If Free Works on the Internet, Can It Work for Health Insurance ?

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 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 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

55 thoughts on “If Free Works on the Internet, Can It Work for Health Insurance ?

  1. Why don’t we focus on getting people healthier? The costs are rising because we don’t take care of our bodies… We eat bad foods, we don’t exercise enough, we drink do drugs and smoke…

    This all leads to poor health, poor health means going to the doctor more (or just falling over dead).

    If I were a doctor and if people disagreed with the above comments about being in poor health then I would charge a monthly membership fee and then discount my services. This would increase the cash flow for Doctor’s offices and then you wouldn’t have to worry about if your insurance covered that Doctor or not (This is just a rough idea that I came up with…)

    Comment by nrg74 -

  2. the explicit costs of tort reform are dwarfed by the implicit costs of tort reform: defensive practice of medicine. That means ordering MRIs, etc etc that aren’t useful, but don’t cost the doctor anything (may earn him something) while saving him some miniscule amount of possible problems down the road

    Comment by Jack Rodwell -

  3. Great post, writergmccarthy. It is true that tort reform wouldn’t help as much as many seem to think.

    Excellent ideas overall here. My addition would be an idea in regards to what could be done to help with the doctor shortage, particularly GPs. When I started out in college I was pre-med and took a course that was an overview of select medical careers; the prof used to be on Tulane’s med school’s admissions panel. Anyways, the stat that always stuck in my mind was being told that (when trying to get across to us how competitive it is to get into med school) every med school in the country could fill up their incoming classes every year four times over with perfect applicants– 4.0 (or close to) GPAs, great MCATs, all the extras they are looking for, ect. We are faced with a terrible doctor shortage that is going to get much worse… we import 25% of ours from other countries now, and the ones we are creating often do not become General Practitioners; they like go for lucrative specialties (not too surprising when you consider the debt they come out of school with). Yet we have countless thousands of qualified doctors being turned away who could be wonderful doctors. Some go to what they call “offshore” private medical schools in the Caribbean that manage to turn a good profit by recruiting U.S. med school rejects; but even these take a risk hoping to transfer back after two years.

    So what can be done? Specifically, since the post asks the question, without more government involvement? In addition to overturning any measures enacted in previous decades when a doctor glut was anticipated, it would be interesting to see what would happen if we allowed private insurance companies to establish their own medical schools and “invest” so to speak in their own doctors, sort of what like the military does now with payback in service for schooling. Allow for contracts that would indebt doctors they put through their schools to a certain number of years of service, or even service for life (or heavy payback if they did not, which could not be defaulted on) at a set salary in the location and specialty of the choosing of the company. Of course, such doctors wouldn’t have to just take patients using that insurance; the idea would be that the doctor is an investment on the part of the company, and the company could then manage the business end of the health care while leaving the doctors (and other health care professionals, could work others too) to deal with what they were trained to do. In exchange for making less money, they would have far less debt and less responsibility and very secure employement… there are enough people out there coming out of college, very qualified, who want that M.D. badly enough and would certainly make the deal. The only trick with my idea is the math; I think it could turn a decent profit in the long term (especially if the government were willing to provide funding or incentives for creating these new med schools) but not terribly certain about my number crunching.

    Every idea probably needs to be explored at this point, given that if the shortage isn’t addressed, especially as the baby boomer population continues to age, the crisis will become far worse.

    Comment by bucfanpaka -

  4. There’s obviously something here. It’ll take some way of quickly quantifying the consumer’s value to the offer maker. Like a reverse loyalty system.

    Comment by in2liberty -

  5. Mark

    I think this is a pretty cool idea that I hadn’t thought of. I guess the question would be how to guarantee the wal-mart purchases? Perhaps take an amount out of the family’s salary and trade it for a wal-mart voucher to ensure their spending commitments?
    Health care is a tricky issue, obviously, but maybe wal-mart would even set up it’s own system of doctors and hospitals to treat people and create a system like government-owned (actually wal-mart owned) medicine like in Canada and Europe.

