How important is our health?

Without causing any particular media attention, Verily, Alphabet’s company focusing on health, has just launched its insurance company, Coefficient Insurance. Thanks to the data collected over years through Google, Coefficient Insurance is able to assess our risk better than any other insurance company. Currently, the insurance company will focus on a niche sector: insurance policies that protect employers against employees health costs volatility. However, the plan is to expand to the whole insurance sector and offer B2C insurance policy to the whole Google customer base (i.e.: the whole world). According to Verily executives, the company can start to monitor its customers through their phones and influence them towards a healthier lifestyle. Obviously, this business model for the hub economy is not new. Indeed, there are a lot of digital hubs that plan to expand into the healthcare / insurance sector. Alexa (Amazon) and DeepMind (Alphabet) both concluded contracts with the national health service of the UK. Apple signed a partnership with Aetna, and together developed an App that uses Apple Watches’ data to assess insurance customers’ lifestyles and adjust the insurance premia. Lastly, at the end of 2019, Facebook launched Preventive Health aiming at educating its users about the importance of healthcare prevention (e.g.: undergo regular checks).
Facebook, through Coefficient Insurance, claims to reduce the load on the health care system by giving users an in-depth analysis of their lifestyle. Nevertheless, Facebook often has an ulterior motive. One has to be naïve to believe that such a system would favor the weak and the sick. There will be positive effects, such as the promotion of a healthy lifestyle or digital tracking. The latter is especially important now with COVID and Alphabet can play a big role. However, there is a big question in my mind: do we really want that our health data have an impact on our insurance policy pricing?
The situation is worsened by current antitrust and privacy laws. Antitrust regulations have not proven effective in the digital economy. For instance, antitrust authorities could not deny Fitbit acquisition by Google. Especially now that Google is entering the insurance business this acquisition is worrisome. Privacy laws are also inadequate. Employees, pressured by their employers, accept to be monitored through their companies’ computers. This problem already existed before Google entered the insurance business. However, now companies are offered very intense surveillance system in order to reduce their employees’ health costs.
The insurance sector is only a part of a bigger problem. Indeed, politicians have a hard time to redistribute the enormous power of connected digital hubs. With positive network effect, it is a new market equilibrium that the power gets increasingly concentrated in ecosystem hubs. The latter increases popular resentment towards the elite and favors conspiracy theories. Politicians, instead of facing the problem and protect the weakest in the society, hope in a self-regulating system (Adam Smith invisible hand). As suggested in the article “Managing our hub economy” “All actors in the economy—but particularly the hub firms themselves—should work to sustain the entire ecosystem and observe new principles, for both strategic and ethical reasons. Otherwise, we are all in serious trouble.” I believe this can happen if customers and investors pressure the hub giants forcing them to follow a more ethical behavior, as ROI will always be dominant.

References
Iansiti, M., & Lakhani, K. R. 2018. Managing our hub economy. Harvard Business Review, 96(1), 17-17.
https://corporatesolutions.swissre.com/insights/news/coefficient-employer-stop-loss.html#:~:text=Verily%2C%20an%20Alphabet%20company%2C%20is,novel%20insurance%20and%20payment%20models.

Apple partners with Aetna to launch health app leveraging Apple Watch data

https://www.theverge.com/2019/11/1/20943318/google-fitbit-acquisition-fitness-tracker-announcement