I have always been a carrot guy in the carrot-stick continuum. I wonder what the national response would be if we were somehow able to develop a form of nationalized health care with built incentives like shorter lines or more immediate access and of course, premium rebates for meeting or exceeding personalized wellness goals. As it is, particularly in the Medicaid arena, there is no incentive to give up unhealthy habits and counter productive life styles. We pay no matter what personal choices people have made. To me, it makes perfect sense. Steve Kirk blogs for seniors on health care at www.theperfectsense.com.

No incentive? I'm on Medicare, not Medicaid, but same thing, no payments out of pocket after paying my private Medigap and Part D and Medicare Part A, no matter how much care I use. I have saved Medicare @$120,000 over the last year by staying off of dialysis through strict diet and exercise and medication adherence. I didn't get reduced premiums, in fact they went up like everyone else on Medicare, I didn't get a bonus, I got a year off of dialysis and a longer life. That's incentive enough for people who are going to be incentivized.

"...many employers are establishing so-called wellness programs, designed to encourage employees to quit smoking, lose weight, keep blood pressure under control and take other preventive measures that should improve their overall health."

Any prospective data that this actually works to save healthcare costs in real life? Or is this really a marketing ploy by insurers to justify higher premiums?

There are many cost-effective wellness programs that make sense, not just at the workplace level, but society-wide. Smoking cessation programs, weight-loss counseling, screening for high blood pressure and treatment with low-cost generic drugs, daily aspirin for people at risk of heart attack -- all of these pay back more to society in the form of lower health care costs, some of them in the short-run. I'll be writing more about this in the days ahead.

Merrill,

FYI-- Clarian is a hospital/health system, not an insurance company.

I do think the bonus/penalty question is a matter of (clearly very important) semantics: Employers can fine someone $50-100 for not participating, or they can increase premiums by $50-100 and provide a "bonus" for those that participate. The year-over-year increase in premiums is not a transparent process to employees, so building in several hundred dollars in "bonuses" can be accomplished fairly easily, with the same net effect as penalties. Unfortunately for Clarian, they seemed to miss this difference initially, but clearly are having success success now. Its a growing phenomenon that is a clear positive for our health system generally.

PS Please take a look at the details of Vertex's R&D spend for a Phase 3 program for a new Hep C drug. An instructive example of a prior discussion-- they are looking at $400-500 million in R&D costs to bring the drug to market. I think it'll provide you a different perspective on the rising costs of trials. Worth an in-depth look.

There actually is a third approach - rather than leaving the institutional factors entirely the same and then trying to change the incentives on top of that, you can change the institutional factors. That is, can you change the way you do your business that makes it easier for people to exercise during the day (flex time for health activities, locating near /building facilities) for example. You can ensure that there are healthy food options to choose from, and that you push them with the same vigor you do less health options (if you see food, you can have fruit by the cash register not just candy bars.) You can incorporate health living into daily life, as opposed to treating it as something separate.

Doing these sorts of things along with providing positive incentives is probably the best option, and it can have benefits for productivity and morale if done right - on top of the health costs benefits.