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Hospitals Are Mining Patients' Credit Card Data to Predict Who Will Get Sick
- ch4s3 12y agoI heard some people at a local research hospital speculating about this months ago... seem pretty bleak.
- rosser 12y agoThe next step is "health insurance" (as we call it in the US, though it's in actuality no such thing) carriers mining your credit card and loyalty program data and hiking your rates if their model predicts you're going to need more or more expensive care. The problem is that unhealthy lifestyles (drinking, smoking, fast food, &c) are disproportionately found among the lower socioeconomic strata, creating yet another penalty for being poor.
- blahedo 12y agoHappily, Obamacare limits the extent to which they can do that.
- ISL 12y agoFor now. The mandated electronic medical records from the ARRA and ACA will make it easier for entities, government or private, to do so in the future. A single-payer system would have similar incentives (in the form of cost reduction) to do the same.
- Shivetya 12y agothere should be no limits on smokers. There is no possible health benefit with smoking and as such penalizing them might get them quit. Many self insured companies already charge extra, 600 a year where I am. However for the money most make that isn't diddly, at least they don't think so
- throwaway2048 12y agomoralizers like yourself are why people should be very very afraid of data collection like this.
- chenelson 12y agoWell, margin is a difficult concept to grep. Vanderbilt University economist Kip Viscusi claims a net cost savings of 32 cents per pack sold [1]. It seems we're all going to die, and Alzheimer's isn't part of the quick and easy way out of healthcare cost. And at the ripe age of 125 or so, 100% suffer cancer. 1. http://usatoday30.usatoday.com/news/health/2009-04-08-fda-tobacco-costs_N.htm http://usatoday30.usatoday.com/news/health/2009-04-08-fda-to...
- mikeash 12y agoSmoking could save money for society but it probably doesn't save money for individual insurers, who are much more worried about the shorter term. The private insurance you have when you're 30 isn't going to be paying for your nursing-home care when you're 90, but they are likely to end up paying for various smoking-related illnesses that kill you sooner.
- chenelson 12y agoWe don't really have Health Insurance companies. Insurance is about risk management, and we have mandated health coverage. But, to your point, this is why real insurance companies manage their portfolios, aggregate. If they're losing money, it's not the responsibility of society to save them.
- ridgeguy 12y ago"no possible health benefit with smoking"...as usual, it's more complicated. See, for example, http://aje.oxfordjournals.org/content/155/8/732.full http://aje.oxfordjournals.org/content/155/8/732.full for the negative correlation between smoking and Parkinson's disease, and http://ajcn.nutrition.org/content/87/4/801.full http://ajcn.nutrition.org/content/87/4/801.full for some insights into the negative correlation between smoking and obesity. Not to say that smoking is a good idea, it's not (actuarial data are clear on that), but your view of its consequences is inaccurate.
- CamperBob2 12y agoRight, the only question is who gets to pay that penalty. Why not the people responsible for incurring it?
- rosser 12y agoIn the case of poor diets, it's often enough a matter of what they can afford. So, yes. Let's impose a financial penalty on people who are eating poorly because they can't afford to eat well. That makes perfect sense. That said, I'm not opposed to smokers paying higher premiums — but that practice already exists, based on policyholder disclosure, or rescission in the event of fraud. (I say that as a former smoker, who did disclose my habit, and paid a substantially higher premium because of it.) We don't need carriers trolling through peoples' transaction history to dredge up every possible excuse for hiking premiums, because that's exactly what they'll do.
- eru 12y agoYou can eat well for cheap. But it requires discipline. And that's what lot of poor people lack. (It's a survivorship bias: discipline helps your chances of getting out of poverty.)
- mreiland 12y agoYou cannot consistently eat well for cheap. Yes, it's true that sometimes you can find healthy stuff for relatively cheap. It's also true that you cannot do it consistently, in order to "eat cheap" in a consistent manner, it means constantly hunting for those deals, which implies trading your time for money. This is something the poor do a lot of, sitting at a laundromat instead of just throwing clothes in a washer, for example. And I don't want to hear about eating some form of beans 5 days/week, eating healthy implies variety. It can occassionally be done as cheaply as eating unhealthily, but not consistently over time. Your food bill will go up.
- eru 12y agoNo need for deals. Just stick to the basics, and avoid sugar and other crap. > And I don't want to hear about eating some form of beans 5 days/week, eating healthy implies variety. Vegetables can be pretty cheap, if you stick to what's in season. Beans are a good start, add lentils, potatoes, carrots, etc. Offal makes for cheap protein (but is not to everyone's taste).