    Nate

    Mark Cuban for president 2012

    Comment by Nate -

  6. Your Wal-Mart argument makes no sense because who would ever commit to buying from one company – too complex to track and/or determine if it’s a smart economic decision from a long-term perspective? When inflation hits, China quits using the dollar to peg against their currency and/or the U.S. enters a trade dispute with China, Wal-Mart’s prices for Chinese goods (or any goods) would likely surge, and you wouldn’t want to be committed to buying most everything from them if prices were cheaper for the same or competitive items elsewhere. That’s a big gamble.

    Comment by cbilds -

  7. Ok, so here’s another story. I have a brother-in-law who lives in New Zealand where health care is nationalized. He’s also a phsysiotherapist (NZ equivalent of a physical therapist), so his business is tied to national health care. Here’s the kicker: he’s so good at what he does, he is currently being investigated for health care fraud. In other words, he’s so efficient and people like him so much, he has a lot of patients. In a free market economy this is a good thing. In his situation, the government thinks he’s making too much money, and they’re pressuring him to take less patients. This doesn’t seem to make health care more efficient to me. The bottom line is that if the government gets their hand into health care more than they are now, they will bog down health care and bog down the national economy. Life will go on, but that’s the bottom line.

    Comment by josephwesley -

  8. Mark,

    Interesting note on a knotty subject. A few thoughts.

    First, while the “free market” approach is romantic to us and usually works best, it often does not apply to health care. The fatal flaw in those scenarios is that a critical component of the free market–the consumer’s right to refuse to purchase–is missing. If I’m evaluating basketball tickets, I can buy the Mavs, the Spurs or Thunder if I want to travel, one of the 4 college programs in the area, or NONE OF THE ABOVE. I cannot “choose” to forego treatment for colon cancer because the alternative is a slow and painful death.

    It is in large part a question of cost. We currently spend 17% of GDP on health care, which is roughly double the average of the rest of the modernized world. The largest component of this cost is administration. We could borrow from the ideas of other nations to streamline the cost of delivery of health care, including centralized and simplified digital record-keeping, more efficient billing systems, and cdertainty of costs. These things are done in virtually all other countries with more centralized healthcare delivery systems. Perhaps not coincidentally, ALL of the other developed nations offer universal coverage, the result of their collective decision that health care access is a basic human right. We haven’t reached that decision in this country, mostly because we get wrapped up in the political and ideological fights, with tags like “socialized medicine” to demonize any attempt to open the discussion of universal care. This concept, incidentally, does not include purely cosmetic surgery, elective non-surgical procedures, or visits to ER’s for the sniffles. It does, however, seek to provide access to necessary health care whether you’re a wealthy adult or a child of a poverty-stricken family, so that no person need suffer for lack of money or an insurance policy.

    Tort reform and malpractice insurance inevitably enter the discussion as well. Insurance premium are indeed high here, but the studies by OMB and Harvard showed that malpractice suits are brought in an exceptionally small percentage of cases in which malpractice actually occurred, and the cost of all elements of malpractice claims, including premiums, attorneys’ fees, and payment of claims, amounted to less than 1% of the cost of medical care. Of course, any balanced discussion of tort reform efforts applied to medical care issues must first address constitutional concerns about equal protection, and must also be accompanied by a discussion of the resulting benefits to patients and society as a whole. Otherwise, an intellectual review of tort reform is revealed to be one-sided and imbalanced.

    It will also take a basic change in our approach to education. Here, a doctor is virtually assured huge debt coming out of medical school, to go along with high costs for insurance premiums and administrative infrastructure. By contrast, doctors in other countries graduate with almost no debt, thanks to assistance with tuition from local, state, and federal governments. They have very small insurance premiums and rarely face lawsuits, due to a combination of cultural reticence, availability of remedial care without the fear of high costs, and results-oriented medicine.

    Most of these issues are addressed in TR Reid’s THE HEALING OF AMERICA. Reid acknowledges that no system will be perfect, and that we must consider alternatives developed by countries to whom we historically feel superior. The system is broken. Better to engage in an exchange of real ideas rather than politicize the issue and draft bills that never really address the problem.

    Comment by writergmccarthy -

  9. I will lean on the Tao of The Big Lebowski -

    Dude -

    Your trying too hard…It turns out that, when someone is spending his own money for White Russians, he is far more likely to ask the questions he would ask if buying anything else other good “Is that house or top shelf?” “Didn’t I get Ketel One just recently?” “Where can I get bowling and white russian at the best price?”

