A new form of discrimination for the post-ACA era

Some consulting firms pitching insurers are emphasizing their unique ability to identify customers who won't cost very much.

One such technology and consulting company, Carrot Health of Minneapolis, is getting “significant interest” because it gives insurers tools to analyze people's lifestyles, which in turn can inform how to spend marketing dollars, co-founder Steve Sigmond said.

Carrot Health sells software that analyzes social, demographic and behavioral data and then spits out a score to predict healthcare consumption. For example, the software can tell insurers whether someone lives alone, owns a pet and how often he or she travels.

Pet owners and frequent travelers tend to be healthier, Sigmond said.

This new niche service is raising concerns that insurers will use consumer behavior data to avoid getting stuck with too many sick patients—an updated form of the cherry-picking banned by the ACA, which forbids discrimination against people with prior medical conditions. But nothing stops plans from looking at data to determine where to spend their marketing dollars to find and enroll the healthiest and therefore most profitable members.

But even if the strategy gains a wide following among insurers, it still won't be a ticket to large margins, experts say. The ACA set minimum medical-loss ratios requiring insurers to rebate money to consumers if not enough is spent on medical care.