- Scoundreller 12y agoThe funny thing is that the insurance industry is obsoleting itself. If they perfectly assess risk, your annual premium will just be your annual cost plus all of the administrative costs of insurance, so just self-insure. We're getting closer and closer to that, further eliminating any value that anyone gets from insurance.
- chenelson 12y agoInsurance is a mode of risk management. If we all have mandated coverage, then all risk is assumed, and the term "insurance" is meaningless.
- omal 12y agoActually, mandated insurance is perfectly in-line with what insurance is for. For n people, you now own a 1/n share of n risks that are not perfectly correlated with each other. Since people are assumed to be risk-averse and due to Jensen's inequality, your expected utility from paying your 1/n share is higher than your expected utility from taking a chance and either 1) paying nothing if you don't experience the adverse event, or 2) incurring the full cost of the adverse event. I think what you're trying to say is that the aggregate risk remains the same under mandatory coverage, put that's going to be true no matter what and the effects of this risk can be optimally spread through insurance. As an example, say $180 billion dollars worth of damage is done to 1 million homes in the US through natural disasters every year. With 300 million people in the US, mandated insurance would have everyone pay $600 a year to cover these damages. No insurance would mean you paid nothing unless your house was affected, at which point you lost on average $180,000. Insurance exists to pool the risks of these life-destroying events. Insurance definitely isn't going away, in fact our capability to insure against a wide variety of events is in its infancy. The insurance market will only get more and more sophisticated. Hank Greenberg has some interesting thoughts on the direction of the industry.
- chenelson 12y agoPerfectly. Wow. You've confused a single-payer system with mandated-coverage for-profit insurance companies...that will somehow be forced by regulation to "optimize"...cost? Yeah. What's the CEO of UnitedHealthcare's nut, again? Let's talk outcomes and efficiency, and not pretend charging doctors $39 to file "insurance" paperwork is anywhere close to optimal. And, yes, aggregate risk for people will not change, as we, unlike our tools (e.g. a house), are only at equilibrium when we are dead.
- Houshalter 12y agoOn the other hand you could get cheaper insurance by paying in cash or being healthier. This is the point of insurance, to estimate your risk as accurately as possible and charge based on that.
- rosser 12y agoAgain, we don't have health "insurance". Actual insurance, as the term is used everywhere but in the American health care system wouldn't cover routine care like visits to your kid's pediatrician, but would cover major care such as surgeries — just like your car insurance doesn't cover oil changes, but does cover fender benders.
- judk 12y agoAuto and home insurers in fact do pay customers for risk-mitigation actions like driver training and alarm systems, just as health insurers pay for preventive medicine.
- rosser 12y agoThey don't pay you for those things, and nor do they pay for them. They reduce your premiums if you have them. That's perhaps a subtle distinction, but it's a critical one. If you're suggesting that an annual physical exam is the risk mitigation equivalent of a car alarm, then GEICO should have eaten the extra cost for purchasing a car with one installed instead of charging a lower premium because you have one.
- arrrg 12y agoHuh? My (mandatory and public) health insurance in Germany does pay for that. For some short time there was a €10 co-pay for routine checks (obviously not covering the actual cost of the visit) but even that was abolished some time ago. I mean, insurance doesn’t cover everything, obviously, but that mostly applies to nice to have things or aesthetic things that aren’t really necessary (e.g. root canal treatment for wisdom teeth is not covered – pulling wisdom teeth if the caries is causing problems that can’t be solved with fillings anymore is, glasses are not covered, etc.).
- hellodevnull 12y agoThe penalty is for being unhealthy, not poor. There are poor people that are healthy, just because a lot aren't, do you expect insurance companies to give them special treatment?
- TazeTSchnitzel 12y agoSo? It still disproportionately affects the poor.
- hellodevnull 12y agoSo? Should we give criminals an easier time because the majority are from poor backgrounds? There will always be poor people and there are always things you can do to make their lives better, complaining about insurance companies isn't one of them. This is coming from somebody who was raised in a very poor family so it's got nothing to do with not caring about poverty. It's just these sort of liberal ideas you could hear at an occupy protest show zero understanding of economics and are basically just bitching about companies.
- TazeTSchnitzel 12y agoAre they "bitching about companies"? Nobody ever said it was their fault.
