Alphabet, formerly known as Google, has decided to enter the health insurance business according to a CNBC report. The entry of big data companies into health insurance could have significant impact on costs. The Alphabet health subsidiary is called Verily. Why might big data companies affect costs of care?

They have tremendous capabilities to know their user base’s behavioral tendencies. That could lead to better analysis on how to improve communicating targeted health information. This capability is both on a group level and increasingly on an individual basis. Verily could have an enormous opportunity to effect change in terms of health behavior. Knowing us as they do, one can envision an automated outreach to help prevent and treat illness before it escalates into expensive hospital care.

Verily will likely try to work with existing insurers, both public and private, to use their data smarts to lower payer costs. This could be through better identification of populations to message needed health information or to provide individual outreach to individuals identified as high risk or non-compliant on treatment.

If it sounds like big brother watching over you, it is. We may eventually see Verily or another data giant like Amazon become your health advisor and remind you to take a diagnostic test, track your vital signs, analyze your DNA, find the best doctor, make your appointments, store your medical data, and potentially use algorithms to diagnose and offer treatment plans. One can envision an avatar of a doctor replacing the real doctor one day.

Verily is likely trying to make insurance cheaper and more widely available. Clearly, they have a huge financial incentive to enter the market where premiums have become too high for many Americans. I love to hear when innovative private companies are entering the health care sector. I bet they will do a better job at innovation than HHS or some other government department. Whether they merely support the existing insurance industry with consulting or expect to replace it entirely remains unclear.

Drug companies should expect these data innovators to be adept at negotiating prices based on patient outcomes. Verily and others will eventually be able to advise providers, payers, and patients which branded drugs to use. They may also be the ones to sell drugs to patients. No one expected Amazon to dominate the retail world 10 years ago. I would not bet against Verily, Amazon, or a new tech company to reinvent the whole health care delivery system. The world of 2028 will be significantly different in how we interact with payers and providers. Of course, if we get single payer government run healthcare then all bets are off as to innovation. Let’s hope the innovative tech giants get their chance first.