Insurance premiums fluctuate annually or every 6 months. It boggles the mind to consider what daily fluctuations would do to the consumer’s wallet if wrist monitors determined diet, pulse and heart rate along with other important health factors that vary day by day. Greater health monitoring would naturally put the gadgets in a gray area on privacy. They would be beyond giving doctors deeper access to your data, to giving health payers, the big name insurers like Aetna, Kaiser Foundation and also self-insured employers, open access to data creating detailed risk profiles on insureds and put a lid on cost. Some independent health insurance agencies are excited that wearable tech may help lower premiums for some of their clients.
Tech entrepreneurs in the health space say insurance companies are currently figuring how to best access the data generated by today’s fitness trackers.
“They don’t have the solution,” says Florian Gschwandtner, founder and CEO of the popular running app Runtastic. Gschwandtner held several meetings with U.S. and Austrian company insurers last year, before he understood they weren’t looking to partner him, but wanted advice getting access to fitness data generated by apps like his company. He no longer takes such meetings
Kelly Barnes, insurer consultant, who tracks healthcare for PricewaterhouseCoopers, says regular feedback from wearables would be valuable to health insurance companies. “I’m very confident we’re all going to be on insurance marketplaces in the near future,” she adds.
Tracking “gadgets” already play a role in car insurance for some Americans. Progressive, for instance, offers drivers a small device they can plug it into vehicle instrument panels so the company can monitor their driving over 30 days. Safe drivers are then eligible for a discount.
Barnes argues that insurers could do the same thing with health care, especially since a large portion of today’s $2.6 trillion health care bill is driven by at-risk behavior such as bad-diet choices that lead clients to obesity and diabetes. The concept is simple. The healthier people live, the lower their premiums go.
“I can see health care going that way,” added Barnes. “If you can take this wearable and I can see a constant level of activity and constant parameters on fitness activities, I’ll take points off your premium. I can set rates on a daily basis as opposed to just once a year.”
Individual premiums typically increase annually as older people are deemed more costly to the system. Insurers make these decisions based on aggregate profiles that include gender and age. But wearable devices could define more exacting definitives as sensors pick up details of an insured’s heart rate and stress levels.
The next generations of devices like the Fitbit, Google Glass or Jawbone Up are already preparing to play a bigger role in how individual-and-group health insurance costs are decided, tech developers and experts in the healthcare space have told Forbes, thanks to the growing data they’re generating about our bodies.
Today only one out of every 10 American adults own a fitness tracker, but these devices should grow much more widespread over the next decade alongside an explosion of sensors that can monitor everything from a person’s steps, his breathing to his heart rate, and apps that can sense the onset of chronic illnesses or stress. In the meantime, more employers are opting to monitor data generated by fitness trackers to the extent they can see it on a dashboard, and are holding their insured staff to account with rewards as part of an increasing number of alleged corporate-wellness programs.
Some are even exploring financial punishments for unhealthy behavior monitored by a wearable device. With health insurance costs on the rise, it’s not surprising that Fitbit’s sales to employers are now one of the fastest growing parts of its business.