Wednesday, 11 June 2014

Why wearables will optimise insurance-based health systems but challenge publicly-funded ones

There was an interesting guest column recently on VentureBeat about the impact of wearables in the US health market.

Now I've always thought that wearables are more likely to be big business in China because it has a very fast growing obesity problem and a very immature health service. That's a good situation for innovation.

However, the US - with its mature obesity problem, mature but broken insurance-based health service and individualistic approach to life - is perhaps an even better environment for the widespread adoption of wearables for personal health.

Making it cheaper with proof

In its simplest form, this could see health insurance companies reducing premiums for people who wear health sensors because - in terms of known data - the personal insurance-based health market has previously always been loaded in favour of the individual.

That's why insurers play by the small print and the attempt to get full disclosure. It's the only weapon they have.

But wearable sensors disrupt this information imbalance. Instead of us telling the insurers how much we don't drink or how much we do run, we'll now have to prove it.

Breaking down the average

For some people, this is bad news, of course. But for generally honest and fit people, it should see a lowering of health costs, and hence will encourage more people to be healthy and fit and prove that they are healthy and fit.

Surely that's one outcome we can all agree is positive.

Of course, this does create a problem for those who aren't or can't prove they are healthy as they will have to bear more of the costs of their healthcare.

No doubt that will be another big political issue, but that's something that's happening through all insurance-based services as better data breaks down what were once dumb averages into well defined risk segments i.e. pensions, flooding, car cover etc.

Hands off our NHS, Fitbit

The sad news, however, is for those countries - like the UK - which don't have insurance-based health services, but instead have publicly-funded systems, paid through general taxation.

The NHS - free at the point of delivery etc etc - has no easy way to build such incentives (at least financial incentives) to encourage people to be more healthy and prove it with wearable sensors.

And let's get this straight. We're not talking about people running marathons here. A recent study suggested that 73 percent of people who used their mobiles to track basic fitness believed they become healthier.

Indeed, giving people more information about their health, generally allows them to change their behaviour for the better - that's even the case when we talk about crude anchoring advice such as 5 fruit and vegetables a day, 10,000 steps a day, or not drinking more than 21 units of alcohol a week.

The question is not whether people fulfil these goals, but it's that they do better than if they have no advice at all.

Instead, the big challenge for services like the NHS is that it will be extremely difficult to use wearable devices to directly incentivise individuals to get fitter and stay fitter for longer in the way insurance-based services will be able to do.

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