    By contrast, the Model of health plans in this country in effect tells the Dude that someone else has their card behind the bar, (eg. on someone else’s credit card)

    Given that a #3 at MCD costs more out of pocket than a visit to the doctor, its like offering all you can drink on Spring Break to dudes without dates. What seems free will always be over consumed….

    Comment by bohicaman -

  10. Privatization is the way to go… there is hardly, if anything the government does that they do right and efficiently. The government doing work is the definition of non-efficiency for obvious reasons. When there is no competition, there are problems. That’s pretty much economics 101. Competition=increased efficiency.

    Comment by jamakmfg -

  11. I am 41 and pay $230/month and have an individual policy.

    It gives me 4 $30-copay visits to a doctor’s office per year, and after that any medical costs count against my deductible, which is $1500 per year.

    So my annual premium cost is $2,760, less than half of $6,000.

    I think that if people are forced to search for good deals before government is allowed to step in, they will find good deals.

    Comment by fatdiv -

  12. Hey Mark-

    I like your idea, but I personally think the real problem is lack of competition in the health care industry. I agree with the above poster that health prices should be posted by every hospital, doctor, etc, just like every other business. Also, I am sure international firms would love to offer their plans to American companies and people, and build relationships with hospitals. I’ll be the first to admit that I do not know that much about national health care, but I do understand that lack of competition is one of the main problems.

    Comment by patrickjobrien -

  13. Your concept of developing free business modes of for health care delivery is a treatment of the symptom which is out of control health care costs. If the cause was treated first then there is no need to treat the symptom with free business models. There are many causes however there are few which are easy fixes if a country has the will. 1) Ban advertising of and tax to the hilt high fat-high calorie-highly processed food. 2) Put the cigarette companies out of business and ban the sale of cigarettes. 3) Tax the hilt out of alcohol. 4) tax the hilt out of high cholesterol processed foods, 5) subsidise cholesterol lowering alternatives like cholesterol blocking butters and margarines, 6)make physical education and exercise 15% of all school time, 7) restrict the supply of a large number of non-prescription medications which are abused and damage health, 8) make pay as you go gym fees tax deductible (not annual subscriptions where you pay but don’t turn up, 9)give business a 200% tax deduction for the installation of gym equipment, showers, saunas etc into the workplace, 10)ask the country’s sports stars to put more back into the community by donating their time and profile to educate and inspire kids into exercise, 11)reduce patent terms, 12) stream-line FDA drug approval times and costs, 13)dramatically decentralise services associated with basic health care like treating people for cols, flu, basic infections where anti-biotics are required, 14) dramatically decentralise the service of preventive medicine like flu shots, hepatitis vaccinations etc – its just giving a needle, does a it really need to be delivered by a qualified nurse?, 15) dramatically de-centralise testing and diagnostics. For example large companies could provide yearly weighing, blood pressure tests, liver test, blood sugar tests, thyroid tests etc. Its easy and big corporations could build their own labs that would take up about as much space as the 25% of one cafeteria, 15) tax sugar based sodas

    Comment by jasonbresnehan -

  14. it is indeed an important topic. i wrote about it here (http://www.schnaeppchenfuchs.com)

    Comment by dayslikethis3 -

  15. Why don’t anyone’s suggestions for what to do about health care ever involve using the models out there are currently achieving significantly better outcomes and cost roughly 50% less? Wouldn’t a rational actor in an open market for a health care model choose a proven product that is of considerably higher value than when looking to upgrade? Mark, your suggestion might not fail, but I don’t think even the most optimistic forecast would have it reducing costs by 50% and improving health outcomes.

    It’s sad that we can’t compete with other countries in terms of value in the health care industry because we’re so ideologically rigid.

    At some point we have to acknowledge that health care must be regulated to high degree. Clearly access is more important than innovation, at least if we’re bothering to ask ourselves honestly via the democratic process. If it were the other way around, a market solution would work beautifully.

    The most successful health care models involve largely private care and insurance administration that are strictly regulated. It’s sad that we don’t have a sophisticated and effective regulatory culture (as in treating the regulation of business as an incredibly important job to do right and having an educational infrastructure as well as a historical culture of success to produce new crops of good regulators) because of all this idiotic ideological warfare.

