As best I can tell, Health Insurance for the average family costs about 13k per year. For individuals, its about $6k per year. For some, employers pay a big chuck of that. For others, the deductibles and other charges are super high so that the monthly premium is lower. For many, its a health arbitrage. You pray you don’t get sick while you can’t afford the insurance.
What we have is a product, health insurance, that everyone seems to need. And if you pay attention to the political world, its a product that our government wants everyone to have. Which got me thinking.
$500 per month per person. $1,200 per month per family. Where do we spend enough on products in competitive industries to warrant a business subsidizing our health costs?
Google (GOOG) subsidizes the cost of hosting our home and business videos in exchange for selling advertising around the content we upload. Our cellphone provider might cover a couple hundred dollars of the cost of our phone in exchange for a multiyear commitment to buy phone and data from them. What do we have to exchange in order for someone to cover all or part of our health care costs?
Let me give you an example. Is it worth it for Walmart (WMT) to add me to the self insured health plan that they offer employees in exchange for a commitment that I buy 100pct of any products Walmart sells from Walmart? If I promise to buy everything from toothpaste to celery to lightbulbs to underwear from them for the next 5 years, would the average person generate more than enough in net margin dollars to make it worth the incremental expense? Remember, you have to build in the reduction in new customer acquisition costs as well. Is it worth it to Walmart? What if my employer did the same type of deal. For the sake of example, what if the Dallas Mavericks promised to buy everything that we can from Walmart? Would Walmart make us an affiliate for health insurance purposes and add Dallas Mavericks employees? Or could the program be simplified so that while Walmart wont commit to subsidizing all of the health care costs in their system, or require 100 pct of purchases, they could take a page from Visa and apply some percentage of purchases towards health care premiums for customers and allow them to participate in a Group Insurance program that Walmart, with their incredibly purchasing power set up. Not surprisingly, this wouldn’t be a drastic step for a Walmart. They already offer special discounts to other self insured companies for the purchase of prescription drugs.
Here is the bottom line. Would consumers and businesses commit to do business with companies that offer incentives and subsidies built around health insurance coverage? And what if health insurance became a value add rather than a primary product? Would a service from companies that are big enough to self insure and add their customers to their corporate health care programs change the dynamics and economics of health care? Would it create enough competition to force traditional insurance companies to change their ways?
Maybe its already out there and I don’t know about. Maybe its an opportunity. But its certainly something I would like to see discussed more. If there is any way to bring back universal healthcare to the market, rather than the government, now is the time to talk about it.
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