Insurers are struggling under a toxic combination of red ink in health insurance and reputational issues surrounding poor claims experience. Industry leaders know that business as usual is not an option – continuing to offer only financial indemnity health insurance products will not restore profitability or improve customer experience. For both health and life insurance companies, the rise of so-called ‘lifestyle’ chronic diseases is further underlining this reality but is also providing fertile ground to explore new models. New technology is already showing promising results in claims reduction and improved customer health outcomes for chronic disease sufferers. In this article, we examine why insurers should take advantage of new digitally enabled therapeutic solutions to move beyond the wellness programmes currently on offer.
Lifestyle diseases – the next healthcare frontier
Over the last century, infectious diseases have largely been eliminated. Gone are the most devastating infections – pneumonia, tuberculosis, and gastrointestinal infections. These have been replaced with chronic lifestyle diseases such as heart disease and cancer, while new killers such as diabetes and suicide have slipped into the top 10. Our next challenge lies in fighting these chronic cardiometabolic diseases (CMDs), such as, diabetes, chronic kidney disease, coronary heart disease, myocardial infarction, hypertension, high blood pressure, and cholesterol, as their incidence is increasing at an alarming rate.
A big problem – and growing bigger
In fact, the Centres for Disease Control and American Diabetes Association are calling it an epidemic. Studies have shown obesity, which is a precursor to CMDs, has doubled in 75 countries and rapidly increased in another 120 over the last thirty years. While the World Health Organization has noted a 600% increase in global obesity since 1975 calling it a “slow-motion disaster”, one study projects 58% of the global adult population to be overweight or obese by 2030.
Not only is this a large problem, it’s also very expensive with four of the top 10 most expensive conditions globally being related to CMDs. Some estimates put the rising global cost of diabetes at more than $2.5 trillion by 2030. More pointedly for the insurance industry, according to one recent study sufferers of chronic diseases have on average nearly 8-times the annual claims cost over people not suffering from chronic disease. In Singapore in 2010, the average annual cost for in-patient treatment of diabetes was S$8,787, while medical inflation there was clocked at 15% in 2015, further underlining the growing headache insurers face.
Can we depend on medication to prevent chronic illness?
The pharmaceutical giants continue to develop more effective drugs to help manage many CMDs, and current research is focused on DNA-level medicines to treat these diseases. However, effective treatments remain elusive – medicine is only one component of the solution.
As Benjamin Franklin famously once said, “An ounce of prevention is worth a pound of cure.” So perhaps rather than seeking a pill to mitigate the effects of poor lifestyle choices, we should focus on modifying the behaviour that lies at the root-cause of CMDs.
Digital transforms and opens new opportunities for insurers
The insurance industry has long recognised that healthy habits can have a positive impact on claims and longevity. Several insurers have made initial attempts to engage customers with optional wellness programmes. However, these programmes miss the mark as they fail to address the specific needs of people with CMDs.
The transformative news is that visionary insurers have begun supplementing their wellness programs with new digital platforms that focus on the therapeutic needs of this population. These solutions work by targeting the behaviour that is at the root-cause of CMDs.
The key features of these new therapeutic platforms are:
- Mobile enabled with a chat-based interface delivering personalised advice and encouragement, powered by a blend of AI and human coaching across the spectrum of medical, lifestyle, diet and fitness concerns
- Founded on established behavioural change methodologies and proven clinical procedures for the treatment of CMDs
- Providing a seamless connection to the personal support network of the policyholder including GP, healthcare provider, family members and other care givers
- Providing tiered intervention to allow efficient targeting and further cost effectiveness
- Tying in a broader ecosystem of medical companies and healthcare providers to enhance the proposition
The use of AI is important, as typically someone affected with CMD will have a range of associated conditions. AI enables a high degree of customisation/personalisation in treatment protocol that exactly tailors to the individual patient’s needs. This supplements the insights of a human coach and means the program can be scaled while remaining affordable.
Similarly, the use of digital/mobile technology enables delivery of the service directly into the hands of patients, providing the right level of convenience and intimacy to make the program effective.
Early studies are showing promising results for insurers and customers
One recent trial run by Wellthy Therapeutics and cited by the American Diabetes Association, showed very encouraging outcomes through digital intervention. The trial was run for 16-weeks. Of those that showed improvement, the average drop in HbA1c level was 1.17%.
To give some context, clinical studies indicate for every 1% drop in HbA1c level, there is a significant reduction in risk for range of complications including:
- A 12% reduction in risk of stroke
- A 16% reduction in risk of ischemic heart disease
- A 43% reduction in amputation and peripheral vascular disease risk
- A 21% reduction in mortality
From an insurance perspective, consider that just a 0.5% reduction in HbA1C has been correlated with reduced hospitalisation and re-admission rates of 22%, reduced average length of stay (ALOS) by 34% and reduced overall cost of care by 12%.
There’s still a way to go in moving from short clinical studies to large scale, mainstream, multi-year programmes – but at the same time the early results, in our view, tip the balance to insurers actively assessing these programmes.
How can insurers get started?
The quickest wins will be for those insurers offering medical expense reimbursement programmes covering both inpatient and outpatient. Insurers with a large base of insured lives will be able to a) identify those who will benefit most e.g. diabetics and b) run prototype programmes to establish their own fact base on the potential value these programmes offer.
The advantages of a successful digital intervention programmes are multi-dimensional:
- The programme will improve health outcomes and consequently be highly valued by customers
- There is the promise of a successful reduction in claims
- Value added services such as these build loyalty with both individual customers and corporate customers (employers). The stickiness from the latter, inevitably reduces price sensitivity and provides the basis for moving health insurance back to profitability
- The data collected will provide insights into customers that can foster long term relationships
- New products can be designed to provide coverage to people who have previously been categorised as uninsurable
The bottom line
We believe that digital therapeutics is going to be a hot topic, and significant opportunity, for life and health insurers. It is core to how the insurance industry can use technology to move beyond financial indemnity into offering dynamic risk management for customers and therefore another chance for the industry to improve its public image while improving its own bottom line.
We hope this article sparks debate and interest and we will provide further updates and insights as these new programmes evolve. In our next article on this topic, we plan to address the options available for different insurers to implement these programmes, tactics to ensure success, how to measure success and how to effectively plan for aggressive expansion when the benefits start to be realised. Until then, thanks for your readership.
The Digital Insurer and Wellthy Therapeutics are collaborating to help bring the benefits of digital preventative techniques for management of chronic disease to more people around the world, see the press release announcement.