Sudden illnesses or accidents can leave people thousands of dollars in debt, but researchers at BYU have found a way to identify those at risk for high medical costs before tragedy hits, enabling insurance companies to help people avoid massive costs.
“I think it's cool to see how using data translates to real business decisions,” said Zoe Gibbs, the student researcher involved with the study. “This is just one way that I feel like I can make a difference with the tools that I have in order to help people live healthier, happier lives.”
The findings of BYU's actuarial science director Brian Hartman and Gibbs are a culmination of two separate studies. They first compared different methods for predicting people’s high-cost risk scores. They then determined which high-cost scores meant a person was at risk for high costs.
Identifying those people could greatly reduce costs for insurance companies and the individuals themselves, said Gibbs. The number of individuals who incur high costs make up just 17% of the population, but they pay almost 75% of healthcare costs according to Gibbs and Hartman's study.
“When we’re talking high-cost members, we’re saying they had over $100,000 in claims in a year,' Gibbs said.
Hartman said there are many different kinds of indicators in determining whether someone will be high-cost or not. The kind of disease, a person's medical history, how many diagnoses they've had, age and gender can all contribute he said.
“Everybody has some chance of being high cost,' he said.
Insurance companies can play a role in helping people avoid preventable illness or injury through wellness programs said Gibbs. Wellness programs promote healthy habits such as walking or going to the gym.
Wellness programs are effective in lowering medical costs for those with high-risk status according to a study published in the Harvard Business Review. The study reported that among that group studied, health care claims are $1,500 less per year for those who participate in a wellness program than those who don’t.
“If we can identify these people before their high costs and enroll them in these programs, it's a win-win,' Gibbs said. 'The insurance company saves money, you are healthier and your premiums are lower because you're not incurring these huge costs.”
BYU English major Adalyn Cheney was able to opt into a wellness program through her health insurance. She explained how the program gave her money for a gym membership each month. “It’s a great way to save money and it encourages exercise,” she said.
Gibbs and Hartman have presented their findings at two conferences so far and anticipate their research papers being published in the North American Actuarial Journal this year.