Behavioral Economics Not Just Useful for Retirement Plan Nudges

As employers look to control health care costs, and keep their workers well, a relatively new area of interest has emerged—behavioral economics.

Many employers are already implementing the theories of behavioral economics in their employee benefit plans and communications, such as automatic plan features in retirement plans and targeted participant education, and nearly two in five are interested in learning more about how to do so. During a recent gathering of industry leaders from the International Foundation of Employee Benefit Plans (IFEBP), 39% reported that they are interested in using behavioral economics to help employees adhere to medical treatment plans. Behavioral economics blends insights of psychology and economics and can provide a framework for employers to understand their employees’ decisions and encourage healthier behaviors, the IFEBP says.

Helping employees make wise health care choices is important to a majority of employers consulted; 72% of responding employers indicated it is important to their organizations to help workers follow the medical guidance recommend by their doctors. Organizations are employing the theories of behavioral economics through a variety of methods that nudge their workforce to make healthier decisions. Forty-two percent use disease management programs to guide employees who need one, step by step, through a treatment plan, and 18% each offer on-site pharmacies that provide easy access to prescriptions and employ financial incentives or penalties that encourage specific behaviors among employees. Seventeen percent use reminder tools such as text messages for workers, and 10% remove barriers by reducing or eliminating copayments for those with chronic diseases.

Three in four employers also report that it’s important to their organization to help employees select the right health insurance plan. Eighty-five percent of employers have found success in helping employees make better decisions through plan design features such as premium contributions, deductibles or coinsurance; 77% through descriptive plan materials; 45% through workshops or seminars that provide guidance; and 34% through one-on-one counseling sessions. 

Employers also report using incentives to encourage participation in their wellness programs—most commonly gift cards, non-cash prizes or raffles; cash awards; or gym discounts or reimbursements. Employers are most likely to offer incentives for participation in health screenings, health risk assessments, fitness programs and smoking-cessation programs.

“Whether it’s choosing a health plan or a medical provider, participating in a health risk assessment or taking daily blood pressure medication, we humans don’t always do what’s best for ourselves. Employers are looking to behavioral economics to shed light on employees’ sometimes irrational decisions with the ultimate goal of reducing barriers and making healthy behaviors easier,” says Julie Stich, CEBS, associate vice president of content at the IFEBP.

Findings were gathered during an April International Foundation of Employee Benefit Plans board and committee meeting of thought leaders from employers across Canada and the U.S. and from the IFEBP’s report Workplace Wellness Trends: 2017 Survey Results.