Nov. 16 (Bloomberg) -- Abu Dhabi is putting its money where its fat is.
The richest sheikhdom of the United Arab Emirates is spearheading the world’s first state-sponsored “pay-for-health” program, in which the government will encourage disease-management companies to take steps such as offering airline miles, discounts for healthy groceries, or even cash to people who need to lower their risk of developing Type 2 diabetes and subsequent heart complications.
Abu Dhabi is stepping up its efforts to prevent diabetes, linked to poor diet and lack of exercise, after it joined five other Middle East states in the top 10 countries worldwide by prevalence of the condition last year. In the U.S., disease management efforts have been implemented in the private sector by some health insurers that offer financial rewards to patients for taking steps to keep diabetes at bay.
“Diabetes is our number one public health priority” among non-infectious diseases, Oliver Harrison, director of strategy at the Abu Dhabi health authority, said in an interview in London.
The Abu Dhabi program will be run by insurers and other businesses currently competing for the “pay for health” program, Harrison said. He expects to choose three winning bidders by the end of the year.
Improvement in disease risk will be measured using a calculator developed through the Framingham Heart Study of the U.S. National Heart, Lung, and Blood Institute, he said. Abu Dhabi will hand out 1,000 dirhams ($272) to the companies for every individual’s 1 percent reduction in cardiovascular risk.
Take for example a 50-year-old male who has a 4 percent risk of having a heart attack in 10 years. He could cut that risk by one percentage point by lowering his total cholesterol by 10 milligrams per deciliter of blood, which could be achieved through a less fatty diet, losing weight, or taking a cholesterol-lowering drug.
The approach, if successful, may serve as a model for countries struggling to curb diabetes and its related illnesses. China has seen the prevalence of diabetes more than triple in the past decade.
In the U.S., the government-funded Medicaid and Medicare insurance programs for the poor and elderly don’t cover lifestyle interventions for diabetes prevention. Private insurers have taken the lead, with the nation’s biggest, UnitedHealth Group Inc., rewarding patients with as much as $500 in out-of-pocket expense savings a year for regular visits to doctors and participation in weight-management programs.
Such initiatives have the potential to generate huge savings. Annual medical costs for a person with diabetes was on average about $11,700, and that for a person with diabetic complications was $20,700, compared with $4,400 for the rest of the population in 2009, according to Minnetonka, Minnesota-based UnitedHealth.
Similar programs may take off starting in 2014, when employers may use up to 30 percent of workers’ health insurance premiums to provide incentives to improve health under President Barack Obama’s Affordable Care Act.
Economists say changing habits with monetary and product-based incentives may be difficult for a wealthy population like that in Abu Dhabi, home to one of the world’s largest sovereign-wealth funds. Success may depend on how the programs are designed and how frequently they are doled out, and whether they are in the form of incentives, penalties, discounts or checks in the mail, said Kevin Volpp, director of the University of Pennsylvania’s Center for Health Incentives and Behavioral Economics.
The main causes of the diabetes epidemic in Abu Dhabi are largely the same as in other countries: poor eating habits, lack of exercise, and obesity, according to Maha Barakat, medical and research director of the Imperial College London Diabetes Centre in Abu Dhabi.
That has been fueled by rapid economic and population growth in the emirate, coupled with traditions of sharing food when seeing family and friends and pedestrian-unfriendly cities, Harrison said.
“The frequency with which you are sharing food and eating increases with the higher population density,” he said. “Some of the social mores around eating and socializing perhaps haven’t had a chance to adapt because the socioeconomic changes have been so rapid.”
The result is that the government expects spiraling costs for diabetes and related illnesses, which include heart disease, stroke and blindness. Those ailments take up as much as 15 percent of national annual health-care budgets in the Middle East and North Africa region, according to the World Health Organization.
To improve care, the emirate opened a second diabetes treatment center in partnership with Imperial College London this year. Still, the traditional approach of physicians monitoring patient health has been ineffective, Harrison said.
“You can’t change the behavior of a population through physician consultation,” Harrison said. “With ’pay for health,’ the more we pay, the more we save in the long run.”
The first step is to identify those at risk of developing diabetes. Abu Dhabi already has an online health-screening program called Weqaya. Data from that program will be used to determine who has the greatest risk of becoming ill and assign those who need to monitor their health to one of the three disease-management companies, Harrison said.
Air Miles, Gyms
The companies will directly communicate with patients to improve compliance with physician recommendations, potentially through text messages, face-to-face meetings and smartphone applications. They are also likely to test incentives of their own, such as airline miles, discounts for healthy food purchases or vouchers for gym memberships, he said.
Giving people incentives to adopt healthy behaviors --other than the promise of a longer life -- has had success in South Africa, where Discovery Holdings Ltd., owner of the country’s largest health insurer, offered rebates to encourage customers to buy more nutritious foods.
Researchers studied the effects of the company’s program between February 2009 and November 2011. They found that the rebates were associated with an increase in daily fruit and vegetable consumption by 0.64 serving and fewer purchases of fried, high-sugar, high-salt and fast foods. The results will be published in the January issue of the American Journal of Health Behavior.
Carrot or Stick?
While the findings are limited by the accuracy of the participants’ reports on their own behavior, “so far, subsidizing healthy food purchases among health plan members appears to be a promising intervention,” the authors said.
In addition to financial rewards, research shows that the threat of losing money may also be a powerful and more efficient tool, said Volpp, who is also a professor at UPenn’s School of Medicine and the Wharton School.
In a 32-week study of 66 obese participants, those told that they would forfeit money they contributed each month if they failed to reach weight-loss goals achieved better overall results than those who weren’t assigned to the deposit contract plan. The study was published in the Journal of General Internal Medicine last year.
No Magic Bullet
“It’s not just about the money; you’re playing on people’s emotions,” Volpp said in an interview. “Participants did not want to lose the money they had deposited.”
Penalties may also be more efficient because rewards may end up going to people who are already engaging in healthy behavior, he said.
Results from long-term follow-up of the programs are less positive and raise questions about how long incentive plans should be offered.
Thirty-six weeks after the end of the program Volpp studied, “substantial weight regain” was observed among those given the financial incentives.
Pay-for-health is only the starting point for Abu Dhabi, Harrison said. It is also considering improvements in food labeling, implemented recently in the U.K., as well as restrictions of products, akin to New York City Mayor Michael Bloomberg’s bans on smoking, soft drinks and trans-fats, and improving walkability of its cities, he said.
“What we’re trying to avoid is having a magic-bullet, one-size-fits-all approach to how to encourage healthy behavior,” Harrison said. “We’re expecting to see a range of propositions tested across the entire market.”
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