That could be our startling future as the next generations of devices like the Fitbit or Jawbone Up 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. It’s all thanks to the growth of real-time, detailed data they’re generating about our bodies.
Wearable devices aren’t mainstream yet; only one in 10 American adults say they own a fitness tracker. But they’ll become more widespread over the next decade, according to Pew Research, and that will happen alongside an explosion of wearable sensors that monitor everything from steps to breathing to heart rate, and apps that can sense the onset of chronic illnesses or stress. In the meantime, more employers are opting to monitor some of the data being 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 a growing number of so-called corporate-wellness programs.
Some are even exploring punishments for unhealthy behavior recorded by a wearable. With health insurance costs on the rise, it’s perhaps not surprising that Fitbit’s sales to employers are now one of the fastest growing parts of its business.
Greater health monitoring would naturally put wearables in a very gray area on privacy. It would go beyond giving doctors deeper access to your data, to giving health payers — the big names like United Health, Kaiser Foundation Group, Humana Group and Aetna, along with self-insured employers — access to data to help them create more detailed risk profiles on insured workforces and put a lid on ever-rising costs.
The opportunity could shift towards individual marketplaces over the next decade as the entire business model for health insurance gets upended, with hospitals potentially taking a greater role in coverage, Forbes’ senior writer on health Matthew Herper tells me.
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 multiple meetings with U.S. and Austrian insurance companies last year, before he realized they weren’t looking to partner — they wanted advice on getting access to the fitness data generated by apps like his. “They are trying to learn,” he says, adding that he recently stopped taking such meetings. “We are not a consultant.”
Kelly Barnes, who tracks healthcare for PricewaterhouseCoopers (and is a consultant for insurers), says regular feedback from wearables would be extremely valuable to a health insurance company. “I’m very confident we’re all going to be on insurance marketplaces in the not-too-distant future,” she says.
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 their dashboards 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 with health care, especially since a large portion of today’s $2.6 trillion health care bill is driven by behavior; in particular, bad-diet decisions that lead to obesity and diabetes.
Insurers already use data points like BMI (body mass index) to set rates, says Vaughn Kauffman, health industries advisor at PwC. “If you think of the wearable devices as a way to value improvement of BMI, who knows maybe one day — it’s scary to think — but maybe on a real time basis, the healthier you get the lower your 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 go up 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 also help create more insightful profiles as sensors pick up details like heart rate and stress levels.
As we previously reported, Microsoft is working on a smart watch that will measure continuous heart rate over days and weeks. Temperature and potentially even blood-glucose monitoring is on the table for wearables too. The “Holy Grail,” according to one person working on a stealth wearables project, is glucose monitoring because of the insights that could give into what someone has eaten. That would be a crucial data point for insurers, since diet has a far greater impact on health than activity.
Several startups on places like Kickstarter have tried and failed to make a wearable product that senses glucose without breaking the skin. But Apple might crack the challenge. Last year it reportedly hired data scientists from now-defunct diabetes company C8 MediSensors, which had regulatory approval for a non-invasive optical glucose monitor. That raised suspicions Apple wanted to put a glucose monitor in it forthcoming iWatch. Apple also talked with FDA officials last December about how a device with a glucose meter might be regulated.
Who Might Be The Bridge To Our Health Data?
Once the sensors are there, employers seem like the most obvious conduit between the tech we wear and our insurance. One large health insurer, Cigna, already launched a pilot program last year where it distributed armbands made by BodyMedia to thousands of employees at one of its corporate customers. Early results showed a number of the employees on the verge of contracting diabetes have improved their risk profiles, according to Cigna spokesman Joe Mondy. “We can literally bend the cost curve,” he says.
Self-insured employers who pay directly for claims have been among the first to experiment with wearables. One tame example is software design firm Autodesk, who for the last two years has bought Fitbit trackers in bulk and sold them at a discount to its staff.
Autodesk managers can’t see the activity data of their employees, yet its global benefits director Lori Wong believes there’s a correlation between distributing the devices and the slide in cases of chronic conditions like high-blood pressure. Autodesk’s bosses “are not pushing us to produce direct return-on-investment (ROI) numbers,” she says. “But when we look at national averages of healthcare increases, we find that we are a little below those… increases.”
Self-insured oil giant BP has taken the monitoring a step further. Last year around 14,000 employees opted to wear a free Fitbit Zip in exchange for letting the company track their steps over the year 2013. If they crossed one million steps, they gained points that could go towards a lower insurance premium.
Another “large, self-insured employer” is using the data provided by employees who use Wildflower, an app for pregnant women that measures data such as weight-gain and other pregnancy milestones. The goal: targeting medical claim costs. One of the app’s board members recently noted that maternity “is a top cost area for almost every employer.”
