To the extent that “insurance” is mandated by government on a state by state basis, I think its beyond the hope of help from Web 2.0 technology (just like political game itself).

To the extent that social intelligence may be able to *reduce risk*, I think the Web 2.0 technology may assist in the creation and distribution of “risk avoidance” knowledge. Most technology companies “self insure” (I believe) their employees for long and short term disabilities. They know that the profile of their work force allows them to mostly “avoid” the disability sucker bet.

On a personal level, if I had the knowledge and possession of a fire proof building, I would not need fire insurance. If I found a community that supported a walking life triangle (distance between work, home, and shopping center), I would not need car insurance. If community / alternative / genetic medicine supported average age up to 80, I may give up health insurance. If I knew how to avoid problem X, I would not insure against it.

Apps would help manage the process by identifying the “markets” and helping manage them at very low incremental cost. Could even provide anonymity, so buyer and seller don’t know each other. Could reduce the cost of insurance by helping cut down the need to charge more to the older or more risky because the credits would be used only on an as-needed basis.

I’m late in the discussion, but I wrote a “Seth: think bigger” post about this problem.

It’s related to “people ranking” (as in google’s page ranking), whereas people’s insurance fee will be related to some sort of ranking in their communities. This ranking can then be matched against the (top-down) ranking you get from your insurance agency, offering you a more personalized monthly fee.
See also: http://www.ichoosr.com/blog/archive/peopleranking-what-do-you-think

Do with it what you like.

Cheers

Bart

The first poster, Seth, has a great idea, but if anyone did it they’d wind up in court on about 30 counts.

The ongoing regulatory burden is enormous, too. And then there are the mandatory coverage issues (which really are part of the regulatory burden). For example, you can’t buy health care coverage in NY that does not provide chiropractic or psychiatric coverage.

You’d have to solve all first to make any stab at insurance 2.0 work.

Any investor in the p2p insurance market must also take all their own insurance through that market and no investor can join who is not also willing to use the market to insure their own risks.

It’s then in the interests of everyone involved for the claim validation process to be accurate and scrupulous. If your house burns down, you want your claim upheld; but if another member falsely claims their house has burned down you want their claim defeated.

In theory the response to that will be for all members to claim on day one that their houses have burned down. Get past day one and you’re in a stable situation where everyone is properly incentivised to reward honest behaviour.

Thanks for the link. I took a look at Health Beat and found this (excerpted from http://www.healthbeatblog.org/2008/04/health-care-ref.html):

“The only way to avoid such inequality is to insist that private insurers offer everyone in a given community the same insurance at the same price. Young and old, sick and healthy, everyone pays the same price for the same coverage, and no one can be denied insurance because of pre-existing conditions.”

If such a system is mandatory, it can work–though it is, as I said in my earlier comment, a redistribution of wealth. We take this approach for education (though some people, usually those with more wealth, opt out and choose private schools); we don’t take this approach for housing (though the tax code favors regressively homeowners over renters).

Perhaps personal choice and individual freedom, which comprise the main objections to most national health care initiatives, are overrated. This is a libertarianism vs. socialism debate, and both sides have strong arguments.

In any case, it is certainly possible to take a one-size-fits-all approach. But it certainly doesn’t sound very “Web 2.0″–which is where I thought this discussion started.

1) The customers are the *owners*. We hold the stock. We get the dividends. We vote for the board of directors. Profits flow back to us. This is an important difference.

2) These are situations where the customer chooses the vendor. Healthcare is different. With a few exceptions, the healthcare insurance buyer is a corporate or government bureaucrat. It is very rare that the patient has any choice in the insurance vendor or insurance coverage. The mutual insurance and banking have been in areas where the customer is the person insured.

Both of these make a huge difference in the motivations of the insurance staff, attitudes of both staff and customers, and the correspondence between customer expectations and insurance coverage.

no place to hide, accountability everywhere, prices will drop, profits/savings more evenly dispersed

best thing that can happen

The principle author, Maggie Mahar, is an authority on health finance, having worked as a reporter in the field for several decades and written two books on the subject. She also replies to comments, so if Daniel Tunkelang would like to repost his questions there, I’m sure he will get an intelligent reply.

Given all that, it seems obvious that, in a market economy, if insurance is worth less to you than to me, then you won’t willingly pay as much for it as I will. If the price is fixed at X, then the people for whom insurance is worth less than X (in general, a lower-risk pool) won’t pay for it. If we force everyone to pay X, then we are redistributing wealth–quite possibly in a regressive way.

What I am saying is economics 101, and shouldn’t be at all controversial. Nonetheless, that common sense seems absent from most of the public debate about health insurance. Interestingly, other insurance industries (e.g., term life insurance) seem to have figured this out. What makes health insurance different? Do the moral dimensions of health and quality of life preclude rational analysis?

