What the health industry can learn from behavioral economics

Nudging diabetes patients towards healthy behavior is a complex challenge and a key interest for insurers

Christian Gressner & Oktay Atay

Fruit or fudge, white rice or brown? And if yes, how much? What sounds like a simple choice is a complex decision influenced by nutritional habits formed in childhood, environmental factors and associations such as the music playing over dinner and the size of the plate.

Add to this our body’s tendency to store surplus calories in fat in case the next meal doesn’t materialize, and urbanized lifestyles with little physical exercise, and the foundations for increasing obesity figures are laid. Obesity often leads to diabetes, which is growing at an alarming rate, even when numbers are corrected for aging (as diabetes is more prevalent among older citizens.)

Roughly 415 million adults worldwide suffer from diabetes, especially type 2, according to the International Diabetes Federation (IDF). The IDF expects this to rise to 642 million by. Diabetes has caused roughly five million deaths and an estimated cost of $673-$1,197 billion in global healthcare spending in, the Federation reports. The majority of patients live in low- and middle-income countries.

The issue is a particular challenge to Asian nations where more than 60% of the people with diabetes live; almost half in China and India combined. Type 2 diabetes is estimated to rise by more than 150% between and in South Asia, Paul Zimmet (Monash University) and colleagues write in Diabetes Care. This poses “huge social and economic problems to most nations in [the Western Pacific Region] and could impede national and, indeed, global development,” they report.

GROWING IN THE WEST

Diabetes is rapidly becoming a key challenge in Turkey as well. By, the nation at the nexus between Asia and Europe is set to arrive among the top ten diabetes countries, according to the IDF.

But the good news is that as much as diabetes is caused by behavior, it can also be avoided by it – despite the fact that genes play their role, too. Fruit, vegetables, nut and whole grain products have been shown to reduce the chances of contracting diabetes by 30-50%. Sugary drinks, white rice and white bread, on the other hand, play into the hands of what Germans call Zuckerkrankheit (sugar disease).

Healthier eating habits could significantly lower societies’ healthcare costs, yet changing behavior is easier said than done, as behavioral economists have found (see PROJECT M #18). This is no reason to sit idle, however, particularly for insurers.

With healthcare costs on the rise and diabetes patients’ claims exceeding premiums by as much as factor four, the insurance industry risks pricing itself out of the market if it passes health’s financial burden on to clients. Smart solutions combining behavioral incentives and disease prevention with a more rigorous cost control are needed.

Allianz Turkey is therefore launching a pilot project early next year. In cooperation with attending physicians, it combines apps to monitor blood sugar levels and other relevant parameters with personal coaching to help 500 diabetes patients improve their disease management and lifestyles. Once the pilot has run successfully in Turkey, it can be offered in countries around the globe – with only minor adjustments.

SENSIBLE COST CONTAINMENT

Ideally, approaches like these align clients’ desire to remain healthy with insurers’ need to be profitable by reducing complications as well as costs by roughly one fifth. Ultimately, insurers need to transform themselves from claims managers to trusted partners in maintaining client’s health at an affordable price as technological innovation such as genetics will continue to increase the cost of healthcare. As insurers, we are well advised to understand and price such innovations sensibly. If this is not done, they can become a cost risk to both the insurer and the insured.

Sensible cost containment does not end there. Allianz Turkey is also seeking to steer customers to high-quality yet low-cost hospitals for follow-up exams and laboratory testing by covering the full amount instead of just 80% at higher cost institutions. The choice, however, remains with the patient.

Frankly, these are all straightforward commonsensical steps. It is nothing more and nothing less than putting clients and patients at the center of health insurance.

What the health industry can learn from behavioral economics

Nudging diabetes patients towards healthy behavior is a complex challenge and a key interest for insurers

Christian Gressner & Oktay Atay

What the health industry can learn from behavioral economics

Nudging diabetes patients towards healthy behavior is a complex challenge and a key interest for insurers

Christian Gressner & Oktay Atay

What price good health?

A mixed blessing

Diversifying diets and portfolios

Weighing up the global cost