Using Our Data To Change Behavior
New rules under Obamacare let employers offer greater incentives for healthy behavior. For employers who are desperate to cut healthcare costs, there’s wiggle room to define “incentive” as either a carrot or even a stick. While BP uses wellness points as a carrot, others are exploring more punitive measures that exploit the real-time data from wearables.
The founders of StickK, a Boston based startup that sells white-label software for corporate-wellness programs, have been trying to talk large U.S. companies into plugging both wearable devices and punitive measure in their wellness plans. These punishments include taking away wellness points if employees don’t reach certain activity targets. It’s a controversial approach, but StickK argue it’s far more effective than offering rewards. (More self-insured employers are already looking at adding $50 surcharges onto the premiums of employees who smoke.)
“A lot of companies are reluctant to do things that could risk a cultural backlash within the organization,” says StickK founder Jordan Goldberg, whose software is based on Yale research into accountability and behavior change. Goldberg has 14 corporate clients using his corporate wellness software, along with three Fortune 500 companies. He’s currently talking to one of those about incorporating a Fitbit-like wearable device in the punitive program. “We haven’t gotten a bite yet.”
Plugging Directly Into The Healthcare System
While services like Fitbit, StickK and Wildflower sell to employers, other health tracking services are looking for lucrative partnerships in the healthcare system itself, which can involve working with insurers too.
Nudge, a free app that aggregates fitness data from wearables to give users a health score of between 1 and 110, says insurance companies could use its data for risk mapping or for setting premiums. Its founders say they’ve talked to “a handful of groups” in the health insurance field, but they want Nudge’s first partnerships to be with doctors.
“Right now we want to stay away from [insurance] to keep the trust of our users and keep the data private,” says co-founder Phil Beene.
Larger tech companies also hope to be those trustworthy bridges between our health data and healthcare: think Apple, Samsung and Google. All three are working on creating data platforms that will aggregate, store and share health data collected from wearable sensors. Apple’s HealthKit will allow health apps to talk to one another inside Apple’s own framework, while Samsung has a biometric bank called Sami. Last week we were the first to report that Google is also gearing up to announce a health-tracking platform called Google Fit. None of these services have been released to the general public — or the health care industry.
“It’s all going to lead to this real race of who can build out the best interfaces for different stakeholders in health care,” says Nudge’s Beene.
Capitalizing On The Most Popular Wearables
Some argue that monitoring wearables won’t become widespread until employers figure out how to tap into the devices that consumers actually want to buy — not just the Fitbits that BP and Autodesk have bought in bulk. It’s why most health-rewards programs are currently failing, according to MobiHealthNews.
“It’s just like when phones came out,” says Derek Newell, the CEO of health platform Jiff, which aggregates employee health data for self-insured companies. Ten years ago people started bringing their own smartphones to work, sparking the BYOD phenomenon. Now they’re bringing their own fitness trackers.
“Our management of population health isn’t one generic program for everyone, [but to] connect to hundreds of apps devices,” says Newell. He claims that over time, Jiff’s platform will be able to show employers which apps and wearable devices being used by staff are most effective at lowering medical cost, and he’s keeping track of all the wearables preparing to hit store shelves. “There’s going to be this evolution of wearables thats going to be amazing. You’re going to see activity monitors in jewelry, literally a ring, in the next 18 months. There are people working on it now.” Devices that can passively monitor what we eat are also on way, he says. “We’re really big on passive monitoring.”
Jiff is yet another claimant to the “bridge” role between employers and health data, but it has the benefit of being able to synch with a range of popular trackers. Right now Jiff competes with a couple of other third-party platforms, WellTok and StayWell, and its clients include chip giant Qualcomm, Red Bull and game developer Activision. The company makes money from selling its software, and collects extra fees each time its helps an employee reduce their premium.
With 1.8 billion smartphones in the world and an explosion of other devices getting connected to the web, people are unconsciously generating more data about themselves than ever before. How that data gets used is still an open question.
Wearable devices like the Fitbit and apps like Wildflower are marketed to consumers with the promise of the Quantified Self movement: that they’ll help us learn more about ourselves. But to stay solvent, many of these services are exploring business models that incorporate employers and insurers, for whom our quantified health data can impact their bottom line.
The result of greater monitoring could lead to some unintended consequences. Some say it could create a two-tier system where those who can afford the best health tracking devices can ultimately get access to lower premiums. As wearables transmit more health data to employers, there also lies the risk that data could leak, and be used by marketers peddling diabetes medication or as extra fodder for insurers seeking to deny coverage.
There is also the fundamental question of whether people will ever be comfortable having their health data monitored this extensively.
“It’s going to be very important that as we move towards the future we don’t set up a system where people become pressured into wearing devices to monitor their health,” says Pam Dixon, executive director of World Privacy Forum, who is exploring ways to promote standards for health monitoring devices. “That’s a real problem. That’s just not very free.”