Published 24 September 2009, doi:10.1136/bmj.b3504
Cite this as: BMJ 2009;339:b3504

Analysis

What can we learn from German health incentive schemes?

¹ LSE Health, London School of Economics and Political Science, London WC2A 2AE, ² Institute of Health Economics and Clinical Epidemiology of the University of Cologne, 50935 Cologne, Germany

Incentives aimed at changing individual health behaviours are well established in Germany. Harald Schmidt, Andreas Gerber, and Stephanie Stock describe how they work and discuss some of the difficulties

Germany first introduced incentives aimed at individuals into its statutory health insurance scheme in 1989, offering reduced copayments for dental treatment to people who attended regular check-ups. Since then, many other incentive schemes have been launched. Some welcome these, but others question their rationale and effectiveness and worry that a focus on individual behaviour detracts from taking action at the social level. Despite these concerns, other countries, including the United Kingdom, have shown interest in incentive programmes.^{1 2 3} We look at the lessons to be learnt from Germany’s experience.

Rationale for incentive systems

German incentive schemes have three main goals:

Improve population health—As elsewhere, chronic diseases are on the rise in Germany. Although evidence on the role of the social determinants of health is becoming increasingly irrefutable,⁴ even the most health conducive environments do not, by themselves, make people healthy. Targeting individual behaviour is therefore viewed as a complementary way of improving population health.

Maximise efficiency of services—Individual behaviour also has implications for the efficient operation of a healthcare system. Many incentive schemes seek to encourage responsible use of resources—for example, by rewarding compliance with treatment or minimising use.

Enhance competition between sickness funds—Germany’s social health insurance system has around 200 sickness funds, and citizens have free choice of fund.⁵ Incentive programmes serve as tools for attracting and retaining clients, in much the same way airlines or supermarkets use loyalty schemes.⁶

Some incentive schemes seek to satisfy all three of these goals, whereas others may focus on one or two of them.

Incentive systems in practice

Sickness funds offering incentive programmes are bound by the provisions set out in the Social Security Code (box). To illustrate these we describe the programmes implemented by Barmer Ersatzkasse, one of Germany’s largest sickness funds, which insures roughly 6.8 million people, or 10% of the population.

Legal basis of incentive programmes, Social Security Code (Sozialgesetzbuch V) Incentives for "health-conscious behaviour" (Article 65a) Sickness funds may offer "bonuses" for participation in health promotion, screening, and check-up programmes. Bonuses may be provided in cash, reductions of insurance contributions, or in kind (eg, sports equipment). Bonuses must be financed through savings made on those taking part in the incentives programmes, and not through general insurance contributions. All funds must report regularly, at least every three years, to the relevant authority on the savings made. Bonuses may be paid only if savings are made. Incentives for complying with dental check-ups (Articles 55 and 56) Sickness funds cover 50% of the costs for necessary dental treatment, and the insured patient pays the remaining half. Funds will increase their contribution by 20% of their initial payment if adults have taken part in annual check-up programmes (and under 18 year olds in biannual ones) over five years. If there are no gaps over the past 10 years the additional contribution paid by the fund increases to 30%. Incentives for the early detection and treatment of chronic diseases (Article 62) Compliance in prevention and treatment schemes may entitle chronically ill patients and those with cancer to lower copayments. Insured people who participate in counselling sessions for cervical, bowel, and breast cancer at the relevant age, and do not refuse treatment if they develop one of these diseases, can halve applicable copayments from a maximum of 2% of gross annual income to 1%. (However, at present, all other chronically ill people pay only a maximum of 1% by default.) It is planned to extend the scheme in the future beyond just the three types of cancer. Incentives for minimising healthcare utilisation (Article 53) Funds may offer reduced contributions (or lower copayments, where required) to those agreeing to take part in schemes thought to reduce the burden of morbidity and costs for the sickness funds—for example, by minimising use of healthcare services or taking part in specific disease management programmes. Sickness funds may offer what amounts to no-claim bonuses—reductions of up to 20% of the annual contributions may be granted, capped at 600 maximum (or more if several different bonus plans are combined).

Incentives for dental check-ups
Sickness funds cover 50% of the costs for necessary dental replacements. Funds must increase their contribution by 20% if adults have had annual check-ups over five years (or six monthly check-ups for under 18 year olds). If there are no gaps over the past 10 years the additional contribution increases to 30%. Barmer gives members a bonus booklet to document check-ups. Dentists sign the booklet to confirm attendance, and members take the booklet to a Barmer branch to claim the discount on treatment costs. People with bonus booklets have been shown to have more check-ups than those without (odds ratio=8.2; 95% confidence interval 6.3 to 10.6).⁷

Incentives for health conscious behaviour
Sickness funds may offer bonuses for participation in health promotion, screening, and check-up programmes. Bonuses may be provided in cash, reductions of insurance contributions, or in kind (sports equipment, etc). Bonuses must be financed through savings made from those taking part in the incentives programmes and not through general insurance contributions. All funds must report regularly, at least every three years, to the relevant authority on the savings made. Bonuses may be paid only if savings are made.

