If Produce Discount Programs Work, Will Stakeholders Bite?

by Natalie Talis

Over the last week, several food policy topics have been making headlines. Journalists and policy wonks have been especially enjoying the back and forth of the Bloomberg and anti-Bloomberg Bills. But the policy with real potential to shake up American eating patterns lies in two produce discount programs: one run by a private health insurer in South Africa, and one in a Massachusetts pilot paid for by SNAP benefits (food stamps). RAND recently put out a paper on the South African produce discount program.

Here’s the basic idea: Starting in 2009, South Africa’s largest private health insurer, Discovery, began offering up to 25% cash-back on healthy food purchases. To participate in the program, individuals or families must opt-in to the HealthyFood program and regularly participate in Health Risk Assessments. Through monitoring grocery store scanner data of program participants and Health Risk Assessments, they found that a 25 percent discount “increased the ratio of healthy to total food purchased by 9.3%. In addition, the rebate increased the ratio of fruit and vegetables to total food purchases by 8.5%, and decreased the ratio of less-desirable food to total food purchases by 7.2%.” The Massachusetts pilot program, Healthy Incentives Pilot (HIP), is offering a more generous 30% rebate on healthy foods and its effectiveness will be tracked with several participant and food retailer assessments.

So, what’s the point? The RAND paper’s timing coincides perfectly with the end of HIP, which is to produce an evaluation later this spring. Although there are no data available yet, the USDA’s initial thinking was focused on rising obesity rates, the low amounts of produce consumption by the average American, and the magic of financial incentives. It’s also too soon to tell if the South African program has had a real effect on obesity or weight-related health conditions. However, if Discovery continues the discount (and data collection), this could be one of the largest natural experiments in health behavior change through economic policy.

With the defeat of Mayor Bloomberg’s soda ban, and the victory for the Anti-Bloomberg Bill in Mississippi, some lawmakers are making it clear that they don’t want to coerce people into eating healthier. If the outcomes of the Massachusetts HIP are anything like what is happening in South Africa, and obesity rates continue to rise as expected, these two produce programs could spawn a number of similar pilot projects in areas looking for solutions. They have the potential to become part of a new approach for public health advocates; an approach that targets unhealthy eating for those that choose to opt in, without the perceived civil-liberties threat of an outright ban on certain foods. The effect of the sequester on SNAP and WIC (the Supplemental Nutrition Program for Women, Infants, and Children) is yet to be seen, but even in a normal budget year, those programs are not renowned for being flush with cash. Although the return on investment for programs reducing obesity has been well-documented, this may not be enough to sway an initial investment into more pilot programs. Splurging on prevention for future payoffs has never been a popular federal policy, particularly with the current budget slashing fever in D.C.

So, if the government isn’t investing, will the U.S. private sector follow Discovery’s lead? Proponents of this idea may not have to wait very long. Vitality, the same group that conducted Discovery’s HealthyFood program, partnered with Walmart in October to offer a 5% discount on pre-approved healthy foods for those with Humana health insurance. Will a 5% markdown have the same results as a 25% rebate? It’s far too soon to tell. Yet, with the new wellness program incentives packed into the Affordable Care Act, these healthy food discount experiments may be the beginning of a trend.


Natalie is a graduate student in health policy at The George Washington University and a Research Assistant at a non-partisan, nonprofit research and policy organization.

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