Stay-Well Health Insurance Pays You to be Healthy

Read about the benefits of a stay-well health insurance incentive.

| November/December 1983

If someone promised to pay you $500 to stay healthy next year, do you think you might try a little harder than you do now to promote your own well-being?

Well, that's certainly been the case with several thousand people across the country whose employers have adopted "stay-well health insurance": an incentive program that pays cold cash (or other benefits) to workers who remain in good health and out of the doctor's office.

The concept was born in 1978 in northern California's Mendocino County, when Assistant School Superintendent Ed Nickerman was asked to find ways to help the school system cut costs. His investigation soon uncovered a particularly burdensome expense for both the district and its employees (including himself): health insurance.

"I have a large family," says Nickerman, "and no matter what I did, our health insurance premiums kept going up. Yet the only times we benefited from those payments were when one of us got sick. There was never any reward for staying well."

Ed reasoned that people would adopt more healthful lifestyles if they were offered some kind of financial incentive . . . and he reckoned further that, as their health improved as a result, they would use fewer medical services, which in turn would ultimately lower the school's (and its employees') insurance premiums.

At that time, Mendocino's schools carried a zero-deductible health insurance plan. Nickerman calculated, however, that if the district converted to a $500 deductible plan, and set aside $500 per employee in a separate account to be used for the worker's medical expenses under $500 (anything over that amount, of course, would be paid by the insurer), the system could still provide total health coverage . . . but for a lower cost.

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