Health Insurers May Be Raising Rates with Help of Personal Information Collected by Data Brokers

by Vins
Published: Updated:

Private data brokers are selling the personal information of 150 million Americans that could be used to predict health care costs. Companies such as LexisNexis Risk Solutions, IBM Watson Health, and Optum have collected more than 78 billion records of personal data—including race, education level, online purchases, and more—to predict the health care expenses that individuals will cost their insurers. These data brokers then sell this information to health insurers, who in turn can use it to raise their insurance rates for those deemed high-risk.

Medical data is protected from being shared by the Health Insurance Portability and Accountability Act (HIPAA), but HIPAA does not protect other personal data. Companies like Optum process this personal data through algorithms to predict how much an individual will cost a health insurer. While health insurers claim to use this information to help patients get proper care, scientific researchers and actuaries note that there is potential to use this data for insurance plan pricing.

The article’s author, Marshall Allen, was curious about how much information these companies actually collected so he requested a report about himself. What he received was 182 pages of data covering the last 25 years of his life. Besides phone numbers “going back decades,” his file includes home addresses dating back to his childhood. Each location included a field to indicate whether the address was “high risk” or not. When Allen inquired about his risk score, the company told him that, if they had calculated it, they had done so for a client, his insurance company, and he could not have them.

In Europe, by contrast, data protection favoring individuals is a constitutional right, the article reported. Frank Pasquale, a professor at the University of Maryland Carey School of Law who specializes in issues related to machine learning and algorithms, told ProPublica that health scores should be treated like credit scores. Federal law gives people the right to know their credit scores and how they’re calculated. “The risk of improper use is extremely high. And data scores are not properly vetted and validated and available for scrutiny,” Pasquale said.

This controversial topic has gone under-reported in the corporate press. The Chicago Tribune and the Daily Beast covered the topic, based on Allen’s original report.

Source: Marshall Allen, “Health Insurers Are Vacuuming Up Details About You—And It Could Raise Your Rates,” ProPublica/NPR, July 17, 2018, (Published jointly with NPR,

Student Researcher: Danielle Blake (Sonoma State University)

Faculty Evaluator: Peter Phillips (Sonoma State University)