I think this story needs to be viewed from a much broader perspective to understand its deeper meaning. Underlying this story is one set of parties who are in the business of providing a service to Penn State employees. Their ability to provide this service and remain financially solvent is increasingly contingent on accurate and detailed information. However there is resistance from the counter party to providing the information. When we enter into contractual agreements with various private entities, we voluntarily share all sorts of information. In return, we get specific services and/or goods which we value more than what we give up. Vendors, who may be taking on some degree of risk in servicing our needs and wants, are able to discount the cost based upon the information we reveal. Transparency facilitates the trade which ideally leaves each party better off than when they started.
The real time monitoring is only just beginning. I wear a small step counting device which gives me feedback on how active I am. This and related devices will be able to collect all sorts of data in real time. The possible benefits for medical practice are staggering. However, the potential for privacy intrusions are also significant. If my insurer will give me a serious discount for behaviors their actuaries tell them will save them money, that can and should be an option which two private parties can come to agreements over. If they are able to measure particular behaviors in real time that creates more confidence that they can offer me lower rates. Would I be willing to wear my activity device and automatically relay information to Aetna or Blue Cross for financial reward? Whether any financial delta to me is framed as a bonus or a penalty is totally arbitrary. It depends upon how much money and how onerous the activities required to gain might be. Between private parties, the basic principles underlying freedom of contract allow anyone of us to simply decide that we do or do not want to participate. No one can hold a gun to our heads.