Stateline Story

States Weigh Medicaid Incentives

  • October 04, 2005
  • By Daniel Vock

For the only physician in the Michigan Senate, one woman's case clearly demonstrated the need for the state to give Medicaid recipients good reasons to lead healthier lifestyles.

Sen. Tom George (R), an anesthesiologist from Kalamazoo, encountered the woman after a successful surgery to remove an ovarian cyst. She was in her 30s, weighed 530 lbs. and smoked two packs of cigarettes a day. And, when George met her, she was pregnant.

"She was saying, 'This is my favorite hospital. I love it here (because of its private rooms and cable TV).' And I was thinking, this is not supposed to be where you come for a break," George recalled in a recent interview.

"She got all of this great care, but nobody said she would have to do anything, that she would have to stop smoking," he said.

George believes Michigan should give Medicaid recipients incentives to exercise, lose weight, quit smoking and follow through with doctor's appointments. It's an idea private insurers are already trying and one that public officials around the country are considering.

George is pushing a measure to try incentives on a voluntary basis in Michigan. A group affiliated with former U.S. House Speaker Newt Gingrich has encouraged Missouri lawmakers to take similar steps.

Florida officials incorporated the idea in an outline for a pilot project the state hopes to start in the Jacksonville and Ft. Lauderdale areas.

Although details aren't finalized, Florida's Agency for Health Care Administration recommended rewarding Medicaid beneficiaries who take their kids in for check-ups and flu shots, go through smoking cessation programs or participate in organized sports.

People who do this could receive lower co-payments, cheaper prescription and over-the-counter drugs and vision benefits.

Iowa plans to start paying for drugs used in treatment to help enrollees quit smoking or lose weight as "part of an overall approach to improve the health of Medicaid recipients," said Dr. Tom Kline, the medical director for Iowa's Medicaid programs.

Kline predicted Iowa could see the financial benefits of those programs within five years.

At a recent appearance in Washington to promote his "Healthy America" initiative, Arkansas Gov. Mike Huckabee (R), chairman of the National Governors Association, also warmed to the idea of pushing Medicaid recipients to adopt healthier habits.

"We do need to create incentive programs where, for the Medicaid population, we provide some reasons that it would be in their best interest… In some cases it may be by actual awards or some type of prize," he told an audience at the National Press Club.

If a recipient loses weight, quits smoking and works out regularly for six months, states could give him "a gift certificate for $50 to a store, or a color television," Huckabee said.

George, the Michigan physician whose practice is roughly 10 percent Medicaid recipients, is focused on more traditional rewards, such as discounts or waivers of co-payments. Maybe the state could provide dental coverage to recipients who keep themselves healthy, he suggested.

The Center for Health Transformation , a Gingrich-led group that advocates more flexibility for states and choices for individuals in Medicaid, is pushing similar changes, especially when coupled with the concept of health savings accounts.

The incentives can reap real savings when people who are truly sick, such as those who have diabetes, keep better care of themselves, explained Jim Frogue, director of the Center's Medicaid Transformation Project.

"Good health is cheaper," he said. That was his message, too, when he testified before a panel of Missouri lawmakers looking at long-term changes to the state's Medicaid program.

One of the Center's members, Lumenos , a health insurance company recently acquired by WellPoint Inc ., has used the incentives to motivate its policyholders to undergo 15-minute online surveys that gauge their health.

The company offers $100 to participants who take the "health risk assessments" and another $100 to consult weekly with a "personal health coach" over the phone. The coaches are registered nurses with at least five years of experience. The money is deposited into participants' health accounts

"The bottom line is, cash always works. Cash is king," said Doug Kronenberg, Lumenos' chief strategy officer. Participation in the programs has jumped significantly in the three years since cash incentives were introduced, he said.

Lumenos, which insures 200,000 people including employees of Fujitsu and Quest Diagnostics, is increasing the scope of its incentives. The company rewarded participants who stopped smoking; now it will encourage its enrollees to lose weight as well, Kronenberg said.

He said there are two main elements to building a successful incentives program: providing programs that help participants become healthier and effectively communicating the nature of the programs and the incentives to them.

Kronenberg anticipates that Lumenos it will see measurable savings within 18 months.

Still, some are wary of applying the concept to the public sector.

"It's not clear whether there are going to be incentives or penalties," said Sharon Parks, the vice president for policy for the Michigan League for Human Services , about George's initiative.

Parks warned that some of the measures would be difficult for poor people. If someone lives in a dangerous neighborhood or can't afford decent shoes, even running or walking could pose problems.

Plus, she said, poor people eat fatty foods because "that's what's affordable."

"Obesity is a tremendous problem, but (reform) has to be done very carefully. (Medicaid recipients) have bare-bones medical care," Parks said.

But George insists there's room for improvement, even if it means instituting higher co-payments for some people with unhealthy habits.

"We can't charge much, but if they can afford $5 a day for a pack of cigarettes, maybe they can pay $1 for treatment," he said.