HIDDEN TRADE-OFFS IN INSURANCE WELLNESS PROGRAMS
57 Pages Posted: 29 Jul 2020 Last revised: 21 Jan 2021
Date Written: August 1, 2020
Would you like a Fitbit with that insurance policy? It seems, perhaps, like a strange question for a policyholder to hear. Yet this, and similar questions, are increasingly common due to a trend in insurer wellness programs. Health and life insurance companies are offering policyholders wellness programs akin to counterparts in the employment arena, where policyholders receive rewards or premium discounts in exchange for participating in health education and surveys or for meeting set health goals. The programs aim to incentivize policyholders to take personal responsibility for health behaviors. The expansion of wellness programs comes even as growing evidence suggests that workplace wellness programs do not significantly improve health or other metrics. Although promoting health is a worthy goal, if insurer wellness programs fail to create meaningful change in health metrics, their use may further entrench a system of shifting costs to those most burdened in society under the weak guise of personal responsibility and health promotion. Insurers, simultaneously, may benefit from gaining valuable consumer data without clarity on how this data will be used or with whom it will be shared.
Regulation at the state and federal level generally sanctions or even encourages these programs. However, especially in the life insurance context, regulatory efforts fail to require even the most basic of protections across all programs. This paper argues for regulation to provide at least baseline protections across five domains. Programs must be offered to all similarly situated individuals; provide reasonable alternatives to those unable to meet program goals due to health; prohibit unreasonable or exorbitant monetary incentives, especially those linked to premiums; be reasonably designed to promote health; and have protections and disclosure requirements surrounding policyholder data. Even these most rudimentary protections are not guaranteed across all insurance wellness programs given the patchwork regulation to date. Without such protections, programs risk harming the most vulnerable in society without substantial benefit to the health and wellness of those participating.
Keywords: insurance regulation, wellness program, unfair trade practice, ACA, ADA
JEL Classification: I13, I14, K39
Suggested Citation: Suggested Citation