Image source: UnitedHealth Group
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UnitedHealth Group , the nation's largest health insurance company, is broadening coverageto pay for wearable devices, fueling an already booming market designed to improve consumer wellness.
It's an emerging trend that could benefit insurers who pay for health wearables as well as the companies making the devices and related technology.
UnitedHealth, working with chipmaker Qualcomm , said it is taking wellness via wearable devices to another level by paying nearly $1,500 a year to health plan enrollees who hit certain fitness and wellness goals. Qualcomm's technology will use a Trio Tracker,but a new report from consulting firm Accenture indicates that wearables of all brands are growing explosively as more employers and insurers tie them to financial incentives to get healthy.
The effort is expected to be just the first for health insurance companies that are moving into population health and doing more outreach to patients through apps, wearables, and other mobile devices.
Other than patients themselves, the obvious winners are health insurers like UnitedHealth who will benefit from improved outcomes. Wearable makers like Qualcomm, Fitbit and Alphabet'sGoogleshould also benefit if more insurers follow suit and boost demand for wearable products.
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Since 2014, the number of U.S. consumers who use health wearables jumped to 21 percent from 9 percent, according toAccenture. But many of these early users are younger millennials, suggesting that putting wearables on the wrists of older, less healthy Americans could open still more sales opportunities.
140 million wearables worldwide and counting
The global market for wearable technology should surpass $30 billion in revenue this year, as an estimated 140 million devices are shipped around the world,according to market research firmreportsnreports.com. Looking ahead, the firm forecasts cumulative annual growth of 30% over the next five years.
"Digital tools are empowering patients to take charge of their health and interact with the system on their own terms," says Dr. Kaveh Safavi, the head of Accenture's global healthcare practices. "Healthcare providers will need to weave digital capabilities into the core of their business model so that it becomes embedded in everything they do."
UnitedHealth and Qualcomm say their UnitedHealthcare Motion program not only uses the device to motivate employees and health plan enrollees, but the Qualcomm technology links enrollees to home diagnostic tests and UnitedHealth's claims information and related database. Over time, UnitedHealth's network of medical care providers will access data from their patients to improve health outcomes.
Accenture's research indicates 63% of patients are open to sharing wearable/app data with their health plans, and 90% said they'd be willing to share data with medical providers.
Dr. James Mault,Vice President and Chief Medical Officer of Qualcomm Life, the chipmaker's health unit, said Qualcomm's technology is in compliance with federal HIPAA privacy rules and brings "medical-grade connectivity solutions" that "enables personalized, connected care to healthcare consumers nationwide."
Empowering employees with cash rewards
An enrollee in the UnitedHealthcare Motion program can earn $1.25 a day for walking 10,000 total steps. There are also "frequency" and "intensity" readings that allow for rewards measured over 30 minute periods. An employee could earn up to $4 a day or a total of up to $1,460 per year. These rewards take the form of credits deposited in health reimbursement accounts linked to high deductible health plans, UnitedHealth said.
"UnitedHealthcare Motion brings together wearable technology, telemedicine, and wellness incentives to empower employees to take charge of their health, while enabling employers to more effectively manage healthcare costs,"UnitedHealthcare's chief medical officer Dr. Sam Ho said. "Employees can improve their health by walking each day and earn financial rewards at the same time, using secure technology that is simple, intuitive and convenient."
UnitedHealthcare Motion is offered in a dozen states, but UnitedHealth Group is seeking regulatory approval to expand in more states as part of a national rollout this year. Competing insurerAnthem is also expanding its partnerships with wearables makers including Fitbit and incorporating them into disease management programs.
The near-term winner in this trend are the wearable device companies and their stocks as insurers pay for more of these products and their related technology. But if the devices, in turn, improve patient health and lead to better outcomes and fewer hospitalizations and more expensive healthcare, insurers and their stocks, as well as the general population, will also be winners.
The article How Insurers and Wearables Will Change Healthcare originally appeared on Fool.com.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fools board of directors. Bruce Japsen has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Qualcomm. The Motley Fool recommends Anthem and UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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