- Someone1234 12y agoThis might be a little off topic but I often read articles like this, and elsewhere, speculate on the "future" where so 'n so is able to see exactly what you purchased on your cards for some nefarious reason. So here is my question: Do stores REALLY pass on an itemised list to the credit card processor? Because it was always my understanding that all they passed upstream was the amount and the name of the establishment. This article claims: "Imagine getting a call from your doctor if you [...] make a habit of buying candy bars at the checkout counter" I don't think that data exists outside of the specific convenience store where you purchased the candy. The CC company would know that you spend an extra $1 at that place, but how do you tie that into bad eating habits? Maybe they purchased an apple or a cup of coffee. I'd really love some insight on this topic, and I will happily admit that maybe my information is either out of date or just flat out wrong.
- rosser 12y agoThey aren't just mining your credit cards. TFA specifically also mentions store loyalty programs, which do track itemized purchases.
- PeterisP 12y agoNo, generally the credit card company receives a message with the following data - card info (duh), amount, merchant ID, merchant category. So they don't have to guess if 'McGuffin ltd' is a pharmacy or a restaurant, and they may know that you shop at mcdonalds often, or have never bought anything from a pharmacy, but no more than that. I don't recall if a single merchant may/must offer different codes depending on the type of goods sold (i.e., a gym selling a membership vs selling a soda). I believe not, but it might be an option. The only place that would get such itemised info is the multi-store loyalty cards; those do link a person to itemised purchases.
- christop 12y agoHow can they tell whether I've been buying cigarettes or carrots at the grocery store? My credit card statement just shows a store name, timestamp and amount. They'd presumably have to be colluding with the grocery chains to get the sort of information mentioned in the article.
- rosser 12y agoFrom TFA, emphasis added: "The company purchases the data from brokers who cull public records, store loyalty program transactions, and credit card purchases." Store loyalty programs do track SKU-level purchases. There was a case years ago where a patron tripped and fell at a store, and filed a personal injury suit. The store pulled up that person's loyalty program records, noted that they'd been purchasing a larger than average amount of alcoholic beverages, and insinuated at trial that the patron might have been drunk. Guess who won that case.
- eru 12y agoWho won that case?
- robert_tweed 12y agoThe article seems to be taking things further than is necessarily possible right now, but while it might be hard to know precisely what you buy at a supermarket, it's a pretty fair bet that if you made a purchase at McDonalds you were buying junk food; if you made a purchase at an off-licence you were probably buying alcohol. And so on. The data might not be perfectly accurate but it can leak a lot of probable information. If you ran a machine learning algorithm on the data, without knowing how much anything cost and just wanted to correlate certain purchase amounts with whether people tended to get sick or not, you would probably find correlations with certain amounts that happen to correspond to things like cigarette purchases. This is especially likely because people often tend to buy only cigarettes, or maybe a couple of other things, rather than only buying them along with a larger group of items that would tend to disguise the purchase. It should be pretty easy to spot the difference in average prices between someone buying a packet of cigarettes, vs a bar of chocolate, vs a weeks' worth of shopping. It might not be super accurate for each data point, but given enough data it's likely some fairly consistent patterns will emerge. In fact, one of the things about ML is that it's good at spotting all sorts of correlations. Those don't prove the existence of a causal link, but often that doesn't matter: the fact a correlation exists is enough. So simple things like buying patterns might be correlated with certain tendencies or risk factors, regardless of what the contents of the purchases actually are (of course this is purely hypothetical).
- buttsex 12y agoHow do they know what specific items were purchased? Is there any way for a consumer to see their own data on that? Also, seems like there would be a lot of false positives as I don't consume or use everything I buy with my card.
- esw 12y agoThey mentioned rewards cards, like the kind used at grocery and drug stores.
- foobarqux 12y agoCan insurance companies legally access credit card transactions? Like the fact that you shopped at a specialty medical store for a pre-existing condition?
- tinco 12y agoHow are hospitals incentivized to prevent disease? I thought it would be the insurance companies who would do this, but they wouldn't be allowed to as it would also let them prescreen customers. Perhaps it could be insurance companies who pay hospitals for being good with disease prevention? There's an interesting interaction there.
- maerF0x0 12y agoMoney isnt the only motivator. Many doctors genuinely care about health and their patients. Plus, prevention can be a premium add on.