One of the phenomena I associate with Web 2.0 is that everything becomes a market (money, attention, etc.). It seems to me that Insurance 2.0 should be more tuned towards market reality.

Presumably greed, fraud and bureaucratic inefficiency aren’t restricted to the US. Even Canada (which is much more like the US than states in Europe) manages to run a national health system without the problems you fear. It is not only cheaper than the US system, but performs better.

I’m not sure what you mean by “Marxist”, but we already have a bit of “from each according to his ability” - Medicare payments are not capped and there is talk of removing the cap on Social Security. The same thing could be said of our progressive income tax system. The EITC (earned income tax credit) is an example of “to each according to his need” as are the parts of Social Security not related to retirement (disability and survivor’s benefits).

I’m afraid that the common condemnation of government smacks more of ideology than of actual data. Medicare is much more efficient than private insurance and the VA (which is allowed to negotiate prices) is not only more efficient, but cheaper as well. (I’m excluding the recent deficiencies caused by the Iraq war - that’s deliberate mismanagement by Bush.)

On your next jaunt or international panel why not talk to a few people from Scandinavia and see what they have to say about their extensive social services.

I spent my career working for non-profits and the people in these organizations worked just as hard and were just as motivated as those who were presumably motivated by profit. I’m sure you see examples of this at CUNY - passionate faculty who will gain nothing personally if their student’s do well in life.

Government man not be good an entrepreneurship, but it can provide standard services better then firms that are looking to cut corners. If we are seeing a rash of mismanagement and corruption at the federal level these days, that is because of a failure in our democratic system. The elected officials are seldom called to account by voters and act accordingly. When 94% of incumbents get reelected do they really need to listen to the concerns of voters?

The cure for imperfect democracy is more democracy. In the case of the US a good first step would be to get big money out of elections. The media is complicit in this since they are making a bundle from political ads and attracting viewers as they play up the horse race.

Historically, when people are free to assemble & associate, they self-organize insurance, cooperatively. Later it became the centralized, professionalized industry we know today. I predict there’ll be some kind of massive craigslistification of insurance by April 27, 2018. It’s about de-institutionalization — not from the government borg (social security), not from the corporate borg (AIG). The New Social [graph] Security. Decentralized, self-organized. Not just DIY, but DIO (Do It Ourselves). That the big theme for everything now. (posted here)

Once the profit motive is removed then there is no reason for the insurance company to game the system, all they need to do is balance the income against the payments by setting rate schedules for both appropriately.

In other parts of the world social insurance is even more widespread, it just isn’t regarded as insurance. For example, in those countries that offer free higher education funded by taxes the “winners” are those who go to college, while the “losers” are those who don’t. To balance this are other programs where the reverse might be true. For example the less highly educated might tend to be unemployed more often and thus collect more unemployment insurance.

If done properly, on average, everyone gets out an amount of service proportional to what they put in, but in those cases where they suffer extreme harm they collect more. The cost to each individual to cover these instances is small.

In this country the rich see paying into a universal pool for social services as an infringement of their “right” to become as wealthy as possible. They fight this by opposing taxation in general and on them specifically (such as with the estate tax).

Why selfishness is now seen as a virtue in the US is something I’ll leave to the social scientists and philosophers to explain.

In an earlier period we had mutual insurance companies and mutual savings banks. The idea was clear, there was not to be a profit. Until recently most Blue Cross/Blue Shield health plans were non-profit. In a deal typical of the tenor of the times they were converted to for profit by paying a small bribe to the government (in the case of NY about $1 billion). The result is as was to be expected. When non-profit, Blue Cross paid out about 94% of premiums to subscribers. This has now dropped to about 72%. The difference it the profit and high salaries of the bosses. For comparison Medicare pays out about 97% of premiums. The head of Medicare is a civil servant. The head of United Health Group made $1.3 billion.

Who has gained from this? Certainly not the public. There are just some areas where the profit motive is not the best way to provide services.

Focus should therefore be on markets, and not industries, and web 2.0 as economics that disrupt markets and make them cooler and more efficient. This is where the more exciting implications lie.

MySpace, through networks, radically changed music as a market (and the dynamics within), less so as industry, and in fact in ways that ultimately make traditional industry players “less relevant”, gradually obsolete and lame i.e. a disruptive change, at a market and economics level, then forces a shift at an industry level.

Google changed the market rules of advertising.

Etc…

Mutual Insurance has been around for a while. Web 2.0 can bring better communication among its members, and make it more efficient and cost effective for its policy holders.

Here is more about mutual insurance from Wikipedia:

http://en.wikipedia.org/wiki/Mutual_insurance

Regards,

Subhankar Ray