Medicare and Medicaid

Apple Watches for Medicare Holders: Will It Boost Sales?


Oct. 8 2019, Published 7:10 p.m. ET

Senior citizens with Medicare plans may soon be sporting Apple Watches. Devoted Health, has confirmed that it plans to offer Apple Watches to senior citizens enrolled under its private Medicare plans.

The startup insurer announced that it would pay $150 per year in “wellness bucks” for fitness programs and wearable devices like Apple Watch. Apple’s (AAPL) smartwatch would empower senior citizens to monitor their health without expensive visits to their doctors.

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In January, CNBC reported that Apple is already in talks with multiple insurers to offer subsidized Apple Watches to senior citizens. Apple Watch 4, which has relevant health features for senior citizens, is available at a starting price of $399. This is a premium device that many of the program’s members may not be able to otherwise afford. So, insurers are keen on including this device as a part of their Medicare plans.

Early this year, Apple joined forces with Aetna to offer an Apple Watch app to encourage healthy habits in its members. As a part of this benefit, members could also earn an Apple Watch. On October 3, John Hancock announced that its life insurance customers could earn an Apple Watch 5 through its Vitality Program.

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How will Apple benefit?

An alliance with Devoted Health could give a boost to Apple Watch sales. Notably, the senior population in the US is keen on adopting cutting-edge technology for health monitoring. So, they may opt for a subsidized smartwatch to achieve this goal.

These change made by the Center for Medicare and Medicaid Services (or CMS) to the Medicare Advantage also benefits Apple. According to the updated guidelines, the Medicare Advantage program could have more flexibility in offering benefits. The CMS also emphasized the Medicare Advantage plans for seniors.

The Apple Watch Series 4 and 5 devices feature multiple health-tracking that can benefit senior citizens. For instance, the fall-detection element allows the smartwatch to place automatic calls to emergency contacts.

The Apple Watch 5 has an electrical heart rate sensor, which enables it to take an EKG for monitoring heart health. While Apple Watch cannot diagnose a disease, the company markets the device an “intelligent health guardian.”

The size of the senior healthcare market

Persistence Market Research stated that the eldercare services market could exceed $1.9 billion by 2026. Geriatric care is a less-explored market with significant potential. According to US Census data, 19% of the US population would be 65 years or older by 2030.

As technology transforms the healthcare industry, insurers are realizing the importance of the issue and offering senior-focused plans. Features like Apple Watch enable them to get a leg up on their rivals and boost enrollments. Moreover, the inclusion of healthcare technology in these plans helps member retention.

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Why is Apple targeting the healthcare segment?

As we mentioned, the opportunity in the health-tech market is massive enough to attract the major players in this segment. Apple is eyeing the healthcare technology space and wants to increase its presence in the geriatric care segment. Augustin Ruta, a health insurance consultant at A2 Strategy Group, said, “It’s the segment of health insurance with the highest dollar revenue and margin per member.”

As the smartphone, services, and wearable market becomes increasingly competitive, Apple is planning to add product differentiation through healthcare. Apple CEO Tim Cook spoke about the company’s strategized moves to enter the healthcare space. At the Time 100 summit in April, Cook said, “I do think there will be a day we look back and say Apple’s greatest contribution to mankind has been in healthcare. I think that will happen.”

Jason Low, a senior analyst at Canalys, noted that with its cellular-connected devices and increased focus on healthcare, Apple Watch is a clear winner. Speculation is rife that by 2020, the Apple Watch could also have a sleep-tracking app.

Apple forays into senior health tech at the right time 

In my view, Apple has an early mover advantage in the senior healthcare segment. Morgan Stanley analysts stated that Apple’s healthcare market opportunity could range from $15 billion to $313 billion in revenue by 2027. With a vast senior population enrolled in Medicare plans, a subsidized Apple Watch already has many participants ready to try it.

We believe that Apple should continue investing in healthcare technology to develop more features focused on health monitoring for seniors. Notably, the company has more than $220 billion in cash, and I feel it is in a comfortable spot to do so. In my view, Apple’s interest in acquiring a healthcare company to set a firm footing in this space also cannot be ruled out. Meanwhile, it will be interesting to see whether collaboration with insurers boosts Apple Watch sales.


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