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A report from the Mayo Clinic at this month's American College of Cardiology scientific meeting suggest that patients given a financial incentive to lose weight are more likely shed pounds than those that weren't given the option.
Participants in the study were paid $20 for every month they met their goal of losing four pounds per month up to their predetermined goal weight. Participants who didn't meet the goal had to pay $20 to a bonus pool for each month they didn't meet their goal. The bonus pool was then raffled off at the end of the study.
The financial incentive encouraged participants to stick with their weight loss program. 62% of participants offered the financial incentive completed the study compared to 26% in the control group that weren't offered incentives.
Naturally sticking with it caused patients to lose more weight over the one-year study: 9.08 pounds for those given the incentive, compared with 2.34 pounds for the non-incentive group.
That's great, but....
I know what you're thinking: It sounds great, but who's going to pay people to lose weight? Hopefully the people that would benefit indirectly from the weight loss.
Health insurers usually pass along higher medical costs incurred by obese patients. If 25% of members are obese and they add $2,000 in medical costs, everyone's premiums have to go up by $500.
There are some employers that self-insure. They're large enough that they can form their own health insurance pool, paying more for some employees and less for others, but averaging out to less than they'd have to pay for traditional health insurance.
Other employers cover all or some of a traditional health insurance, but the cost they negotiate is someone dependent on the expected medical costs the health insurers calculate they'll have to pay out. A company with an older work force, for instance, will be quoted higher premiums than a company made up of primarily younger workers who don't get sick as often.
For employers paying medical bills -- either directly or through insurance premiums -- there would seem to be a very good incentive to get employees healthier, saving them money in the long run. Healthier employees could also be more productive. To save that money, companies might be willing to shell out some cash to help encourage employees to shed pounds and get healthier.
Provisions in the Obamacare law allow employers to charge employees who have a high body mass index or other negative health indicators like smokers more than their healthy counterparts. That sounds a lot like the $20 that participants in the study had to pay to the bonus pool when they didn't reach their goal, although the increase could be a lot more than $240 per year.
This is good news for obesity drugmakers
If companies are willing to pay employees to lose weight, it seems reasonable to assume they might also be willing to shell out cash to pay for obesity drugs. What was once strictly a cosmetic issue has turned into a real health benefit. Obesity drugs are expensive, but so are diabetes medications; obesity is a major risk factor for developing type 2 diabetes.
Even if employers aren't willing to include obesity drugs in their health insurance plans, employees might have an incentive to pay for VIVUS' (NASDAQ: VVUS ) Qsymia, Arena Pharmaceuticals' (NASDAQ: ARNA ) Belviq, or Orexigen's (NASDAQ: OREX ) Contrave on their own if they know paying for them now will lower the cost of their health insurance in future years.
You could extend this line of thinking to Weight Watchers (NYSE: WTW ) or Nutrisystem (NASDAQ: NTRI ) that aren't typically covered by health insurers, but may increasingly be offered as a benefit to employees looking to lose weight. Same goes for gyms, such as Life Time Fitness, that might see a boost from employers offering free or reduced memberships to encourage employees to be healthy.
No magic bullet
None of these are going to solve the U.S. obesity problem on their own. The financial incentives only helped participants lose an additional 7 pounds over a year. Obesity drugs are only marginally better. Diet and exercise can be effective, but they're no fun, which is why many people regain the weight they lose.
The best option is likely to be a combination of programs to help patients lose weight. Let's hope employers can see the benefit and are willing to foot the bill.
Who will win the obesity drug market?
Can VIVUS pick up its lagging sales and fend off the competition, or will Arena Pharmaceuticals reign supreme in the obesity space? If you're in the dark, grab copies of The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals to stay up to date. Senior biotech analyst Brian Orelli gives investors the must-know information, including an in-depth look at the obesity market and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.