AI-Driven Incentives in Insurance Plans: Transforming Member Health Behavior through Personalized Preventive Care

Abstract

In the US, 60% of adults had a chronic condition in 2020, with an estimated 9 out of 10 over age 50, and 7 out of 10 premature deaths due to chronic conditions each year. Such alarming statistics indeed imply a significant burden on the healthcare system that not only incurs costs but also challenges lifestyle changes among those affected. It is no surprise that employers, who care about the health of their employees, have gradually joined forces with insurance carriers to implement incentives in health insurance plans, aiming to induce lifestyle changes and solve the associated health behavior problems. Those incentives ideally should cover comprehensive care but typically focus on preventive and wellness care, as well as chronic care. These incentives also exhibit the dilemma of unresponsiveness among participants, as they need to trigger interest, maintain engagement, and sustain lifestyle changes. In this research, we propose the use of artificial intelligence in insurance plans to address the identified dilemma.

As developed in the existing applied marketing research, mass customization programs have shown great potential to tackle the identified dilemma by providing products or services tailored to individual desires, ultimately optimizing customer satisfaction. The ability to learn and adapt to individual members under AI techniques, in combination with information technology for large-scale data collection and comprehensive method design, enables the development of AI in the mass customization of insurance plans. Emphasis on preventive care and wellness care under AI-driven incentives further magnifies opportunities to unlock the dilemma and emphasizes long-term impacts. As the individual incentive design integrates various preventive measures such as exercise or nutrition counseling and examines multidimensional individual characteristics, including basic profiles, medical history, insurance claims experiences and personal preferences, the AI-driven incentives spearhead the evolution of actuarial science and health economics where prevention is more powerful and financially beneficial than treatment.