How can businesses get the best return on investment from quit-smoking rewards? Dr. David Grossman reports on a New England Journal of Medicine study.

David Grossman, MD, MPH, is Group Health Medical Director for Population and Purchaser Strategy and a Senior Investigator at Group Health Research Institute

Employers know that it pays to have happy, healthy, and productive employees. This fundamental principle has led businesses and health plans to offer financial incentives for behaviors like exercising, eating well, and quitting smoking. We're now figuring out how to get the best response to these programs through incentives and nudges. A recent paper (with video) by Halpern et al. in the New England Journal of Medicine reports that a straightforward cash incentive yielded the best results when CVS Caremark employees were offered different types of reward programs to stop smoking. 

The study questions were:

• Which of several incentive programs works best to get people to quit smoking?
• Does getting a large cash reward improve the odds of quitting over no reward?
• Will employees be willing to risk their own money to try to succeed in quitting?
• Will those who put up a deposit and take the risk do better at quitting than those who take no risk?
• Do people do better as individuals or as a group in taking risks?

Such a fascinating set of questions about health, behavior, and economics!

Designed for “skin in the game”

The study’s design was elegant but a bit complicated. Some participants received individual smoking cessation programs and some were in group programs (with group incentives). For some participants, the incentive to stop smoking for six months was the potential to earn $800 cash. Others were offered a structure in which they deposited $150 that was returned with a $650 bonus for successful tobacco abstinence; but they lost the $150 if smoking cessation was not achieved. (Quitting was validated with urine tests). Control participants received no rewards or incentives other than the huge pleasures of being smoke-free. Only half of participants had coverage for tobacco cessation, which included free behavior-modification help and nicotine-replacement therapy.

Why deposits? The researchers were interested in participants' reaction to deposit programs because people are generally wired to prioritize the avoidance of loss, even at the expense of future gain. But people who make deposits, and take risk on success, also have more "skin in the game"—and they might try harder to quit!

Cash wins!

The Halpern et al. study found that any type of cash reward increased smoking cessation compared to no reward. That makes sense—we respond well to carrots, like chances to earn cash. On the surface, rewards looked better than deposits: Overall, nearly 16 percent of participants offered the $800 reward succeeded in quitting compared to about 10 percent of people offered the deposit return plus reward. Halpern et al. discovered the reason for the difference in results: More people accepted the straightforward $800 reward structure than the deposit program, which many people were reluctant to try. In other words, from a population perspective, the simplest method—direct cash payments that didn't require an initial employee investment—got the best results.  

But underneath these results, the researchers found that if an employee accepted the risk and made a deposit, their rate of quitting was about 13 percentage points higher than if they took a simple cash reward. Skin in the game matters—if you are in the game. The researchers had interesting findings about individual vs. group approaches, but the bottom line was that the impact of rewards was similar when offered to groups or individuals; in this case, it doesn’t take a village.

Rewarding healthy behavior benefits families, communities, employers, and insurance plans. Smoking cessation is one of the "best buys" in prevention; while most preventive services are generally cost effective (i.e., they don’t save money but do improve health), smoking cessation programs with counseling and medication are cost-saving to the sponsor.

A 2014 study cited in the Halpern et al. article calculated that a smoker costs a business more than $5,800 a year over a nonsmoker. Offering a reward for smoking cessation is a good investment for employers and now, we know more about the type of reward structure that people prefer. At Group Health, we’ll continue to learn from studies like Halpern et al. about how to encourage employees and health plan members in daily habits that can lead to healthier, longer lives.