The traditional definition and role of health insurers is changing. Digitalization is enabling and prompting health carriers to move beyond simply mitigating risk; insurers are now looking to become partners in maintaining customers’ good health. RGA's Alan Watts explores these changes and the implications for insurers.
Insurance, by definition, exists to mitigate risk.
Traditionally, insurers take little or no active role in a client’s life until a triggering event occurs and a claim is made. This is especially true in health insurance, where insurers function as a third-party payer between the service provider and the consumer.
This traditional definition – and the role of health insurers – is changing. Digitalization is enabling and prompting health carriers to move beyond simply mitigating risk; insurers are now looking to become partners in maintaining customers’ good health and working to prevent triggering events from ever happening.
Digitalization starts with data, and the proliferation of new and vast data sources continues to gain momentum. The move from analog to electronic health records is slowly getting underway throughout the world and will enable greater and faster access to personal medical histories. Meanwhile, advances in genomic sequencing are providing unprecedented insights into individuals’ disease risk.
Technology such as glucose monitors, wellness apps, and wearable fitness trackers offer yet another source of actionable information. Personal health tech empowers patients to participate more fully in their own preventive care plans, both improving plan adherence and providing valuable insights to healthcare professionals.
As data has increased, so has our ability to process it. Predictive models can mine and analyze data to determine which diagnostics, monitoring, and treatment offer the most value for the money spent. This should allow insurers to price better, develop better products and resources, and pay for better results. This will then facilitate the transition within healthcare systems toward value-based care, in which providers are paid based on patients’ actual health results rather than on an entirely per-service basis.
Digital tools are changing how and where health care is delivered. Telemedicine, the remote diagnosis and treatment of patients via telecommunications technology, is moving care from brick-and-mortar facilities to virtual, in-home treatment. The advantages of greater access for people living in rural areas are clear, but big city dwellers are also realizing the convenience of remote care. Patients can access certified doctors directly through their computer or mobile device – and also view and gain possession of their own case files.
For hospitals, telemedicine enables new methods of service delivery and could produce a general reduction in admissions, waiting times, and ER visits. Evolution Health, for example, has set up a 24/7 command center complete with doctors, nurses, and pharmacists with the capacity to coordinate and administer services.
Preventive care made possible by digitalization could also improve medication management – and even reduce the need for medication through lifestyle improvements. Onduo, for example, a business partnership between Sanofi and Verily Life Sciences (Google) combines devices, software, medicine, and professional care to deliver integrated solutions for diabetes management. Looking ahead, clinical trials for drugs could be facilitated by connected apps (once the apps are approved by regulators) to deliver results more quickly and track a study’s progress in real time.
In most industries, innovation generally makes products cheaper and/or produces better results, but this is not yet happening in health as the cost of care continues to rise. Globally, healthcare costs are increasing faster than general inflation. So why isn’t the cost of care going down?
Factors include an uncertain regulatory environment, the wide variety of payment methods, and an overly complicated value chain that contains too many players and conflicting interests. But perhaps the biggest problem may be a failure to focus on the needs of the end user: the patient.
Yet therein lies the hope for digitalized health care – that it will transfer power to the patient. Some of the biggest global companies are betting on it and investing in this area, including technology giants like Amazon and Google, as well as increasing focus and investments from venture capital. Resulting competition and innovation promise to revolutionize the health insurance industry.
The spike in preventable, chronic diseases – diabetes, cardiovascular disease, cancer – is well-documented. Medical claims are increasingly connected to lifestyle and lifestyles are increasingly connected to technology. Already we see carriers emphasizing the customer journey and strengthening their connection to insureds – Humana’s “Start with Healthy” wellness initiative, for example. As mobile health apps and wearable devices continue to advance, this connection will only grow closer, engendering behavior changes among insureds and a flood of new data for insurers.
As much progress as we’ve made in the digitalization of health care, the journey has only just begun. The movement toward the prevention of risk in cooperation with connected consumers is destined to accelerate. But progress needs the right building blocks in order to advance. If we lack a strong foundation in traditional insurance – efficient sign-up, verified data, thorough experience analysis, effective claims management – redefining health insurance will stall before it has a chance to gain momentum. We should first accurately define the problems, and then seek digital solutions.