New Wellness Program Collaboration between Kaiser Permanente and Large Union

The Los Angeles Times reports that United Healthcare Workers, a union that represents 150,000 workers in hospitals and nursing homes, and the giant healthcare provider Kaiser Permanente recently signed a contract that creates a novel incentive for workers to get in better shape, testing the notion that peer pressure may be a more effective way to promote healthy lifestyles than individual rewards or penalties.

Some unions have been notorious for trying to insulate their membership from the fitness push. The United Auto Workers, for example, has fought against efforts to ban smoking at job sites. More subtly, by bargaining for insurance plans with little or no out-of-pocket costs, unions reduced the financial incentive for their members to stay in shape. That approach isn't sustainable, however, and it ignores the trade-off between healthcare costs and wages. The more a company spends on insurance policies with low deductibles and co-pays, the less it can spend on payroll.

The contract signed this month by negotiators for Kaiser and the union coalition heads in a different direction. It sets a modest fitness goal for its members — a 5% improvement in body mass, cholesterol, blood pressure and smoking rates by the end of 2016 — and promises financial rewards if the workers collectively stay on target. Although the details have to be ironed out, the rewards will be pegged to the savings that Kaiser sees in its healthcare costs. It's hard to say how much of a bonus workers stand to reap, but considering how much the company spends on employee healthcare, the savings could be significant.

The incentive is unusual because it's based on the group's progress, not each employee's. That's a departure from the typical approach, which stresses individual responsibility and rewards (or, less often, punishments). The theory is that workers will be more motivated if they know that their efforts will affect their colleagues' pay as well as their own, and that groups of people are more likely to stay committed to diets and exercise than individuals. Of course, the group approach means that the rewards won't necessarily match the effort that each person makes (or doesn't make). But that's already the case with group insurance plans, where the premiums paid by the healthy subsidize the care received by the sickly.