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Data: Health Insurance
Weighing in on Wearables

Consumer and medical wearable devices are opening up a new data portal for health insurers, but many are still grappling with how to use that information.
  • Lori Chordas
  • May 2019
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Key Points

  • Weighing in on Wearables: Wearables and fitness trackers have evolved from counting steps to helping detect and manage chronic diseases.
  • Digging into the Data: Health insurers are struggling to find ways to use that data to transform health care and improve their members’ health outcomes.
  • Full of Potential: Data from wearables could help insurers better price policies for the needs of individual users and identify early-stage disease to drive down health care costs.

When the Apple Watch debuted in 2015 users were excited about the ability to track their simple daily activities, such as steps and caffeine intake in a compact device that banded around their wrist.

Four years later, the Apple Watch's latest iteration includes more advanced functionality, such as the ability to take an electrocardiogram to screen for potentially life-threatening conditions like atrial fibrillation.

Features like that are evolving to provide a detailed glimpse into a person's medical history and health behaviors. That's also opening up a new portal of real-time digital data for health plans.

However, many insurers have struggled to fully take advantage of this mountain of new data they sit on now.

There are a number of challenges in using that data, and most carriers are still grappling with regulatory constraints, data privacy concerns and questions about the accuracy of information generated by wearable devices, said Nick Milinkovich, an associate partner in the insurance practice at McKinsey &Co.

Those gadgets, including wrist-worn fitness trackers, smartphone health apps and consumer and medical wearable devices, can now measure just about every health metric, including heart rate, blood pressure, respiratory rate and blood glucose level. They can also detect and monitor diseases such as chronic obstructive pulmonary disease, cystic fibrosis and diabetes.

Health insurers are now using that data to create fitness programs and deliver employee wellness benefits to cultivate a healthier workplace.

“But there are also other opportunities to use wearable data to more accurately price insurance and develop new products. Most insurers just haven't gotten to that point yet,” Milinkovich said.

Untapped Data

Health insurers have historically relied on data gathered by health care practitioners during medical exams, results of invasive medical testing and information provided by customers on paper insurance applications to capture a snapshot of their members' health habits and medical histories. External vendors later developed health risk assessment tools that applied analytics to these sources and assisted in providing a more in-depth evaluation of an individual's health risks and quality of life.

When wearable devices burst onto the scene in the mid-2000s, the expectation was that new data from the devices would help insurers rapidly up the ante in assessing an individual's lifestyle, providing early warning signals of specific conditions and monitoring treatment efficacy.

While that has emerged in isolated areas, most health insurers continued to rely on traditional data sources to understand their customers' potential risk, Milinkovich said.

Today, about one in six Americans wear some type of consumer fitness tracker or smartwatch, according to the Pew Research Center.

There's also growing use of noninvasive, clinical wearable medical devices, often in the form of clothing, skin patches, contact lenses and more. Those devices monitor and control specific medical functions and vital signs, provide real-time access to health records and offer quicker diagnosis and treatment of conditions.

Health insurers use a blend of those devices, along with mobile health applications, to support wellness, chronic disease and health management programs, said Brian Kalis, managing director of digital health at Accenture.

“Those types of programs are commonly being used to bolster member loyalty and individual engagement and with the aim of curbing the progression or onset of costly chronic diseases by having at-risk members take a more active role in their health,” he said.

However, data generated by those programs remains largely untapped.

“Right now health insurers are just trying to wrap their arms around the granular information to understand what the data is telling them to see if it's something they can act on,” said Doug McElhaney, a partner in McKinsey &Co.'s insurance practice.

“For example, they're trying to figure out if they can construct profiles from the data to create a health persona, and then there's the question as to whether the data provides a signal as to what future outcomes might look like,” he said.

Heidi Guetzkow, Lockton

Today, everyone is getting savvier about trying to connect the dots as much as possible. But ultimately you still need different data sets merged together to get a full picture of what’s happening within your member populations.

Heidi Guetzkow

Put to the Test

Health plans are hoping their incentivized wearable programs will help answer some of those questions.

Earlier this year Aetna partnered with Apple to launch a new program that allows Aetna members to use an Apple Watch to personalize health goals, track their daily activity levels and receive recommended healthy actions and rewards for those actions.

Aetna plans to use the data it gathers from its Attain program to create new program features and offer participants more personalized recommendations to provide greater context and decrease barriers to health care.

Aetna said it doesn't plan to use the data for underwriting, premium or coverage decisions.

Several years ago UnitedHealthcare created its national Motion walking program to enable participants to use their Apple Watch and other wearables to track daily walking steps and earn financial rewards when reaching those walking targets.

By meeting the program's three daily “FIT” walking goals (frequency, intensity and tenacity), program participants can earn more than $1,000 per year in financial incentives.

The wearable device walking program encourages participants to achieve an average of nearly 12,000 steps per day—more than double the number of the average American adult.

While other incentivized wearable programs provide a host of data about a person's health history and habits, there's also much to be said about leveraging just the very basics, said Paul Sterling, vice president of emerging benefits at UnitedHealthcare.

“Through our program we leverage information only about participants' daily step counts. But that's powerful data that can help our members establish a baseline, motivate and help them make walking a part of their daily routine,” he said.

Cost Containment

Cost containment is often an indirect benefit of wearable programs, Accenture's Kalis said.

UnitedHealthcare's Motion wearable device walking program has cut member health care costs by $222 per member per year, Sterling said.

“That's significant. If people engage and meet daily objectives over the course of a year that manifests into dramatic savings, which is good for participants' overall health, their finances as well as the health care system as a whole,” he said.

“For example, improving medication adherence in a clinical program may also indirectly eliminate costs associated with unnecessary emergency room visits. Or participants losing weight in a pre-diabetes program may circumvent costs associated with the onset of diabetes further down the road,” Sterling said.

