The Future of Healthcare Financing
How banks and technology can disrupt global healthcare
1 — Lifestyle…
There is a well-known fact that the unhealthy lifestyle is the main cause of diseases at least in 60–70 percent of cases, according to the WHO. The lifestyle consequences are not transparent during a very long term. Hence, people have no immediate difference between being healthy or not. Through it all, people got themselves into a discombobulated rope. Productivity loss (measured in billions of dollars) associated with several health conditions and risks has been studied. Cancer, diabetes, and heart disease are responsible for 1.1 trillion dollars in lost productivity in the United States. More than that, cancer is a preventable disease that requires major lifestyle changes. Only 5–10% of all cancer cases can be attributed to genetic defects, whereas the remaining 90–95% have their roots in the environment and lifestyle. There is no healthcare in many countries, there is the treatment of diseases instead.
The lifestyle factors include cigarette smoking, diet (fried foods, red meat), alcohol, sun exposure, environmental pollutants, infections, stress, obesity, and physical inactivity. By 2020, the world population is expected to have increased to 7.5 billion; of this number, approximately 15 million new cancer cases will be diagnosed, and 12 million cancer patients will die. More than 2.1 billion people — nearly 30 percent of the global population — are overweight. In fact, employer medical costs have risen 51 percent, and the growth shows no sign of slowing down. Yet studies show that for every $1 invested in corporate wellness, employers receive $3.27 back. Lifestyle not only has consequences for health, it also places a substantial cost burden on health services, through the treatment of long-term conditions. What if everybody taking an oath to live a healthy life would be financed preventively?
2 — Polity…
As it has been written on Bloomberg, “for decades, public and private health-care spending have grown significantly faster than the economy as a whole”. In the United States, national health spending is projected to grow at an average rate of 5.6 percent per year for 2016–25. Health spending is projected to grow 1.2 percentage points faster than GDP per year over the 2016–25 period; as a result, the health share of GDP is expected to rise from 17.8 percent in 2015 to 19.9 percent by 2025. With that, the U.S. federal budget deficit for fiscal year 2018 is $440 billion. As a main reason, mandatory spending has increased and exceeded $2 trillion a year since FY 2011. It intensifies pressure to finance. Global debt soared to over $230 trillion. One of the life truths is that to create a debt is much easier and faster than to create a property object. One thing is pretty clear — the system is broken.
As Chris Viehbacher said: “In the United States, the government can spend 100,000 dollars to prevent your death, but even one dollar will not be spent to protect you from becoming ill.” But the reality is that less than 5% of adults participate in 30 minutes of physical activity each day, and only one in three adults receive the recommended amount of physical activity each week. It has been widely studied that there appears to be a graded linear relation between the volume of physical activity and health status, such that the most physically active people are at the lowest risk. Unhealthy lifestyle can be measured, because overweight is defined as BMI ≥ 25 kg/m². A population salt intake of less than 5 grams per person per day is recommended by WHO for the prevention of cardiovascular disease. Adequate consumption of fruit and vegetables reduces the risk for cardiovascular diseases and cancers.
3 — Insurance…
As researchers think, preventive wellness programs are the biggest hope for fixing a national health crisis, because it provides a unique opportunity to reframe the mindset around health itself — from one of sickness to wellness. Original Medicare doesn’t cover gym memberships or fitness programs. In Australia, there are health insurances with additional extras (up to $250) like a gym membership, but 46% of organisations do not provide any form of private health insurance cover or preferred purchasing arrangements for employees. While HBF only provides discounts, so that it is possible to receive a 10% discount on gym memberships at Snap Fitness and up to a 15% discount at Jetts as an HBF member — without joining fee. Many companies offer discounts or even full reimbursements for gym memberships. Aetna offers it for most Medicare Advantage members. They are not the only ones.
Innovative insurance companies are battling for the industry transparency. With Colleсtive Health, it is free to select medical partners, get insightful recommendations, and monitor compensations. When health is put in real-life terms, people discover the value that health can hold in their lives. For example, the average annual expenditure for those not having an eye exam was 62% higher than those who did have an eye exam. The reason why bad habits are so hard to change is because they don’t actually involve a conscious process. Even when people really want to break a habit, will alone isn’t enough. Habits are automatic behaviors triggered by situational signals, followed by some form of premium. Some insurance companies in the UK and Australia provide cash-back offers that gives money back for a range of everyday healthcare bills. So, targeted expenditures are underestimated.
4 — BANK!..
As it has been hinted above, targeted healthcare is a new black. Gym membership discounts or reimbursements and corporate wellness programs as a whole have a big impact on a company’s insurance spending. Oscar’s Health App automatically syncs steps from Apple Health or Google Health and reward 1 dollar toward an Amazon® Gift Card for every day hitting a step goal, up to 240 dollars per year. Bitwalking and Sweatcoin issue digital currencies backed by physical activity. Actually, that is the revolutionary approach to the funding of healthcare. Is it fragile now? A huge trap of cryptoassets is its illiquidity. Notwithstanding that, this technology provides much more effective registration of facts. Thereby it has become possible to ensure adressable and decentralized healthcare financing — preventively, not post factum. It makes the industry rapid, efficient, transparent, and focused.
It is useful for insurance companies, as it reduces long-term insurance risks. Well, banks are historically responsible for infrastructure financing. Wisely, healthcare banks should be founded all over the world. These institutions are to become brokers between governments and insurance companies, on the one side, and insured subjects, on the other side. Govs might directly finance gym memberships or provide its reimbursements, buy out digital currencies backed by physical activity, or whatever it would be. Unfortunately, that is obvious for policy-makers how to perform quantitative easings wherever it is, but there are no analogies in real spheres where direct granting is crucial. In the digital nations like Estonia, multifunctional digital coins might be issued. Being a community medium, it can be the unique tool to finance healthcare. Ariv.al is launching the first crypto-friendly neobank. The evolution is coming.
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