    Comment by jimmoffet -

  16. Very interesting idea…

    I think that anytime the free market decides the pricing and structure on something that it is a good thing. I don’t see why health care coverage can’t be the same way. Deals would be worked out and insurance companies would face some strict competition… which would obviously lead to lower rates. Unfortunately we are moving the opposite way of a free market system. I can only imagine the reaction most of America would have if we said we were getting rid of the health care coverage we already have. That would be interesting.

    On a side note, what do you think about firemen being privatized? Is there really a need for them to work for the public anymore?

    Comment by jamakfab -

  17. Mark:

    Mark, I think your post is interesting, but I agree with Levi Spires. To ask a “pool” of insurance subscribers to pay for day-to-day bandages, cuts and bruises has and will continue to cause unnecessary increases to the funding of a financial vehicle, i.e. insurance.

    We all have access to Health Care, but many of us (myself included) abuse the Health Care Insurance system by going to the doctor unnecessarily for colds, bumps and bruises. And the doctors, for fear of litigation, ask for way too many x-rays, lab tests, etc.

    If health care were not so expensive, then our insurance (the financial vehicle for health care) would not be so high. Think about it!

    Comment by dianemahoney -

  18. Mark, yet again you provide an interesting perspective to a complicated issue. I’m not sure if a family were to dedicate the majority of their purchases to a store like Walmart, that there would be enough profit on Walmart’s end to agree to a deal like this.

    Taking your idea one step further, what if based on my agreement with Walmart, they agreed to pay x dollars towards my health insurance premiums. I could then combine this with all the other places I spend money, which could add up to some sort of “sponsored” health insurance.

    My example:
    – Agreement with Walmart for the majority of my home goods/food
    – Agreement with Chevy for all car purchases/repairs
    – Agreement with Bank of America to get all personal loans (auto, mortgage, credit cards, etc.) from their company
    – Agreement with Cable subscriber for Cable/Internet
    – Agreement with Cell Phone provider for cell service
    – Agreement with Dallas Mavericks for season ticket package

    Each of these companies could provide money(obviously the likes of BOA would kick in more than the Dallas Mavericks as BOA is making more monthly from consumers) and pool all their consumers into a massive insurance group.

    Comment by wihoffa -

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  20. Another great idea Mark. I share the opinion that it would be much better have the free market determine healthcare coverage (and hopefully drastically lowering the costs) rather than having the government try to do it.

    Comment by joeconnector -

  21. Pingback: rePost::If Free Works on the Internet, Can It Work for Health Insurance ? « blog maverick : On the 8 Spot

  22. Pingback: The Answer To Healthcare « Uncommon For A Reason

  23. Mark- I like your “think out of the box mentality” and when it comes to business-you are the man- and that’s not disputable, but I think you aren’t considering the real issue with health care which is the COST.

    You own great businesses like the Mav’s, HDNet, Landmark Theatres, etc. These businesses ARE great because you control both the income and expense side of the income statement. Maximize incomes-Minimize costs..not exactly rocket science but it does to creativity, persistence and execution.

    ALL of the above is ultimately controlled by one person..YOU..and the smart people you hire that actually do the work for you. So if costs variances are higher than you like..you make changes and fix the problem. End result..more manageable costs and profit margins that are suitable.

    When I buy that ticket to watch the Mav’s take care of business it includes those costs plus some profit and I make the decision whether or not I want to spend that much to watch a basketball game.

    With healthcare it’s not that controllable.

    Problem #1

    @josephwesley nailed this one earlier.

    When I go to see my local doctor I don’t have a clue what this guy is going to charge me and even if I had some records of past charges there is no guarantee it’s not going to cost me double for the same procedure. I have no “menu options” to choose from and further more I don’t get them from any other healthcare facility either. If I had menu options. I could shop around..and shopping around means there is competition that knows what prices are everywhere else and they price their products to stay competitive.

    End Result- Cheaper Healthcare costs and better services. What if congress passed a law that required all providers to list their services and charges? Talk about health care reform and it takes all of about one page. “All health care providers must list ALL services offered and prices for those services” THE END

    Problem #2

    If I am a health care PROVIDER..how do I reduce my costs of providing a service so that I can stay competitive and profitable?

