Medicaid section 1115 waivers, which allow states more flexibility to reach new populations or provide more benefits than the federal Medicaid statute covers.  Currently, multiple states possess waivers to implement HBIs in their Medicaid expansions in an effort to promote personal responsibility for health outcomes and improve the efficiency of Medicaid programming.

Nearly all HBI programs reward enrollee participation in activities like wellness checks and health risk assessments, while fewer tie rewards to health outcomes (e.g. weight loss, smoking cessation).  Incentives can take many forms, including financial awards, non-monetary rewards, or Medicaid cost-sharing reductions.

Generally, HBI results have been mixed.  Early outcomes indicate some success, though utilization changes and financial benefits remain uncertain.  Studies have indicated that shorter-term behaviors respond better to incentivization, immediate rewards work best, and raising public awareness, while challenging, is key to program success.

HBIs face serious obstacles to implementation

For instance, Iowa implemented an HBI program as part of its Medicaid expansion under a section 1115 waiver in 2014.  The program seeks to improve health behaviors by incentivizing enrollees to undergo a ‘wellness exam’ and fill out a health risk assessment.  It also incentivizes health care providers to assist patients in filling out these assessments. If enrollees fail to fulfill the two HBI components, they are charged a nominal premium each month for their insurance.

Despite efforts to smooth implementation, including a multi-modal information campaign, this program floundered.  Of all eligible enrollees, only 17% completed both requirements of the program, and only about a quarter of all enrollees completed one component or the other.  Low health care utilization subpopulations participated even less.

Researchers attribute these poor outcomes to a lack of awareness and poor health literacy among enrollees, and confusion with other insurance programs among health care providers.  For enrollees in particular, lacking internet access, insufficient time to visit their doctor, and too few providers accepting Iowa’s Medicaid also served as barriers to participation.

Earlier HBI programs implemented before Medicaid expansion experienced similar results and challenges.  In Florida, enrollees only claimed about half of all the credits they earned for participating in HBI programs.  In Idaho, HBIs improved health outcomes only for children whose families qualified for the program, while other incentives for weight loss and smoking cessation fell relatively flat. And West Virginia, whose HBI program penalizes non-participants by automatically decreasing their benefits, fared the worst, with only 10% of enrollees participating.

Academics reviewing these programs attribute their mediocrity to a lack of evaluation systems, poor program awareness, and reliance on health care providers for implementation.  In addition, they propose that future efforts must address these issues while also utilizing nearly-immediate rewards delivered through new, effective administrative infrastructures.

Policy implications

The benefits of HBIs remain unclear, as so few states have achieved reasonable participation rates.  States considering HBIs as part of their Medicaid expansions should think twice. While HBIs may increase healthy behaviors, they also come with significant risks, including high administrative costs, challenges educating the public and providers, and poor uptake.  States that are dead set on adopting HBIs should ensure their programs expand reward delivery infrastructure, deliver incentives quickly, and effectively raise awareness of the program.

Anecdotal evidence indicates that incorporating HBIs into Medicaid expansion plans may make the decision more palatable for conservatives, but this victory will ring hollow if the programs then inflate administrative costs while failing to improve health outcomes.