In his recent post, “The Politics of Big Data,” my friend and colleague Jim Bacon asked some pertinent questions regarding how our government, and our society at-large, can put data to use for the common good. In a fairly short discourse Jim hit on a range of explosive topics, from privacy, data sovereignty, property rights, Universal Service, government regulation and legislation, universal health care, Obamacare and Medicare/Medicaid, predictive analytics and preventative medicine, and more. Each of these could fill a book in their own right; I should know, as I’m working on those books right now!
Of all of the issues raised by this discussion, the one that immediately came to mind was that of the use of our individual data to support the effective delivery of healthcare. As I have written and spoken of extensively in the recent past, healthcare stands to be the industry most disrupted by the application of Big Data in the coming decade. (Indeed, I’m keynoting a discussion on exactly this disruption at the American Health Information Management Association information governance conference this week.) In no other industry is so much valuable information put to so little use, for so little gain, at so much cost, thereby leading to suffering, the waste of human life, and the ineffective expenditure of so much treasure.
Why is this so? Why is our health system so sickly when compared to that of other countries? Why does healthcare seem to extract so little value from information, when compared to other industries? Is it from too much government regulation, or too little? Is it from the influence of commercial special interests such as the payers, or the professional special interests of practitioners, such as the AMA? Is it because our technologies cannot meet our needs, or is it because we are not prepared to accept the implications of those technologies? I would argue that all of these factors are at play in this discussion; that all of the ranting that accompanied Jim’s post were all equally spot on, and all completely off the mark.
All of these positions are equally accurate, and equally pointless in the real world. Whether healthcare providers put patient data to work for the common good or their own good is irrelevant; it will be put to work in any event, with significant unintended and extremely disruptive consequences. Whether special interests or patients will benefit from the use of data is not open to question. The answer is: both will. Whether or not our privacy will be sacrificed or not is also a pointless question; of course it will. And finally, whether or not we will willingly give up our privacy in order to gain these benefits from our data is a further pointless question; we already have.
Disruption in Insurance: The Canary in the Coal Mine for Healthcare
The best example I can give of what WILL happen in healthcare over the next decade, equally in Virginia as with the other 49 states, can be seen in what is rapidly taking over the insurance industry across the country. Insurance is an old-school, highly-regulated, data- and money-intensive industry. Insurers have both access to massive amounts of very private information on all of us, and intense motivation for putting that data to use. The potential for profit, and hence abuse, is exceedingly large.
But, the motivation for using our data isn’t necessarily nefarious. Insurers look at each of us to determine our risk profiles so that they can both make money (that is, remain solvent so their checks to benefactors or debt holders don’t bounce) and provide coverage to all segments of the population at affordable prices (or at least the perception of affordability).
The regulatory framework that governs the insurance industry is well over a century old. It is state-based, state-enforced, and is designed to provide universal coverage to people from all walks of life. If you drive a twenty-year-old pickup truck, you probably pay proportionately less than someone who drives a new European sports sedan. If you’re a 60-year-old who smokes a pack a day and loves Miller Time, you’re likely to pay more for your life insurance than a 24-year-old jogger and yoga nut. Our regulatory framework has been designed to try to make insurance available and fair for all, and to ensure that insurers remain profitable, but not excessively-so.
Despite all of this, insurance is going through a fundamental, massively disruptive, and permanent transformation right before our eyes. This transformation is being driven by what I call the Digital Trinity of mobility, social media and advanced analytics. These three technologies trends are completely transforming how we live, work, play, and interact with our world, and they are causing enormous unintended consequences across our entire society. These changes are comprehensive, and old-school, hard-line, heavily regulated industries such as insurance are the MOST likely to be disrupted, rather than the least likely.
To see these disruptions consider this. Car insurers have deployed smartphone apps that allow them to track the driving behaviors of their customers in real-time, turn by turn. These apps keep track of how fast you accelerate, how hard you brake, how fast you drive down the residential streets of your neighborhood, and whether or not you text or talk while driving. These apps create huge amounts of extremely sensitive data, they are massively invasive of your privacy, they provide an enormous source of information for discriminating against you in setting your insurance rates; and they are massively popular.
