“Look no further than the massive statistical calculations that allowed American health insurance companies to avoid insuring high risk customers..” (How Should We Think about Privacy, Scientific American, Nov. 2013) This is a significant and timely observation as the U.S. continues it’s ongoing battle over health care. But look closely at what is being said, and where it leads in the future.
With the accumulation of both personal data (health insurance companies have access to much or all of your health data) and millions of other individuals records, insurance companies can make very informed decisions about rates, pools (aggregating similar risks) and accepting applicants in the first place. Given the profit incentive to do this well, they have learned to do it well. It should be no surprise that with a mandate by the Affordable Care Act that these suppliers have applied triage, raising rates or canceling policies for various groups to assure profitability, or purge individuals with greater risk. This is what capitalism is all about. Somehow American consumers do not understand that insurance is not a “game” where you only play if you can win (i.e. expect benefits greater than your anticipated costs) … insurance used to work on the basis of ‘blind statistics’ — average costs for risk “xyz” and expected occurrence of “xyz” determined the the insurance premium for “xyz”. But the process is no longer blind, it has become well informed, and in the future will close to fully informed.
What does fully informed mean? Well, with full Genomic analysis (and some related work), and full life style details, insurance will increasingly become “pre-paid medical expenses” with a profit margin for the Insurance company. There will be a “pool of one” — you. And the “insurance company” will be monitoring you via many channels. While “discrimination” based on genomics for health insurance is illegal in the US — that may be a moot point with other sources of information available — such as Doctors actions based on such information, prescriptions, web postings, etc. We could reach a point where the real margin for health insurance companies comes from accidental deaths where individuals provide a windfall of pre-paid anticipated expenses that will go unclaimed.
As the title of this column suggests, technology may render Insurance obsolete — albeit a drain on the consumer economy for the century or so it will take for folks to realize this is the case.