This Insurance Company Pays People to Stay Fit

Oscar will offer Misfit bands to members for free. Oscar Insurance

Oscar Insurance bills itself as a “new kind of health insurance company,” one that uses a combination of technology and transparency to bring the stodgy insurance industry out of the Dark Ages. And now, it’s giving the industry a particularly firm kick towards the future.

On Monday, Oscar unveiled a new initiative that will provide every Oscar member with a free Misfit fitness band. But in an industry that’s infamous for nickel-and-diming its customers, what’s even more progressive is that Oscar is going to pay its members to actually use them. “If I stay accident free, my car insurer will lower my rates,” says Mario Schlosser, co-founder of Oscar. “Why don’t we give these rewards to people when they stay healthy?”

Counting steps with a fitness tracker like Misfit, he says, is a good place to start. In recent years, fitness trackers have grown beyond the cottage industry of quantified selfers, so much so that even Apple is ready to seize on the opportunity. But having an insurance company—albeit a small one—recognize these devices as an actual health intervention lends the entire fitness tracking industry a new level of legitimacy.

Oscar members can order their new Misfit on the Oscar iOS or Android app. It syncs to the app automatically, so users only need to strap it on and get to walking. Users who already have a fitness tracker can also connect it to the Oscar app using Apple HealthKit, but that takes a bit more set up. Oscar’s algorithms determine how many steps each member should aim for in a day, based on that person’s health data. Each day a member surpasses that goal, he gets $1. When he accrues $20, he can cash out in the form of an Amazon gift card.

The Oscar app tracks steps by the day. Oscar Insurance

This is not the first time Oscar has offered its members cash incentives to stay healthy. Earlier this year, it offered certain members $20 to get a flu shot within the month. At the end of the trial, the Oscar team found that the group that was offered the incentive was 2.5 times more likely to get a flu shot. “This was absolutely astounding,” Schlosser says. “I’ve been building internet businesses for many, many years, and I know how hard it is to get people to click on a button. Here, we had people walk into a pharmacy and roll up their sleeves and get a needle stuck in their arms to get a $20 gift card.”

Behavioral economists have found strong evidence that cash incentives can motivate people to be more proactive about their health. But according to Kevin Volpp, director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania, the success of these programs depends largely on how they’re designed and who, exactly, is receiving the benefit. For instance, if most of Oscar’s members are already young, fit, and healthy, then all an incentive like this would do is reward those people for existing behavior. It’s changing behavior among less active members that Volpp says is both the goal and the challenge.

“If I’m the kind of person who walks 8,000 steps a day, $1 a day might get me to walk 10,000 steps a day, but if I’m the kind of person who walks 2,000 steps a day, for $1, it’s unlikely I’m going to become the person who walks 10,000 steps a day,” he explains. “The people with the biggest potential health benefit are less likely to change their behavior, because its too hard to win the incentive.”

Schlosser admits that this is “very much the beginning,” and that one of Oscar’s main goals is to collect more health data on its members to make sure doctors have the most information available on them. Down the line, that could include nutrition data, sleep data, and as tracking technology becomes more sophisticated, perhaps even blood pressure data.

“We aren’t the people who deliver your healthcare, but our job is to facilitate the delivery of your healthcare,” Schlosser says. “To do that, we can get more information to your doctor.”