It is interesting that health insurance works because of mutual ignorance. If the insurer had an accurate idea of when I was going to fall ill, he would refuse to insure me at that point. If I knew when I was going to fall ill, I would only apply for insurance cover at that point. So information symmetry will simply cause the insurance industry to collapse.
I was fundering (short for futuristic wondering) if we can apply a wisdom of crowds model to health insurance in the future. The fundamental assumption is that the collective resources of a large pool of healthy people will more than adequately cover the unhealthy minority.
- The “Insurance company” is simply a large social network of people (Orkut?) with one common interest – insurance.
- Let us assume that there is no information asymmetry. The health of every individual who is insured is monitored by implanted devices which trasmit health metrics to a server. The underlying assumption here is that these devices cannot be gamed. (A fairly unsafe assumption to make in the “Oh Nine Oh Eff” era)
- Intelligent algorithms send out customized alerts based on the health signals they receive. For e.g (“Your BP is rising. Stop eating salt”). The algorithms also learn to improve their medical knowledge over a period of time. Users can also teach the algorithm by posting symptoms, home remedies etc.
- The system will also facilitate easy exchange/swapping of left-over medicines. For e.g. a flu patient with left over paracetamol could possibly make it available (with due diligence for expiry dates etc) to others in the insurance network.
- The monthly “premium” is calculated by the algorithm based on projected claim costs. The logic is to just balance premium costs with the community claim costs
- The community also actively engages in identifying (by a digg-like submission and voting mechanism) cheap, but high-quality medical facilities. This will drive down the montly “premium” to it’s logically lowest possible value. In fact, doctors who are part of this network could chip in with services in exchange for a lowered montly premium.
The thought process is to try and create a platform where people can help themselves (share tips, left-over medicines, symptoms, potential epidemics, warnings, doctor reviews etc) for most of the common medical conditions, while at the same time, share the burden of helping out the very unhealthy.