Oscar paid members $1 a day to beat step goals — the insurer as behavior coach

Oscar Insurance, the New York startup billing itself as 'a new kind of health insurance company', unveiled the program on December 8, 2014: every member could order a free Misfit fitness band through Oscar's iOS or Android app, where it synced automatically. Existing tracker owners could connect via Apple HealthKit instead.

The design was the point. Oscar's algorithms set each member a personal daily step target based on their health data; beat it, and $1 lands in an account; accrue $20 and it cashes out as an Amazon gift card. Co-founder Mario Schlosser framed it as borrowing from car insurance: 'If I stay accident free, my car insurer will lower my rates. Why don't we give these rewards to people when they stay healthy?'

Oscar had already run the experiment. Earlier in 2014 it offered certain members $20 to get a flu shot within a month — and the incentive group was 2.5 times more likely to roll up their sleeves. '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,' Schlosser said. An insurer treating a $10 fitness band as a health intervention also lent the whole wearable industry new legitimacy at the moment Apple was entering it.

Behavioral economists praised the mechanism but flagged its limit. Kevin Volpp, director of Penn's Center for Health Incentives and Behavioral Economics, noted that $1 converts an 8,000-step walker into maybe a 10,000-step walker, but 'it's unlikely' to move someone at 2,000 steps — meaning the members with the most to gain health-wise are the least likely to win the incentive.

Copy the auto insurer's safe-driver discount for health: give every member a wearable, set a personal daily step goal by algorithm, and pay $1 for every day they beat it.

The flu-shot trial gave Oscar measured evidence — a 2.5x effect — that small cash rewards change health behavior.

Wearables turned exercise into data the insurer could verify and price, with no claims process.

Algorithmic personal goals kept targets achievable per member instead of one-size-fits-all.

Frequent small payouts beat rare big ones for habit formation, mirroring points programs.

Paying for prevention positioned the insurer to share in the savings when healthier members cost less.

Incentives must move the marginal member: $1 rewards existing walkers but won't turn a 2,000-step person into a 10,000-step one — design for those you need to change.

Schlosser conceded the design challenge of reaching the least active members. The program doubled as marketing for Oscar's tech-forward brand at exactly the moment fitness tracking went mainstream — and, as WIRED noted, an insurer recognizing trackers as 'an actual health intervention' lent the young industry a new level of legitimacy.