    I’m not a doctor but if I had to take a stab at the two largest costs it would be malpractice insurance and the cost of education to become a doctor.

    You can’t fix the cost of education but you can fix the cost of malpractice insurance through tort reform as @dcangelo pointed out. But to get tort reform you’ll have to get a bunch of “attorneys” in D.C. to agree on how to fix it..

    Problem #3

    Congress is inept and they don’t represent the people of this great country. The recent ruling by the Supreme Court to allow businesses to flood political campaigns with as much money as they want only exacerbates this problem because now it’s going to be a free for all. Those with the most money win.

    How do you fix that?

    I’ll summarize with this. You are where you are for a reason and I respect the hell out of you for it and I think that Mark Cuban is a force for good in this country.

    But I think your suggestion is only a band-aid for a system that’s been broken for a long time. It only covers up the real problems associated with the costs of healthcare.

    Comment by josephpschmitt -

  24. Check what these guys are doing:

    http://www.symbeohealth.com/

    They open up shop in Jersey in the next couple of months. They offer unlimited access to a primary care doctor for $40 a month and are partnering with insurance carriers to offer a catastrophy insurance add-on.

    Makes the patient the client again. Brilliant!!!

    Comment by gomeztech33 -

  25. A typical family would have to by over $100,000 worth of toothpaste, celery, light bulbs, & underwear from Wal Mart to be able to cover the $13-$15K yearly cost of Health Insurance. How about offering a Health Insurance Policy with a Mavs Season ticket? Or, allow season ticket holders to buy in to the Mavs Group Policy? That would increase the size of the group & lower costs. Maybe all NBA Teams could buy insurance in one big pool to further lower costs. I have a better idea – let’s take the money we give to these Health Insurance Conglomerates & actually use it to pay for health care (like every other industrialized country in the world.) Health Care should not be a privilege, it should be a right for all Americans.

    Comment by philydog -

  26. US healthcare definitely needs some fresh ideas – get Google involved!

    Comment by shaundeezy -

  27. I just want to point out the simple math here: If the average health insurance costs are $13k a year, and the median household income in the US is ~$50k per year, then the answer to the question “Where do we spend enough on products in competitive industries to warrant a business subsidizing our health costs?” is a circular reference. Health care is where the most money is being spent.

    Ok, that math is wrong – If we want to make a fair comparison and find a price point for a Walmart to subsidize health insurance, we need to compare the median cost of healthcare and not the average cost (the mean). I don’t have any statistics to back this up, but I would guess that the cost for healthcare as a function of age forms a bathtub curve (higher at the ends by birth and death, low in the middle).

    So now let’s make the assumption that the median health care costs of everyone between the ages of say 21 and 50 are $1,000 per year and assume a profit margin of 10% for Walmart on what they sell. From there Walmart only needs to come up with a number of what that age group person is spending per year there already, add $10k to it, and they have a business model for sustainability, and can work on lowering the $1,000 per person costs to attain profitability.

    My gut feeling is that insurance companies are the Vegas books, and the actuaries are the odds makers. The problem is most of the population is being forced to bet more than they should.

    Comment by psmcgarrity -

  28. Here’s a short little story for you all. I grew up without health insurance. The interesting thing is that I didn’t go to the doctor whenever I had a sniffle. If I had a sniffle, I slept it off. I also seemed to deal with sicknesses in about the same amount of time as people who went to the doctor. Once in a while something bad enough would send me to the doctor, and my parents would foot the bill. Fortunately, nothing catastrophic happened, and we didn’t end up owing a hospital a whole lot of money. Ok, fast forward to now when I do have health insurance. The oddest thing to me, is that I don’t consider how much a procedure costs. I just flash my insurance card. If I’m unsure about a health condition, I go to the doctor. If he says I need a test, I go to take the test. BUT WHEN I GO TO TAKE THE TEST, I HAVE NO CLUE HOW MUCH IT’S GOING TO COST. I DON’T ASK AND THE OFFICE DOESN’T TELL. IT ISN’T UNTIL THE BILL IS IN THE MAIL THAT I FIND OUT HOW MUCH THE PROCEDURE WAS. DOES THIS SEEM WEIRD TO ANYONE ELSE? IN WHAT OTHER PURCHASING DECISION DOES A CONSUMER NOT CARE HOW MUCH THE COST IS? IT SEEMS LIKE IT WOULD BE VERY DIFFICULT TO CONTROL COSTS WHEN CONSUMERS DON’T FEEL THE COSTS DIRECTLY. What do you all thing about this?

