Get Ready For Wearable Tech To Plug Into Health Insurance

Autodesk employee Blake Menezes wears his Jawbone Up as part of a global corporate health challenge. Menezes keeps the activity data to himself, but other employers are exploring ways to monitor their staff's wearable devices to help keep a lid on rising health care costs. (photo via Autodesk)

Today the average American's health insurance payments fluctuate once a year. Imagine if that rate changed each day, determined in part by a sensor-rich gadget on the wrist. Sound far fetched?

That could be our startling future, as forthcoming generations of devices like the Fitbit or Jawbone Up look set to play a larger 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 tech isn't mainstream yet; only one in 10 American adults say they own a fitness tracker. But it will 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 (pronounced schvant-ner) 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.

Aswe 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 is eating. That would be a crucial data point for insurers, since diet has a far greater impact on health than activity.