Wearable data can also save members from costly lab tests and medical exams. Gadgets such as the Apple Watch 4 can now perform tests such as electrocardiograms to identify conditions like atrial fibrillation and prevent disease before it strikes.

Today more than 2.7 million Americans have atrial fibrillation, a leading cause of stroke and hospitalization in the United States. That number could rise to as high as 12 million Americans by 2020, according to the Centers for Disease Control and Prevention.

Data Accuracy

As health plans begin to embrace the exchange of data from wearable devices, they need to securely transfer private health information in a seamless, easy manner to ensure compliance, security and regulatory requirements are met, said Heidi Guetzkow, health risk solutions program manager at Lockton.

The Health Insurance Portability and Accountability Act of 1996 requires covered entities to implement safeguards to protect the confidentiality and availability of personal health information.

Members enrolling in Aetna's Attain initiative must opt into the program and select what data and health history information they want to share with Apple.

Aetna gathers the data, encrypts it on an Apple Watch device and on Aetna and Apple's servers, and then stores the information in a secure environment using HIPAA-compliant practices.

Consumers are more willing than ever to exchange wearable device data.

Last year, 72% of respondents in Accenture's Digital Health Consumer survey said they were willing to share that information with their insurer, up from 63% in 2016.

But just how accurate is the data?

In 2017, researchers at Stanford University School of Medicine examined the accuracy of seven types of wrist-based fitness trackers that measure heart rate and energy expenditure. They found six of the seven devices measured heart rate within 5%, none measured energy expenditure accurately. In fact, the most accurate device was off by 27% and the least accurate was off by 93%, according to the study.

But much has changed in the last two years.

In March, Stanford researchers presented preliminary results of an Apple Heart Study of more than 400,000 participants. The researchers reported that wearable technology can safely identify heart rate irregularities that were later confirmed to be atrial fibrillation.

Lockton's Guetzkow is also fairly confident in the accuracy of data coming from wearable devices. “Biometric readings like heart rate and blood glucose levels seem to be quite accurate and well-tested; step counts, however, may be less precise. Wearable information alone doesn't tell the full story,” she said.

“Today, everyone is getting savvier about trying to connect the dots as much as possible. But ultimately you still need different data sets merged together to get a full picture of what's happening within your member populations,” Guetzkow said.

Brian Kalis, Accenture

Health insurers use a blend of [wearable medical devices], along with mobile health applications, to support wellness, chronic disease and health management programs.

Brian Kalis

More to Come

By 2020, more than 189 million wearable gadgets will be sold across the globe, according to market intelligence and advisory services provider IDC research. Capabilities inside those gadgets and devices themselves will also evolve.

For instance, researchers are now developing a tiny wearable patch device that will lie under the skin to monitor calcium levels to detect early prostate, lung, colon and breast cancer signs.

Also, a team at MIT is designing a jaw-mounted intelligence-augmentation device that will be able to read neuromuscular signals and internal brain patterns through built-in electrodes.

As devices become more sophisticated, so too will the quality of data generated by those devices, said Lockton's Guetzkow.

“The ability of real-time interactions will also improve. However, data integrity and security always have to be at the forefront as new technologies emerge,” she said.

Behavior change is a critical part of the mix.

“It takes customers changing their day-to-day behaviors in order for this data to enable better health outcomes, and we know that behavior change is not a data issue,” McKinsey's Milinkovich said.

“Designing a product that incentivizes people in the right way to change their behavior is a very complicated exercise that needs to balance short- and long-term incentives. Using this new data to create value for the end customer is a complex issue too, and it's taking insurers longer than expected to come to market with something game-changing,” he said.

Data and new uses of that information will remain a top-of-mind issue for health plans.

Cigna President and CEO David M. Cordani said in the company's 2018 fourth-quarter earnings call that one of the top goals of Cigna's recent acquisition and integration of pharmacy benefits management provider Express Scripts is to harness its combined data to better predict and identify conditions or behaviors to connect providers and customers.

Wearable data has the power to help make those types of connections.

More than half of the respondents to Accenture's 2019 Digital Health Consumer survey now use a wearable device or app to manage their lifestyle and health care conditions. That's twice as many as in its 2016 survey.

“Today, most consumers are willing to share data from those devices with their doctor (90%) or other health care professional (88%). This appetite for digital services will continue to share the advancement of programs and evolve the range of future medical uses,” Accenture's Kalis said.

However, insurers are still grappling with the notion of a data universe that has ballooned exponentially over the last five years and just being able to use all that data, McKinsey's McElhaney said.

“At the same time more information comes online, carriers are starting to build out their analytics capabilities. They're still a bit behind other industries and can't yet take full advantage of all of the data. So there is still a mild disconnect between the capabilities they have and the new avalanche of data coming into the door,” he said.

McElhaney expects that over the next several years insurers will begin to discover how to ingest that data, along with information coming from new and evolving devices.

“However, this increase in data may create a sustainability challenge because if you build something today, such as an advanced heart rate monitor wearable device, over the next five years connected clothing may offer even more health information. Then the product has to change to make sense of all that new data,” he said.

The biggest change going forward will be the emergence of ecosystems, including the data ecosystem, Milinkovich said. “How do you create standards so that the information coming in is the same and is able to be read by multiple carriers across multiple devices?

“So for health insurers to do something with wearables, it's not just about the device data but the products they're going to have to create for different customers. That will involve a connected ecosystem of carriers, diagnosticians, providers, startups, benefits providers and others becoming more linked to provide customers with a differentiated experience,” he said.

Learn More

Aetna Inc. Group (A.M. Best # 058700)

UnitedHealth Group (A.M. Best # 069973)

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Lori Chordas is a senior associate editor. She can be reached at

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