    Comment by josephwesley -

  29. I think we should let the consumer buy healthcare. Healthcare benefits to the employee should be paid in salary instead. Let the consumer choose plans. This way the true cost is known to consumers and not hidden. This way you don’t have to switch plans if you switch jobs. You don’t have to switch plans because your employer told you so.

    We all buy our own insurance. Not sure why employers choose our healthcare insurance for us.

    Folks that don’t make much money pay a lesser rate, but pay something so they don’t abuse the system.

    I’m all for shopping plans to consumers directly.

    Not a big fan of subsidization. Don’t like it with cellphones. It also seems to me it is too complicated for the average consumer. Maybe Walmart should be hired to run a hospital and healthcare company though.

    Comment by trip1ex -

  30. $6000.00 for an individual? I live in Los Angeles and my individual adult insurance (Anthem) through the company I work for is $100 a month. I like my insurance as is. I knew the cost/benefit of getting a higher education so I chose a career path which comes with benefits.

    Comment by etheragent -

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  32. Mark, your offer above to the inquiry of the Dallas Mavericks providing Medical Insurance (or some other coverage) to someone who commits to purchasing season tickets for the next five seasons would lead to an adverse selection problem. People who face large medical bills (cancer patients, people needing transplants, etc.) would indeed purchase season tickets as the low cost way of paying their previously unexpected but now certain medical bills.

    The Mavs organization would either pay the medical bills out of profits or seek to reinsure this risk. I’d be the reinsurer would charge the Mavs a high premium.

    Bottom line, those who want insurance may often have some certain expense that they seek to pass off on the insurer if they can get a policy issued. If you did bundle health insurance with season tickets, there will be a lot of less than fully healthy fans at the Mavs games.

    Comment by onehandede -

  33. I don’t know about health care, but I think a free coffee shop could. Require membership or an iphone app or some sort of identifier that you become a “member”. Have music/books/magazines in the coffee shop as well as advertising on the coffee cups. The sponsors would get access to the “member” profiles as well as restricted targeted marketing opportunities. Coffee is cheap so the ad support wouldn’t have to be huge. You could obviously get people to hang out in a free coffee shop. The biggest expense would be the rent on the real estate.

    Comment by rivyrs -

  34. @demosthenes9 Health insurance IS different. If my car maintenance is too expensive, I can buy a cheaper car, or take the bus, or ride a bike, or walk. If my healthcare is too expensive, I die.

    I wouldn’t mind having consumers see the actual costs of health care with subsidies for people that can’t afford it. That would mean eliminating the employer tax deduction, which neither side is willing to do. But if the insurers are still on the hook and can’t just reject unhealthy people (preexisting conditions) or deny them after the fact (recision), or raise rates at will (Obama’s insurance rate authority), but can still make a profit because of an expanded pool (mandates), then maybe they’ll have incentive to help people make healthier choices up front, including preventive care, eating better, exercise, etc. And that’s exactly what the proposed healthcare reform attempts to do.

    Comment by bdeterling -

  35. A huge problem is that most people treat health INSURANCE as “pre paid medical”.

    I mean, just look at prescription drugs. People had “insurance” but then bemoaned the fact that they spent so much on medications. Solution ? Have “insurance” pay for it. The kicker ? They didn’t want their “insurance” premiums to go up too much.

    In short, what people wanted was for someone else to step in and pay perhaps $1000 a year for their medications, BUT, they somehow figured that their premiums would increase by a much smaller amt.

    We all have car insurance. When it comes time to get an oil change or a brake job, do any of us expect our car insurance policy to pay for either ? Of course not. If we want that type of coverage, we would purchase an additional service contract in addition to our auto insurance.

    Why do people think health “insurance” is any different ?

