(Note: This post is quite similar to one I wrote a couple of weeks ago.)
Here’s a rough sketch for a non-profit medical insurance company:
- First of all, it’s a non-profit company, so it wouldn’t have to pay taxes or show a profit.
- It would be funded by policy sales (premiums) and tax-deductible donations. The usual sorts of fund-raising campaigns would be used to attract donors.
- The finance and actuarial side would work more-or-less exactly like it does in the for-profit insurance industry, but policy pricing wouldn’t include profits.
- One of the company’s core principles would be exactly the same “presumption of innocence” doctrine that grounds the U.S. Justice System: a claim is assumed to be legitimate and must be proven otherwise. This means that all claims are paid immediately, given that certain application standards are met. Let me put it a different way: provided that certain minimum application standards are met (e.g. doctor’s prescription) no claim would be denied! Yup, that’s what I said. Perhaps the company’s slogan would be something like: “we pay first, and ask questions later.” This would be a very attractive feature and make the product highly competitive in the market, provided the premiums could be kept affordable.
- To protect against fraud, claims would be randomly sampled and audited, which is to say scrutinized from top to bottom for evidence of fraud. If evidence of fraud is found, formal charges would be filed with the appropriate authorities. The company might also offer cash rewards for evidence that leads to the conviction of people who file fraudulent claims.
That’s about it.
What do you think?