When Onboard Monitoring Comes to Health Insurance

June 15, 2012
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You’ve probably seen the onboard telematics programs from auto insurers like State Farm and Progressive that promise discounts for safe drivers based on the data captured by devices that monitor miles driven, sudden acceleration and braking, etc. There’s rich data to be collected and analyzed, and the technology is getting cheap enough and reliable enough to make these programs feasible.

You’ve probably seen the onboard telematics programs from auto insurers like State Farm and Progressive that promise discounts for safe drivers based on the data captured by devices that monitor miles driven, sudden acceleration and braking, etc. There’s rich data to be collected and analyzed, and the technology is getting cheap enough and reliable enough to make these programs feasible. Of course it’s a bit of an invasion of privacy and a lot of folks will be reluctant to sign up even if a discount is offered.

I think this kind of approach has a lot of potential in health insurance, and that we’ll start to see it applied within a few years. The recent trend, accelerate by the Affordable Care Act, is to disallow differential pricing for health insurance based on health status. That strikes a chord with most people, who consider it unfair to penalize people for their bad luck of being ill. On the other hand, a lot of health care costs are determined by lifestyle choices and there is support for programs that penalize unhealthy lifestyle choices –like smoking– by imposing financial penalties on employees. Charging more for a smoker is simply a crude way of doing what the auto insurers are doing with their telematics.

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But imagine having more advanced devices that monitor other aspects of lifestyle like diet, exercise, and sleep habits.  Maybe throw in risky sexual behaviors, too. If individuals could save 25 percent on their health insurance for good behavior they might go for it. After all, health insurance is a heck of a lot more expensive than care insurance so maybe it’s worth it.