The National Health Service in the UK is trying out the idea of conditional payments to encourage people to improve their health habits, such as quitting smoking or cutting down on drinking. This gives policymakers a chance to learn from evidence gathered on conditional payment programmes in Latin America.
A recent health-promotion trial published in the British Medical Journal shows that shopping vouchers given to women in Glasgow who smoke during pregnancy can act as an effective incentive. In this intervention, the longer that women who took part in a National Health Service programme abstained from smoking, the more vouchers they received. If they dropped out, no further vouchers were given. The cessation rate was significantly higher than in the usual programmes targeted at pregnant women.
Providing financial incentives to people to engage with (public) services to promote behavioural changes increasingly is of interest to policymakers in Western countries. The business case seems obvious. If decisionmakers can get more people to cut their alcohol or food consumption or make other changes that otherwise could lead to substantial costs to the state (for instance, in terms of healthcare use or productivity losses), the eventual public benefits may far exceed the initial outlay.
Interestingly, similar programmes are in place in middle- and low-income countries such as Brazil, Colombia, Mexico and Cambodia. These “Conditional Cash Transfer” (CCT) programmes aim to give households a small amount of money that is conditional upon the householders visiting health clinics or sending their children to school. The aim is to alleviate poverty and improve human capital. Most research has shown that CCTs are effective and result in more people using health and education services. Poverty is also reduced, because households have more spending power.
Such findings suggest that policymakers in Western countries seeking new policy levers to tackle costly lifestyle behaviours in the age of austerity may do well to take up programmes based on cash incentives. Recent analysis of these CCT programmes highlights some useful lessons.
RAND Europe recently completed a three-year research grant looking at the quality of implementation of CCTs in Latin America. Our results showed that, across the board, few of the countries that had introduced such programmes had invested sufficiently in the supply of the conditional services, whether they were in health or education. This is an important omission, because such programmes obviously spur an increased demand for those services.
Moreover, in further work on Brazil’s Bolsa Familia programme, in which financial aid is given to poor families who ensure that their children attend school and are vaccinated, we found that those administering the programme had an incentive to enlist as many beneficiaries as possible, while the conditional services (health and education) had little incentive to provide additional capacity. As a result, the quality of health and education services was often poor and access to them was difficult.
Our study found that the quality of the programme was typically better when there was more integration between those registering beneficiaries for cash payments and those supplying the health and education services; when direct subsidies were given to services; and when the intervention was offered in a smaller administrative unit. This final factor probably eases coordination between those handing out cash and those supplying the support services.
The lesson for policymakers is that much thought should be given to the overall design and implications of a programme. Providing a conditional cash payment to people may lead to an increased demand for health or education services, which may require additional investment upfront along with effective local coordination and integration of services. This in and of itself may make the initial investment much higher than perhaps planned. Furthermore, if the quality of the support service is not good, then the intended long-term benefit may be lost.
Christian van Stolk is director of research in social policy at RAND Europe in Cambridge, UK.
Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.