Rethinking benefits: What if we paid members to get healthy?

If we want different outcomes, we may need a different approach. What if benefits design did not just encourage healthier behavior, but directly paid for it?

Misaligned incentives and an unbalanced system

People are shocked that 18% of the U.S. Gross Domestic Product (GDP) is spent on health care. The issue is not how much the U.S. spends on health care -- it's how those dollars are aligned.

Despite spending nearly twice as much per capita as other developed nations, Americans experience worse outcomes, including higher rates of preventable disease and shorter life expectancy. Much of this stems from lifestyle-related factors: eating the wrong foods, inactivity, and substance abuse.

Yet the system is not built to effectively address those behaviors.

Today's incentives are fragmented:

• Providers are largely paid to treat illness, not prevent it
• Members are insulated from the full cost of care and lack meaningful financial motivation to change poor lifestyle habits
• Health plans absorb rising costs tied to chronic conditions
• Employers and employees shoulder increasing premiums and out-of-pocket expenses

We have a sick care system – one optimized for managing sickness, not sustaining health.

A more balanced model would shift investment upstream -- toward prevention, early detection, and behavior change -- reducing downstream costs and improving outcomes over time.

Paying for better choices

Research suggests that up to half of health outcomes are driven by behavior. Yet knowing what is healthy does not always translate into action.

That raises a critical question: can financial incentives bridge that gap?

The evidence is mixed but promising in specific contexts. Studies have shown that small, consistent financial rewards can increase participation in activities like exercise, preventive screenings, and smoking cessation. At the same time, results often diminish when incentives are removed, and not all behaviors - particularly those tied to addiction or mental health -- respond to financial motivation alone.

Employers and health plans already invest heavily in wellness programs:

• Subsidized gym memberships
• Health risk assessments
• Smoking cessation and weight management programs
• Preventive screenings

But these efforts are typically peripheral rather than central to benefit design. Plus, the financial upside for members is often too small to drive sustained change.

What is missing is a model where meaningful financial rewards for people are directly tied to measurable health actions and outcomes.

For example, employers and plans could:

• Offer premium reductions or HSA contributions tied to verified milestones (i.e. smoking cessation, biometric improvements, regular exercise)
• Provide cash incentives for completing preventive screenings or chronic condition management programs
• Structure benefits so that healthier behaviors translate into immediate, tangible financial gains for individuals

As premiums, deductibles, and out-of-pocket costs rise, employees are more sensitive than ever to their health care spending. A lower premium – translating to more take-home pay -- could be a far more powerful motivator than today's wellness perks.

Why employers and health plans must act together

Health plans alone cannot drive this shift, and employers cannot do it in isolation. But together, they have a unique opportunity to rethink how benefits are structured.

Over the past decade, plans have successfully influenced provider behavior through value-based care (VBC) models, tying reimbursement to outcomes, reducing low-value care, and leveraging clinical performance data to improve performance.

A similar concept could be applied to patient members.

Imagine a benefits model where:

• Members are rewarded for behaviors that reduce risk and improve outcomes
• Employers share in the savings from a healthier workforce
• Plans align incentives across all the stakeholders in the ecosystem, not just with providers

This would effectively extend value-based principles beyond clinicians to the individuals whose behaviors drive a significant portion of health care costs.

The barriers

There are challenges to this approach, but they are not insurmountable.

Health plans operate under financial pressures and shareholder expectations, making it difficult to justify upfront investments that may reduce short-term revenue. Employer-plan relationships are often one-year contracts, which discourages long-term investment in member health. And there are ethical and practical considerations, such as ensuring equitable incentives and accounting for factors like socioeconomic status and chronic conditions.

Plans and employers can overcome these barriers through innovations such as longer-term employer-plan partnerships, improved data tracking, and more personalized incentive structures. None of these innovations are radical; they just haven't been done at scale.

A call for bolder benefits design

Incremental change will not solve a structural problem.

We cannot continue to rely on wellness programs while costs rise, and health outcomes stagnate. If behavior is a primary driver of health -- and cost -- then it must be a primary focus of benefits design.

Paying members to get healthy represents a meaningful shift: from passive encouragement to active alignment of incentives.

For employers facing another cycle of rising health care costs, the question isn't whether the current system is sustainable. We all know it isn't.

The question is whether we are willing to rethink it. It is time to test new models, pilot bold ideas, and learn more about this path forward.