MARKET REASONING RENDERS MORAL CONSIDERATIONS IRRELEVANT --- Episode 7

                 THE ECONOMIC APPROACH TO LIFE

                                  HEALTH BRIBES

    Health care is another area where cash incentives are in vogue. Increasingly, doctors, insurance companies, and employers are paying people to be healthy --- to take their medications, to quit smoking, to lose weight. You might think that avoiding disease or life-threatening ailments would be motivation enough. But, surprisingly, that's often not the case. One-third to one-half of patients fail to take their medications, as prescribed. When their conditions worsen, the overall result is billions of dollars a year in additional medical costs. So doctors and insurers are offering cash incentives to motivate patients to take their meds.
   In Philadelphia, patients prescribed warfarin, an anti-blood clot medication, can win cash rewards ranging from $10 to $100 for taking the drug. { A computerized pillbox records whether they take the drug and tells them whether they won that day. } Participants in the incentive scheme make an average of $90 per month for adhering to their prescriptions. In Britain, some patients with bipolar disorder or schizophrenia are paid 15 lbs (about $22) to show up for their monthly injection of antipsychotic drugs. Teenage girls are offered 45 lbs (about $68) in shopping vouchers to receive vaccinations that protect against a sexually transmitted virus that can cause cervical cancer. 
   Smoking imposes big costs on companies that provide health insurance to their workers. So in 2009, General Electric began paying some of its employees to quit smoking---$750 if they could quit for as long as a year. The results were so promising that GE extended the offer to all its U.S. employees. The Safeway grocery store chain offers lower health-insurance premiums to workers who don't smoke and who keep their weight, blood pressure, and cholesterol under control. A growing number of companies use some combination of carrots and sticks to motivate employees to improve their health. Eighty percent of big U.S. companies now offer financial incentives for those who participate in wellness programs. And almost haf penalize workers for unhealthy habits, typically by charging them more for health insurance. 
   Weight loss is the most alluring if intractable target of cash incentive experiments. The NBC reality show The Biggest Loser dramatizes the current craze of paying people to slim down. It offers $250,000 to the contestant who achieves the biggest proportional weight loss during the season. 
   Doctors, researchers, and employers have tried offering more modest incentives. In one U.S. study, a reward of a few hundred dollars motivated obese participants to shed about fourteen pounds in four months. (Unfortunately, the weight losses proved temporary.) In Britain, where the National Health Service spends 5 percent of its budget treating obesity-related diseases, the NHS tried paying overweight people up to 425 lbs (about $612) to lose weight and keep it off for two years. The scheme is called Pounds for Pounds.
   
   Two questions can be asked about paying people for healthy behavior : Does it work ? and, Is it objectionable ?

   From an economic point of view, the case for paying people for good health is a simple matter of costs and benefits. The only real question is whether incentive schemes work. If money motivates people to take their meds, quit smoking, or join a gym, thus reducing the need for expensive care later, why object ?
   And yet many do object.The use of cash incentives to promote healthy behavior generates fierce moral controversy. One objection is about fairness, the other about bribery. The fairness objection is voiced, in different ways, on both sides of the political spectrum. Some conservatives argue that overweight people should trim down on their own ; paying them to do so (especially with taxpayer funds) unfairly rewards slothful behavior. These critics see cash incentives as a "reward for indulgence rather than a form of treatment." Underlying this objection is the idea that "we can all control our own weight," so it's unfair to pay those who have failed to do so on their own---especially if the payments come, as they sometimes do in Britain, from the National Health Service. "Paying someone to ditch bad habits is the ultimate in nanny state mentality, absolving them of any responsibility for their health."
   Some liberals voice the opposite worry : that financial rewards for good health (and penalties for bad health) can unfairly disadvantage people for medical conditions beyond their control. Allowing companies or health insurers to discriminate between the healthy and the unhealthy in setting insurance premiums is unfair to those who, through no fault of their own, are less healthy and so at greater risk. It is one thing to give everyone a discount for joining a gym, but something else to set insurance rates based on health outcomes that many people can't control. 
   The bribery objection is more elusive. The press commonly calls health incentives bribes. But are they ? In the cash for sterilization scheme, the bribery is clear. { Giving heroin-addicted women monetary payments for voluntarily agreeing to undergo sterilization. You lawyers remember Buck v. Bell } Women are paid to relinquish their reproductive capacity not for their own good but for the sake of an external end --- preventing more drug-addicted babies. They are being paid to act, in many cases at least, against their interest.
   But the same can't be said of cash incentives to help people stop smoking or lose weight. Whatever external ends may be served (such as reducing health costs for companies or a national health service), the money encourages behavior that promotes the health of the recipient. So how is it a bribe ? Or, to ask a slightly differently question, why does the charge of bribery seem to fit, even though healthy behavior is in the interest of the person being bribed ?
   It fits, I think, because we suspect that the monetary motive crowds out other, better motives. Here's how : Good health is not only about achieving the right cholesterol level and body mass index. It is also about developing the right attitude to our physical well-being and treating our bodies with care and respect. Paying people to take their meds does little to develop such attitudes and may even undermine them. 
   This is because bribes are manipulative. They bypass persuasion and substitute an external reason for an intrinsic one. "You don't care enough about your own well-being to quit smoking or lose weight ? Then do it because I'll pay you $750." 
   Health bribes trick us into doing something we should be doing anyhow. They induce us to do the right thing for the wrong reason. Sometimes, it helps us to be tricked. It isn't easy to quit smoking or lose weight on our own. But eventually, we should rise above manipulation. Otherwise, the bribe may become habit forming.
   If health bribes work, worries about corrupting good attitudes toward health may seem hopelessly high-minded. If cash can cure us of obesity, why quibble about manipulation ? One answer is that a proper concern for our physical well-being is a part of self-respect. Another answer is more practical : absent the attitudes that sustain good health, the pounds may return when the incentives end.
   This seems to have happened in the paid weight-loss schemes that have been studied so far. Cash to quit smoking has shown a glimmer of hope. But even the most encouraging study found that more than 90 percent of smokers who were paid for kicking the habit were back to smoking six months after the incentives ended. In general, cash incentives seem to work better at getting people to show up for a specific event --- a doctor's appointment or an injection --- than at changing long-term habits and behaviors.
   Paying people to be healthy can backfire, by failing to cultivate the values that sustain good health. If this is true, the economist's question { "Do cash incentives work?" } and the moralist's question { "Are they objectionable ?"} are more closely connected than first appears. Whether an incentive "works" depends on goal. And the goal, properly conceived, may include values and attitudes that cash incentives undermine.