The carrot vs. the stick

Friday September 21, 2012

There’s been an ongoing debate in this country about how to encourage more Americans to follow healthier habits and how to lower health care costs. One of the nation’s largest health insurance companies has come up with a way to kill both proverbial birds with one stone, and it doesn’t involve using the stick of higher taxes or outright bans on oversized portions of sugary drinks.

Instead, Humana is using the carrot approach. This week the company announced a new partnership with Walmart that will give the more than one million members of its wellness program, Humana Vitality, a 5 percent discount on healthy groceries.

The program, which will launch Oct. 15, is meant to steer customers toward healthier food choices - and potentially drive down health care costs in the process, the Washington Post reports.

"We want to lower the cost of healthy food and have an impact on lowering the cost of health care," John Agwunobi, who oversees health and wellness for Walmart, told reporters.

The 5 percent discount will go toward any foods with a new "Great for You" icon, ranging from low-fat milk to produce to low-sodium soups. HumanaVitality members will accrue the discounts on a membership card. The discounts can then be used to purchase anything sold in a Walmart store, from healthy foods to clothing.

"In a recent survey we did, we saw that 84 percent of our members said a savings program would motivate them to start purchasing healthier foods," said Humana Vitality CEO Joe Woods.

Research on financial incentives and food purchasing behavior indicates that pricing could have an impact on purchase decisions. The USDA published research in 2007 that looked at how low-income families reacted to a 10 percent drop in the price of low-fat milk compared to a full-fat alternative. Researchers found that price change correlated with a 14 percent increase in the consumption of low-fat milk.

This is the first time a major retailer and a major health company have tried to use financial incentives to change how people eat, according to the Washington Post. The program is experimental and time will tell if it is effective or not. If it does work, then perhaps more health insurance and retail companies could get on the band wagon for a healthier America.

The best part is, there is no nanny state involvement from the government on any level and no resentment or backlash that sometimes comes from using the stick approach.


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