Journal of Real Options and Strategy
Online ISSN : 1884-1635
Print ISSN : 1881-5774
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Optimal Incentive Design of Wellness Programs That Encourage Behavior Change to Health Improvement in Health Insurance Subscriber
Masaru UnnoHua Xu
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Volume 9 (2017) Pages 1-22

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Abstract

In recent years, a number of health insurers have introduced a reward gain type of wellness programs that can reduce the medical costs by encouraging the behavior change of health insurance subscribers to improve health. In the programs, insurers have to determine a reward strategy in order to strive the insurance subscribers. In this paper, we study the insurer's incentive designing problem of wellness programs. We formulate the insurer's incentive designing problem as a dynamic principal-agent problem. We derive the sufficient conditions for the existences of the optimal reward strategy, the optimal health-support service strategy, and the incentive compatible effort recommended to the insurance subscribers. We also discuss the effects of the insurer's risk-sensitivity on the optimal strategies. We use a numerical example to show the computation aspects of the problem.

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© 2016 The Japan Association of Real Options and Strategy
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