If I told you three years ago that car insurance companies soon would be tracking all of this information on the drivers that they cover, you might think I was crazy. If I then told you that customers would sign up for such apps by the tens or hundreds of thousands, in order to gain a discount in their rates, you’d probably think I was certifiable. Americans are voluntarily giving up extremely intimate details on their behavior, surrendering their Constitutionally inalienable rights, and opening themselves up to all manner of government and commercial scrutiny in order to save 15% on their car insurance? Yes they are, in droves. You may think this sounds crazy, and you’d be right.
Yet, this is exactly what is going on right now. Innovators such as Progressive Insurance started these behavior-tracking apps, providing discounts to drivers who demonstrate good behaviors. These apps have been so successful, that now all insurers are scrambling to deploy similar apps with similar capabilities, while they still have time.
These apps allow insurers to create millions of more classes of consumers than their old data used to allow. Insurers can still claim to not discriminate between their clients within a class (the basis of nearly all of our insurance regulations), but this new data allows them to create millions of classes of one, which effectively annihilates the regulatory framework that took a century to build. In a relative blink of the eye, the Digital Trinity has completely disrupted an entire multi-trillion-dollar industry.
The dark side of all of this great new technology and insight (and there is always a dark side) is that our present use of the carrot will necessarily be joined by extensive use of the stick.
Insurers aren’t supposed to penalize their customers for their bad behavior; that would be unseemly, and is perceived to be unfair meddling in their personal freedoms. Such logic sounds good during a legislative hearing, but in reality, it’s bunk. If insurers know that you’re a good driver most of the time but a bad driver on a certain stretch of country road, early on Saturday mornings, how long will it be until they start sending notes to this effect to the local police department? If insurers know that this group of people are factually bad drivers, how long until factually good drivers in the same insured class will demand insurers penalize the bad drivers (or or drop penalties against the bad drivers)? How long can Universal Coverage be justified and held as rational when none of us remains anonymous?
Once you start changing behavior by using the carrot it is only a matter of time until you start punishing with the stick. This is a slippery slope, and we’ve already pushed ourselves over the top of the moral mountain. Very soon, it is likely that if you’re a bad driver — prone to speeding, braking excessively hard and so on — you’ll get an automated ticket from your local government, a small penalty from your insurer (automatically deducted from your Apple Pay account) and an instant coupon for 20% off your next brake service at your car dealer.
The same thing is coming to Healthcare. Given the enormous inertia in the system, the Digital Trinity will take a bit longer to manifest itself in healthcare. Nevertheless, these changes are already coming, as can be seen in hundreds of startups implementing healthcare solutions and apps that border on the hairy edge of legality and morality. These apps deliver compelling and desirable results to early adopters, even as they challenge nearly all aspects of the regulatory frameworks and societal norms that presently govern healthcare.
In the very near future, “Going to the Doctor” will mean that you’re seriously, seriously ill. Instead, when you’re merely sick, you will “see your Doctor” via an app on your smartphone, in real time, from the place of your choosing, probably sponsored by some pharmaceutical company. Your diagnosis will be made remotely, using minute-by-minute tracking data and predictive analytics to prevent you from getting sicker. If this vision makes you uncomfortable, tough. This reality is coming because enough of us will think that we’re better off for it. It turns out most of us are willing to give up most of our Constitutional rights most of the time, as long as the price is right and the app that we use is sufficiently addictive.
Ben Franklin is often quoted as saying: “They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”
Perhaps a modern-day Franklin would be read blogging: “They who can give up their rights to obtain great coupons deserve neither rights nor great coupons.”
Deal with the Devil?
Among the disruptive results brought about by the Digital Trinity, digital populism may be the most dramatic. Over the coming decade, you will see more and more “legislation by plebiscite,” where old social and legal norms are swept aside by online popularity contests and digital protests, all enabled by apps.
The taxi app Uber may be illegal in half of the places in which it operates, but unfortunately for incumbent taxi companies, Uber just works better. No amount of regulation, lobbying or yelling from an ethical bully pulpit will overcome millions of people who vote with their smartphone every day. Such populism is presently seeping into nooks and crannies under the foundations laid by our society for the last two hundred years. These foundations are being compromised by the same forces that make our lives dramatically more convenient, day by day.
We are coming to a reckoning. There will be a time, in the not-too-distant future where we will have to ask if all of the conveniences brought by the Digital Trinity are worth the unmeasured costs we are paying. Unfortunately, by then it may be too late. In the meantime, organizations will use our data to improve our lives, because you and I demand that they do so.