A little more than six months ago, Prime Minister Narendra Modi launched the Ayushman Bharath Digital Health Mission, and in particular the Digital Health ID. The launch met with acclaim for trying to fix a healthcare system full of frictions as well as legitimate concerns. The Health ID, now called Ayushman Bharat Health Account (ABHA), is a repository of all health-related information about a person. Using basic details like mobile number and Aadhaar number, an Indian citizen can generate a 14-digit unique health ID. As per the latest reports over 14 crore health IDs have already been generated. Digital Health ID wants to disrupt healthcare just like the Unified Payments Interface (UPI) did to payments and finance.
What does the Health ID hope to achieve?
The ID enables consensual access and exchange of personal health records (PHR) for Indian citizens. It will contain details of every test, every disease, the doctors visited, the medicines taken and the diagnosis. Citizens will only be a click away from accessing verified healthcare facilities. The ID also enables access to verified doctors ensuring quality healthcare.
The analysis of health data will also help the government in better healthcare planning, budgeting and implementation for states. This has huge potential to bring down healthcare costs in the country as wastage can be severely curtailed.
How can health ID impact health insurance?
The widespread success of the scheme can potentially decrease healthcare costs of the masses with early and better diagnosis and as a result, also bring down the cost of health insurance due to lower incidences of hospitalizations.
However, the biggest impact will be access to healthcare data. This data on an individual level can potentially let health insurance companies assess risk according to the verified healthcare history that an individual has. In theory, this can result in lower health insurance premiums for people adopting a healthier lifestyle.
You can equate this to Tesla selling its own motor insurance. Tesla has access to large amounts of data of an individual driving their car. They know exactly how much to charge a premium for their cars from drivers based on driver usage patterns such as turning, braking speeds, lane discipline and other factors. They can leverage data and can charge very less premiums to drivers that drive responsibly and ultimately incentivize safer driving practices for poor drivers. Since traditional companies are unable to leverage this kind of data, they rely on traditional models to perceive risk. They are thus unable to assess the right risk for an individual and focus more on aggregating the risk portfolio and charging a higher premium. Tesla on the other hand has individual-level data.
Why could there be serious concerns about letting insurance companies access healthcare data?
One of the biggest concerns surrounding the scheme has been privacy. Enabling access, even voluntarily, to sensitive healthcare information has the potential for misuse.
When it comes to health insurance, we have a different problem. Insurance companies would want to cover people with low healthcare risk and would want to avoid people with high disease risk and accordingly launch insurance products that leverage this data. Ultimately insurers are companies looking for profits and this would be a way for them to earn higher margins.
This is a classic case of the market for lemons. As healthier people move to get covered through insurance through their clean health history, they will stop subscribing to the normal products available in the market. This will ultimately lead these products to become more expensive as the healthier individuals are getting cheaper premiums using their healthcare data. People who have pre-existing diseases or who have a weak immunity may see their premiums skyrocket. This may ultimately create social inequity and prove to be detrimental to society.
What can be the way forward?
It is fair to say that there needs to be a debate on how insurance companies can leverage Health ID data. Insurance companies will inevitably use this data to underwrite new health insurance products. However, the health insurance industry in India is highly complex and a larger shift will take years if not decades. It will also be upon the insurance regulator and the government to ensure there is social equity and ensure that people even with a poor health history and pre-existing diseases can subscribe to health insurance.
But the fact is people will get motivated to have a healthier lifestyle as there are monetary incentives to do that. And if a healthier India can get promoted, it begs us to explore whether this insurance industry transformation can be looked at in a positive light.
Sanil Basutkar is the Co-founder of HealthySure, an InsurTech platform that focuses on innovating employee health protection.