Barmer offers bonus points for 17 different activities (table), many of which they must offer by law, such as immunisations and check-ups for chronic disease. Participants are issued with a bonus card on which credit points are recorded and signed off by an authorised person. Anyone earning 500 or more credit points over two years is eligible to redeem points. In-kind bonuses include one year access to a personal internet based electronic health record, backpacks, cycle helmets, kitchenware, sports watches (all 500 points) or partial funding of a short wellness holiday. Families may pool bonus points to exchange them, for example, for a Nintendo Wiifit console (1500 points). Alternatively, a cash benefit may be chosen.⁸ Individuals can redeem up to 30 a year (120 for a family of four). Some bonus schemes may be combined with newly introduced deductible plans—for example, an additional 70 is available if blood pressure, blood sugar, cholesterol, and body mass index targets have been met over one year.

View this table: [in this window] [in a new window]   Interventions and rewards in Barmer bonus programme

 
Barmer’s evaluation of the cost saving from the bonus programmes focused on immunisation, check-ups, screenings, exercise, and education.⁸ More than 10% of the insured have taken up one or several bonus programmes. In a controlled cohort study (matched pairs) comprising 70 429 members in each group annual net savings of 97.14 (90% confidence interval –10.45 to 104.73) were found per member in the intervention group in the first evaluation, after implementation costs (mail-outs, advertising, general administration) were subtracted.⁸ Other sickness funds report similar results.^{9 10}

Incentives for minimising use of health services
Sickness funds can offer reduced contributions (or lower copayments) to those agreeing to take part in schemes thought to reduce the burden of morbidity and costs for the sickness funds—for example, by minimising use of healthcare services or taking part in specific disease management programmes. Barmer has offered two schemes since 2007, both of which have a binding three year term. In the first, 80-200 of insurance contributions may be reclaimed each year if the insured have not required hospital admission or a general practitioner consultation that led to a prescription. The second comprises nine different schemes that entitle the insured person to an annual rebate if they agree to pay a certain percentage of healthcare cost they may generate. The amounts range from 80-500, with higher rebates where people agree to higher percentages of costs. Some plans are open to everyone; others only to those with higher incomes. For example, all insured people may enrol in a plan where they may redeem 100 annually if they pay 10 each time they use services (capped at a total of 150). Those earning more than around 4000 gross a month can secure 500 annually if they agree to a two year plan in which they pay 45% of cost for services used in the first year and 40% in the second year. Some plans also require participation in particular bonus programmes that Barmer offers. Although the measures seek to reduce use of services, a range of measures are exempted. Hence, insured people do not need to pay for participation in primary prevention, screening, vaccinations, dental check-ups, and other services.

Incentives for early detection and treatment of chronic diseases
The social security code specifies that people who participate in counselling sessions for cervical, bowel, and breast cancer at the relevant age, and do not refuse treatment if they have one of these diseases, can halve applicable copayments from a maximum of 2% of gross annual income to 1%. (However, at present, people with other chronic diseases pay only a maximum of 1% by default.) Barmer implemented the programme last year and no evaluation data are available yet.

Incentives or disincentives?

This brief outline shows that, conceptually and functionally, incentives in health care are complex. A common narrow understanding of an incentive is that it constitutes a material or idealistic benefit conditional on certain voluntary health related behaviour. Such approaches are sometimes referred to as reward or "carrot" policies. These might be contrasted with disincentives or "stick" approaches, where people incur a financial or other disadvantage for failing to act in a way that is regarded as appropriate.

The bonus programmes described above are the most popular German incentive programmes. The concept emphasises both that rewards are good things, and that they are provided in addition to something else. But it is not always clear where bonus programmes fall on the carrot-stick spectrum, and the distinction is less rigid than it might seem. For example, politicians and policy makers often use a wide understanding of incentives that includes stick elements. This is illustrated by the programmes for early detection and treatment of chronic diseases. For example, the maximum copayment for some cancer patients was recently increased from 1% to 2%, with the option of reducing it to 1% through compliance in prevention and treatment.¹¹ The health secretary emphasised that this initiative had "created new incentives."¹² However, the incentive is not to secure an extra benefit but to avoid incurring a penalty.¹³ There is a risk that people will be alienated rather than encouraged by such initiatives.