- tapp 12y agoOne of the primary ways (though not the only one) is by being part of an "Accountable Care Organization." These allow health systems to share in the savings they create for Medicare patients.
- dredmorbius 12y agoCapitation of member lives is one mechanism that's been tried. That's the theory behind HMOs, though some (notably Kaiser) seem to be markedly more effective than others. The story behind how Kaiser healthcare was founded (providing health services for workers on the Hoover Dam) is pretty interesting.
- wfjackson 12y agoI see a lot of people asking about how they get the data. One way is through huge data brokers that buy and sell data from retailers, merchants etc. One big company that has a huge trove of customer purchase information is Acxiom. http://en.wikipedia.org/wiki/Acxiom http://en.wikipedia.org/wiki/Acxiom
- walterbell 12y agoAcxiom is partnered with Facebook/Twitter and owns LiveRamp. http://blogs.wsj.com/digits/2014/05/14/data-broker-acxiom-moves-to-tie-physical-world-to-online-data/ http://blogs.wsj.com/digits/2014/05/14/data-broker-acxiom-mo... "The data-gathering has stirred privacy concerns. The Wall Street Journal reported in 2010 that Rapleaf, the former parent company of LiveRamp, had amassed databases tying people’s real names to privately shared information in their Facebook profiles, as well as data in their voter-registration files, real-estate titles, shopping histories, and other records. The company was censured by Facebook for the practice, which involved pulling data from apps against the social network’s rules."
- bjelkeman-again 12y agoIt is interesting. In Sweden this would be illegal to do, unless you had consent from each individual at the time of data collection to do that type of data assembly and analysis.
- yuhong 12y agoI am beginning to think about how well non profit health insurance companies would work.
- wiredfool 12y agoLots of health insurance companies are technically non-profits. Doesn't change their behavior. They accumulate huge amounts of excess reserves, and pay their executives like they're a for profit company.
- yuhong 12y agoThat is not what I am thinking of, of course.
- akgerber 12y agoObama wondered the same thing: http://en.wikipedia.org/wiki/Health_insurance_cooperative http://en.wikipedia.org/wiki/Health_insurance_cooperative http://www.npr.org/blogs/health/2014/04/02/293327561/small-health-insurance-co-ops-seeing-early-success http://www.npr.org/blogs/health/2014/04/02/293327561/small-h...
- zobzu 12y agoprivacy what privacy
- kimonos 12y agoOne disadvantage of technology...
- n09n 12y agoThis seems promising. When it comes to healthcare, prevention is nearly always more efficient than treatment, and early detection of problems is very important. If this can be turned into more accurately determining who needs to be screened for lifestyle-related problems like arteriosclerosis, blood pressure, diabetes, etc, that would be amazing.
- saurabhnanda 12y agoIf they're accurate enough, can they be legally forced to inform the patient when there's a high probability that the patient will get sick in the future? You know, "prevention is better than cure" How long before someone sues a hospital for 'negligence' for knowing the future and not letting the patient know?
- jpttsn 12y agoI don't understand this. How does my credit card data tell hospitals what I buy? Personally, I can't get anything beyond a date (dubious accuracy) and the amount spent.
- uptown 12y agoIf you buy something at a liquor store, you're likely buying alcohol. If you buy something at McDonald's, you're likely buying fast food. Do you pay for a gym membership? Pretty much every store has an itemized list of everything you're buying - though only some of that is currently exposed to your credit card processor. Obviously, some purchases are more obvious than others - but it's safe to assume that if there's a profit to be made regarding selling more-specific information about each purchase, then businesses looking to increase their bottom-line will seek to opt-in to selling that information. What I expect to see is for it to star as an opt-in choice by consumers. Want a lower health-insurance rate? Opt-in to this program where we see where you're eating and if you're going to the gym. You're starting to see it in the auto-insurance industry where insurers will give you a safe-driver discount provided the device you attach to your car confirms you're a "safe-driver". But eventually I'd bet it will be a requirement for auto insurance. They're pushing to mandate auto "black-boxes" in every car. Right now, that data requires a court order to obtain in an accident, but how does that change when every car is connected? Does that data live with the vehicle, or is it sent to a remote location "for the safety of the data in case of a crash" or whatever spin they put on it? Here's the car-dongle I mentioned: http://www.progressive.com/auto/snapshot/ http://www.progressive.com/auto/snapshot/
- igl 12y agoDon't use credit cards. Problem Solved \o/