In January, the Federal Trade Commission (FTC) published a staff report titled “Internet of Things: Privacy and Security in a Connected World.” The staff wrote the report on the basis of a workshop held in November 2013 and public comments. Because it is based on limited information, the report misses some important factors that affect the development of the Internet of Things (IoT) and consumer privacy. One glaring omission is the failure to mention workplace wellness programs and their role in what is becoming known as “connected health.”
As I listened to the workshop panel called “Connected Health and Fitness” I was struck by a complete absence of discussion of workplace wellness programs. The report doesn’t mention wellness programs, either. To the extent that it mentions the employment context at all, it lumps employment-related decisions with the other uses covered by the Fair Credit Reporting Act (FCRA), like credit and insurance. Why does this matter? It matters because the market for fitness trackers, which do appear in the report, is not a pure consumer market. Workplace wellness programs use significant incentives to get participants to wear fitness trackers and, thus, increase the number of people who wear these devices and the amount of data collected through them.
Repeated surveys have shown that most consumers abandon their wearable devices. About a third do so within six months of receiving the device. Manufacturers of fitness trackers hope that the abandonment rate will fall if wearing a fitness tracker can be tied to lower cost of health insurance or another significant incentive. As a result, several manufacturers have dedicated sales forces for the corporate wellness market and at least one is creating a fitness tracker specifically for this market. Some market forecasters believe that the financial incentives provided by wellness programs are essential to the growth of the fitness tracker market.
The privacy approaches suggested in the FTC report do not work well in the employment context. There is an inherent power imbalance in the employment relationship. The employer determines health plan design, the amount employees pay for their health insurance, and whether this amount depends on participation in a wellness program. When signing up for health benefits, employees who do not want to participate in wellness programs can face a less desirable health plan, higher health insurance costs, or fear that they might jeopardize their career prospects if they are labeled as “not a team player.” This dynamic is quite different from a market in which products are offered to customers who freely choose whether to use them.
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Contact Steven G. Cosby, MHSA with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