Equity

Incentive programmes may help funds attract or retain higher income earners, which may confer a competitive advantage, as they contribute more but cost less (insurance contributions are proportional to income, and higher income earners typically have lower morbidity).¹⁴ It is well established that people who are better off are more likely to participate in preventive measures than poorer people.^{15 16} Braun confirmed in an early analysis that almost twice as many bonus users were in the fifth quintile of earnings than in the first quintile (19% v 11%).¹⁷ However, sickness funds are not required to produce these data under the mandatory evaluation scheme. Nor are they required to specify whether people have actually changed their behaviour and are not receiving bonuses for activities they have always been doing (such as exercising) or would have done anyway (attending check-ups). It remains to be seen whether bonus programmes have the potential to benefit all equally and whether they can help reduce health inequalities among different social groups. If it turns out that unequal take-up of bonus programmes is structurally determined, it could be argued that incentives actually penalise those who are insufficiently able to use them.

A related problem concerns people’s capacities to make prudent choices: there is no risk in taking part in the dental check-up or fitness programmes. But Barmer’s incentives for minimising use of healthcare services have lock-in times of up to three years. Users will not be equally able to decide which plan is most suitable for them. Although Barmer offers some help in making the right choice, better-off people may still benefit disproportionately. Furthermore, the bonuses are much higher for minimising use of health services than for health promotion activities. Poorer people might be more tempted to forgo needed care in order to secure the bonus.

Doctor-patient relationships

Some policies put doctors in a new position because they need to confirm that people have qualified for incentives. The programmes for early detection and treatment of chronic diseases created particular controversy because doctors had to attest compliance of cancer patients with treatment. Uncomfortable with their policing position, doctors resisted initial government pressure and only agreed to note if patients refused any treatment.¹¹ The new schemes aimed at minimising use of health care create similar tensions. Patients seeing their general practitioner for a prescription may ask for it not to be logged in order to secure the bonus that is dependent on having no prescriptions for a year.

Cost savings or health promotion?

The underlying rationale of incentives is that healthier people are less costly to the healthcare system than sick ones. German legislation states that bonuses may be paid only when savings are achieved. Although some short term savings have been shown, consensus remains elusive regarding the question of whether, overall, prevention will curb cost. Better health at older ages may condense healthcare costs over a shorter time, and possibly reduce costs, but longer life at good health may also lead to higher absolute levels of morbidity and need for care.^{18 19 20} It is therefore questionable whether the cost saving requirement is helpful. It would seem odd to wind up programmes that have been shown to stimulate behaviour change, simply because they may not have reduced costs.

Competitiveness versus population health

The competitiveness enhancing function of bonus programmes can be counterproductive to maximising population health. Sickness funds may be reluctant to share experiences about which programmes are the most effective in order to secure a competitive advantage. Equally, evaluations suggest that cash incentives are more effective than in-kind ones in motivating people to take up incentive schemes, although in-kind schemes provide the highest financial returns.¹⁰ If further evaluations consolidate this finding, funds may seek to maximise (short term) benefits by opting for in-kind rather than cash incentives, with the consequence of potentially less effective programmes.

Conclusion

Germany provides a unique large scale setting for the study of incentives for health. The available programmes combine both carrot and stick approaches. Initial evidence suggests a clear potential for cost savings, and mandatory future evaluations will elucidate the longer term financial viability. But other key aspects that are currently not part of the legal requirements also need to be assessed, chiefly the potential for achieving sustainable behaviour change and better health and the uptake ratios across different socioeconomic groups (box). A fuller picture would ensure that the positive potential of incentive programmes, which lies in complementing activities at the level of social determinants of health, can be maximised without compromising the fundamental value of social solidarity that underlies the German health system. Achieving the right balance should be of interest to policy makers in Germany and elsewhere.

Key issues in evaluation of future incentive programmes To what extent are bonuses given for actual behaviour change rather for actions individuals would have done regardless, as a matter of habit or routine? To what extent do different socioeconomic groups use incentive systems? Are the mechanisms satisfactory for identifying which schemes best promote health? Are programmes that have the potential to put doctors in a policing function ever acceptable and, if so, under what conditions? Are people likely to be alienated more than motivated by incentive schemes that seem to be carrot approaches but in fact function as sticks?

Cite this as: BMJ 2009;339:b3504

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Contributors and sources: HS is assistant director of the Nuffield Council on Bioethics. His academic background is in philosophy and bioethics. SS is a medical doctor with a degree in health economics. She is an experienced researcher evaluating sickness fund data and conducting healthcare systems research. AG trained as a paediatrician and has a MSc in health economics. SS and AG were 2007-8 Harkness fellows of the Commonwealth Fund. Their research for this paper was in part supported by the Commonwealth Fund. This paper arose from discussions around the shortcomings of evaluations of bonus programmes between SS and HS. HS drafted the initial core manuscript, SS and AG contributed substantial sections, provided insights into the German healthcare system, and critically reviewed and commented on the document. HS is the guarantor.

Competing interests: None declared.

Provenance and peer review: Not commissioned; externally peer reviewed.

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(Accepted 16 August 2009)

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