Would you give out private data for discount in insurance?

The health insurance industry has been slow or no-growth. It does not seem to be relevant and appealing to customers that much as the value isn’t realized immediately. Insurance wasn’t my interest until I read this article and found some interesting connection with our class last week on data and privacy.

http://www.nytimes.com/2015/04/08/your-money/giving-out-private-data-for-discount-in-insurance.html?_r=1

The article was about John Hancock, an insurance company, teaming up with Vitality program, an integrated wellness program. Their strategy is to encourage customers to take better care of themselves with some monetary incentives. The systems works like this: customer earns point through healthy activities by sharing that piece of information to the system; by maintaining a certain points, customer obtains certain status, which translates to lower payment or gains some bonus. The underlined logic makes sense to me. I mean, Health Insurance Company would like to have its customers stay healthy and anyone would want to be a healthy person.

I found this model a way to revive health insurance industry. Indeed, besides checking on medical histories upfront, insurance companies do not have much information about the customers’ wellness and other activities during the life of the insurance plan. There is a gap between insurance and customer’s relationship. If it is meant to secure the individual and the family, insurance should have developed a better way to maintain the relationship and keep track of how the customers are doing. An automatic withdrawal amount from the customers’ bank obviously can’t enhance that relationship.

If a customer is an already active person, taking an extra step to enroll in the program and answer health related questions seem to be a minor thing to do, considering the savings in the long payment plan. On the other hand, if one is not so active, the Vitality program seems to give it a push and incentivizes the person to be more active and healthy. The question for this new model is privacy. The article indicates “consumers participating in the Vitality program must be comfortable providing enough information continuously to meet certain thresholds that will convert into worthwhile savings. Including workouts, physical exam or answering sensitive personal questions.”

Though the customer can choose whether or not to send data to the program as if s/he is not comfortable with, the trade off is no point is earned. I think the system lays out a fair game to customers. Point can’t be recognized if not known to the database.

As I think hard about this new model for health insurance, I really see how it can actually work. Health is a big concern. People do healthy activity for their own good. Now health insurance is trying to translate that goodness into money by asking people to share that data. We talk in class about how data can transform the nowadays business. We also discuss how much we care about our privacy but not so good at securing them information. I think we have been giving up too much personal information for just convenience or for maintaining relationship on multiple social media platform. If things are set up correctly, the monetary incentive of sharing fitness and health data to the insurance would innovate the industry and take privacy to the next step.

There are a lot of questions on how insurance companies would use our health data in the future to harm us, if it would happen. But I can see that keeping information private is a struggle where many more companies are craving for our data and offering so much of benefit for that data.

What would be your response to this, guys?

6 comments

  1. Seems pretty similar to Drivewise by Allstate (https://www.allstate.com/drive-wise.aspx) and Snapshhot by Progressive (https://www.progressive.com/auto/snapshot/) for auto insurance. Seems to be an effective and creative way to give insurance companies more information about their insureds in order to more accurately price the insurance. I don’t know enough about health insurance to speak to any privacy concerns, but I really can’t imagine how most of this data could be used against you. Seems to me like they are pretty open in explaining the reason they need this data.

  2. I think the biggest issue is something you pointed out in your article: security and privacy. Its true that people who agree to opt-in into programs like this have a less stringent view on their own privacy and are comfortable sharing their data. However, this does not mean that they are lax when it comes to security. A theft of biomedical data would be absolute disaster, and the idea of selling biomedical data to advertisers or pharmaceutical companies might cause an uproar as well. Since we are still in flux when it comes to personal data, it is unlikely that standards for biomedical data will come any time soon. As useful as this technology is, I am hesitant about what this will do for security and privacy.

  3. I really like this post, particularly when examining our societies health standards. It’s appalling to travel through the airports today, or even on the sidewalk in populated areas. People are overweight, and living unhealthy lifestyles. I think this system could really work, and incentivize people to implement exercise into their daily routine. I can see where privacy comes into play here, but I don’t think it invades upon ones security to the point of not working out and living a healthy life. I believe our society is motivated when there’s a sense of ‘someone’s watching over me’. We’re extrinsically motivated and need to find a sense of intrinsic motivation in regards to nutrition and exercise. I think this idea of insurance would provide a ‘kick in the butt’, and push people into gear to stay healthy and fit.

  4. I think this idea has the potential to really take-off, especially in the fitness-competition craze that seems to have developed recently with the dawn of FitBits and Jawbones. I know many people who are almost obsessed with getting the correct number of steps in a day so they can beat out their siblings or parents. I could see this points programs as an extension of this type of fitness competition, especially if devices like AppleWatches, FitBits, etc. could be integrated into these point systems. One of my worries, however, would be that insurance companies might hold it against a customer if they suddenly stop reporting points. If a customer falls off of their fitness routine for an extended period of time will the insurance company want to “reevaluate” their insurance plan and potentially charge them a higher rate because they have now become “unhealthy”. I have to admit that although there are some security concerns with this program, I know my competitive nature would encourage me to participate in a program like this as an additional motivator to stay healthy and fit.

    1. Yes, if the customers stop doing healthy activities, their points drop, and there’s no discount or extra bonus. As far as I understand, the program is similar to the saying ” no pain no gain” :)
      Customers can apply for the program and not necessary report activities or maintain certain points.

  5. I have mixed feelings about this (on both sides). While the insurance companies would love to have this data, it does introduce a bias into the models. You don’t know whether people who refuse are doing so because a) they are unhealthy or b) they don’t want their privacy violated. It could play a bit of havoc with their actuarial models.

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