Blockchain health insurance: Addressing challenges in data management

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  Quantumrun Foresight
• November 21, 2023

Insight summary

Health and life insurance industries are increasingly eyeing blockchain technology as a transformative tool for secure data sharing, risk mitigation, and operational efficiency. Endorsed by bodies like IEEE for its potential in healthcare, blockchain can minimize forgery and significantly cut costs. Deloitte suggests insurers invest in strategic planning and seek specialized technology partners for implementation. Notably, blockchain can foster new customer-centric business models, streamline claims processes through smart contracts, and facilitate interoperability across platforms. However, to harness its full potential, insurers must also integrate advanced analytics, AI, and IoT, while being mindful of collaboration and development costs.

Blockchain health insurance context

Blockchain guarantees secure and reliable data sharing across various domains, including the economy, supply chain management, food industry, energy, education, the Internet of Things (IoT), and healthcare. In the healthcare industry, balancing patient care with privacy, accessibility, and comprehensiveness has posed a significant challenge. 

According to the Institute of Electrical and Electronics Engineers (IEEE), due to the direct impact of healthcare on people's lives, it is one of the first fields where blockchain has been adopted. By addressing not only data management concerns between different stakeholders but also minimizing forgery and empowering patients, blockchain can save millions of dollars in healthcare costs. However, insurers need to take the time to study how blockchain can best complement their services.

Consultancy firm Deloitte suggests that insurers engage in strategic planning, experimentation, and proof-of-concept development. This approach will better capitalize on blockchain's potential for creating next-generation products and services that foster more interactive relationships with policyholders. Given the potential workforce and expertise constraints within existing IT departments, insurers may need to identify and invest in technology partners who specialize in blockchain development to implement these concepts.

Disruptive impact

Deloitte's study on how blockchain might benefit health insurers revealed that this technology can improve the customer experience by providing plan recommendations and increasing operational efficiencies. New business models and processes are necessary to meet customers' growing demands for personalized services, stronger privacy protections, innovative products, enhanced value, and competitive pricing. Blockchain could enable the automatic collection of records related to agreements, transactions, and other valuable data sets. These records can then be linked together and processed through smart contracts.

Interoperability is another feature that makes blockchain attractive for health insurers. The technology's enhanced security and ability to establish trust between different entities make it ideal to use on different platforms. However, the health insurance industry also needs to take the initiative to collaborate with larger healthcare consortiums to ensure the development of standards for blockchain-based data repositories. 

Fraud detection is also a critical blockchain feature. Smart contracts can aid in verifying the validity of submissions made to life or health insurers, such as false claims or falsified applications, to prevent fraudulent information from being processed. In addition, provider directories can leverage decentralized consensus protocols offered by this technology to facilitate more efficient and streamlined updates to listings by providers and insurers. However, investing in blockchain can become very costly. To fully capitalize on the technology's potential, insurers also need to utilize advanced analytics, artificial intelligence (AI), and IoT while collaborating with diverse stakeholders.

Implications of blockchain health insurance

Wider implications of blockchain health insurance may include: 

• Streamlined processes for healthcare claims, payments, and record-keeping, significantly reducing administrative costs.
• Personal and medical data being stored securely and encrypted, preventing unauthorized access or tampering. 
• The immutable and transparent nature of blockchain eliminating errors in healthcare data, reducing the potential for misdiagnosis or incorrect treatment.
• Patients having more control over their personal and medical data, and can selectively grant access to specific providers. 
• Improvements to the provision of affordable and accessible healthcare services to underserved populations, including low-income individuals and those living in rural areas. 
• Interoperability between healthcare systems, providers, and payers, improving care coordination and reducing duplication.
• Fewer data-related inefficiencies and corruption in the healthcare system. 
• New job opportunities, including blockchain developers, healthcare data analysts, and healthcare professionals with expertise in blockchain technology.
• Reduced paper waste and energy consumption. However, data storage and processing may also increase emissions.

Questions to consider

• Would you prefer getting blockchain-based health insurance? Why or why not?
• Given its decentralized nature, how can governments ensure that blockchain health insurers are adequately regulated?