Date of Award

2021

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Khemraj, Tarron

Area of Concentration

Economics

Abstract

This paper examines the problem of adverse selection induced by asymmetry of information between buyers and sellers of health insurance and the negative effects imposed upon both firms and consumers. After reviewing some traditional methods used to address this problem, this thesis discusses the significant potential that certain Remote Patient Monitoring (RPM) technologies may provide to address these issues and close the information gap. Specifically, it is shown that smartwatches capable of monitoring a wide array of health indicators including heart rate, body fat, respiratory activity, skin health, medication in sweat secretion, and other important vitals appear to be highly feasible in reliability of data collection, noninvasiveness, and consumer willingness to frequently wear and interact with daily. This analysis provides a framework for future data collection programs for health insurance providers to employ, utilizing RPM devices to regularly monitor consumers’ vitality levels to determine the risk involved with insuring them to narrow the disparity of information between provider and buyer, curbing the harm imposed by adverse selection. Several ethical concerns and limitations are addressed to ensure confidence in the security and privacy of the system as well as encourage frequent engagement. Finally, it is found that programs offering discounts for achieving healthy metrics create a virtuous cycle which improves consumer health and lowers overall risk in a loop of positive reinforcement.

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