    Comment by demosthenes9 -

  36. In somewhat related news, this article mentions the idea of health insurers subsidizing the costs of mobile data plans. Maybe telco’s should work toward becoming larger conglomerates and offering health care as part of their bundles.

    http://www.sdnn.com/sandiego/2010-02-05/health-fitness/smartphones-are-the-new-stethoscopes

    Comment by mudget -

  37. Mark I love the way you take an idea and look at it in a new way.

    I think the problem with healthcare is that people do not pay their own way. If people had to pay for the healthcare they used, then maybe they would make better choices and negotiate with doctors etc.

    I can speak to the pharmaceutical industry and say that it is rife with corruption and wasted dollars. I worked in the industry and had defended them before working in the industry. It is truly outrageous the behaviors that are tolerated.

    I have done an analysis of Obama’s healthcare proposals and foudn this incredibly informative video:

    Comment by disfiguredskating -

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  39. Maybe we should look at how personal injury lawyers are effecting the health insurance industry.
    http://www.yourgirlz.com is a start

    Comment by madamezora -

  40. You bring up a great point Mark. Not only do current insurance industry regulations and the new 1200 page health care proposal delimit market competition, they also neuter the development of ingenious financial instruments/Business2Consumer contract opportunities to offer these services. Instead, Obama wants to confine financial creativity, insurance coverage, and market competition to our government which has already failed by creating insolvency for doctors, consumers, and businesses while telling them how to get their disease treated under the given protocol. In summary, the consumer’s decision is ignored, the industry is monopolized, and the potential economical growth that can be made from the creation of new treatments and health care financing instruments are legally halted.

    In failing to understand how the economy is grown, Obama is attempting to license its monopolized contraction and permanently close its ears to market solutions such as the one you have offered. Even hospitals alone could operate their own insurance reserve plans – and with increased competition costs would go down, hospitals patient lines would shorten, and Americans would not be forced to pay into a medicare or social security plan that may not exist when they come of age and need it. If tax payer “insurance” resources were redirected to the market, the market would experience growth, costs would go down, and treatment options would go up.

    As an example, I can buy DHEA and pregnenolone for $12.95 yet must pay $100 or more for the same amount of testosterone – all of which are hormones secreted in the same place and produced with the same level of complexity. The only difference is that you can obtain one over the counter without a prescription. Imagine if all our health care costs benefited from such competition.

    Comment by cjw2020 -

  41. If doctors would sell ads for their waiting room walls, they wouldn’t have to charge a thing. Talk about a captive audience.

    Comment by cheezmo -

  42. I can see it now, “Supersize those fries for big health care savings at McDonald’s! We’re lovin’ it!”

    Comment by therugelachman -

  43. @bdeterling, actually I think it might work out for the better. Becoming a health insurer, doesn’t Wal-Mart have incentive to shift towards a healthier food selection?

    Comment by mateo2 -

  44. No simple or easy answers on this one. I’ll give Mark Cuban kudos for one thing: He is contemplating a brand new approach rather than arguing over stale and recycled ideas, such as raising my taxes to pay for other people to have health insurance. The idea Mark hints at is almost like bartering—except I guess cash does change hands. But that “loyalty” in the form of a commitment to a vendor, in exchange for service, is interesting. Here is where I stand on the issue: The current bill is a no-go. It’s over 2000 pages and it’s a power grab by the Democrat power brokers in Washington. Meanwhile, Republicans had eight years (Six of those years with control of Congress, Senate and White House, 2001-2007). This issue (threat of healthcare/health insurance ruining families financially) has been a real concern for millions of Americans, including people like me, who are employed with a fair amount of savings. So the GOP failed to do anything with the football when they had it. Of course, Pelosi, Reid and Obama having the ball is an even bigger disaster, as they are ready to cripple us with a bill that benefits their party more than it does hardworking taxpayers. We need competition across state lines, tort reform and regulation of charges for essential medical services (i.e., limits on what can be charged for heart surgery, but no limits on what someone can charge for a nose job or breast implants). Any medical expenses picked up by American taxpayers should only benefit American citizens, that’s a given. There should be tax deductions for people who buy their own insurance (people who are not covered by employers plans). In my opinion, government’s role should be as a regulator and board of appeals, to keep providers and insurance companies in check. The moment government BECOMES the insurance company or medical provider/decision maker, people are powerless as you really can’t beat city hall—-you can fight them all you want, but you can’t beat them. It’s frightening to think that a government official would be charged with deciding whether my five year old or I could have an expensive procedure. If you have any doubts about their competency, go to your local DMV. For the people who say
    “This will be different, this time the government will only hire very well qualified experts and not put up with nonsense because of how important the issue is” I give you the TSA and Homeland Security. Nuff said.

