Big Data = Big Trouble for Universal Healthcare? The Effects of Individualized Health Insurance on Solidarity

Abstract

The collection of Big Data and surging artificial intelligence (AI) technologies to analyze these data increasingly enable health insurers to calculate the individual health risks of their customers. By offering individualized rates, data-driven health insurance (HI) challenges fundamental norms of solidarity in universal healthcare systems. This paper investigates to what extent personal financial benefits of individualized HI, the associated privacy costs of mandatory data disclosure, and attitudinal healthcare solidarity affect people’s intention to switch to an individualized HI rate. Three pre-registered experiments with German respondents (Study 1: n = 162, Study 2: n = 439, Study 3: n = 1,621) suggest that financial incentives are highly effective in persuading citizens to switch to an individualized HI rate. The personal costs and people’s attitudinal healthcare solidarity do not moderate this positive relationship. As technological and demographic developments pressure current universal healthcare systems, the results raise important questions concerning the future of HI in increasingly digitalized societies and provide novel insights for healthcare practitioners, policy-makers, and researchers.

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“…There are empirical studies on related issues that may hint at initial empirical evidence supporting our considerations on adverse selection. Lünich and Starke ( 2021 ), e.g., investigated (in a not yet peer-reviewed study) to what extent personal financial benefits influenced persons' attitudes toward dual healthcare systems and their choice between public and private healthcare systems. They conclude that financial benefits, or the prospect of them, may have considerable influence on individual attitudes and decisions, as individuals often express their intent to switch to private health insurance if they expect to gain a financial benefit from it.…”

“…People weigh financial cost and benefits, among other factors (Richter et al, 2019 ), in order to identify the optimal choice when they are seeking insurance since it is in their rational self-interest to pick the contract which provides them with the largest overall benefit (Corea, 2019 ). Since, as noted above, the benefits in statutory and private health insurance are roughly the same—both offer basic health coverage, private health insurance offers some additional benefits (§ 11 SGB V , § 192 VVG )—it is mainly the cost that is decisive for the choice between the two types of insurance (Lünich and Starke, 2021 ).…”