    Comment by dcangelo -

  45. It used to be that hospitals were church-run charities. It was good business to connect the church to the hospital. At least that way people would donate to the church with the intention of seeing most of it end up in the hospital. What’s a few chapels here and there when you have hospitals that need to be built in poor communities?

    Comment by Jonathan Gardner -

  46. I suspect Walmart’s insurers would notice that their pool is becoming less healthy as the people that have no options but to agree to buy everything from Walmart are likely to be people that know they need insurance because of health problems. So Walmart’s plan prices would go up which would cut into their bottom line. They would start allowing only healthy people into the program and then they’re just doing the same kind of risk analysis as the insurer, which doesn’t help the currently uninsurable.

    I doubt there will ever be a purely free market solution that makes it profitable to provide expensive surgery to a poor person. So by all means keep the ideas coming, but I have a feeling any solution that doesn’t involve the government is going to amount to you pay or you die.

    Comment by bdeterling -

  47. Great idea, I like the fact that you’re thinking outside the box. Most either A) don’t do their math (democrats) or B) don’t acknowledge that there is a problem (republicans).

    Comment by mateo2 -

  48. Many credit card companies refund a portion of the fees they charge the stores in cash or frequent flyer miles. They could easily negotiate low premiums for insurance and offer healthcare instead.

    For a look at the cost of healthcare, see this post from National Geographic. http://goo.gl/qKZN

    Comment by humbleonion -

  49. Capitalism works best in perfect competition, where rational consumers are able to make fully informed decisions on pricing. This would cause very bizarre distortions in the markets where organisations have the immediate capital to afford health insurance for customers would immediately develop monopolies, and barriers to entry into those industries for competitors would be phenomenal.

    This might be a market based solution, but that doesn’t necessarily make it in the best interests of the market.

    Comment by richei -

  50. Mark, Some fascinating ideas. However, we will always have this health care issues until we control the input costs of care in the United States. I’ll give you an example. I have some close friends who sell products for medical device companies. They sell some of the largest hospitals in the country (whom you think would have pricing power)products with ridiculous markups. A pair of surgical scissors, used for one surgery and disposed of, $800 EACH. A scalpel, same deal, used for one surgery and tossed, $250. The hospital beds, THOUSANDS each. On a smaller scale, printer ink, they simply purchase it from an office supply retailer, and mark it up 50% and sell to the hospitals. Until this industry is regulated or this problem is brought to the public where we demand change, this health care problem will always be here.

    Comment by rototrader -

  51. Free works on the internet because of advertising. If you want to talk about a health care system that is subsidized by the pharmaceutical companies with individuals still paying for their own prescriptions that might be a concept that would work. You could go to the doctor or the hospital whenever you need to and only pay for the medication needed to help you. If you break your arm there is no expense to you for the x-ray or the cast, only for the pain medication.

    Mark I’ve lived in Dallas for 10 years and I’ve only been to 1 Mavericks game. If I committed to buying 3 season tickets for the next 5 seasons would you cover my medical expenses for my wife, my son, and myself for the next 5 years?

    From MC> If you bought our most expensive seats, i would certainly consider it !

    Comment by Stephen Moore -

  52. Kaiser Family foundation says that for an average family health care cost in 2009 was $13,375 and premiums were rising 5% while prices fell 0.7%

    Comment by ntadams83 -

  53. Mark, you make an interesting solution to increasing the number of insured, and it’s market based.

    However, one of the main problems is that most people equate not having health insurance to not having health care (look at pangofilms comment). By design, insurance is not a long-term subsidy for day-to-day health costs. As a nation we should pursue policies that promote policies that place the patient as the primary payer of health care, not insurers, government or private.

    Good idea and great blog!

    Comment by levispires -

  54. How would you propose regulating the ‘everything must be purchased from one outlet’ model? What would the implications be if someone slipped up and bought M&Ms from Chevron instead? Doesn’t this create a Big Brother sense that spreads fear instead of freedom?

    The Internet, or Google as you point out, makes money from advertising — not product. Health care in its current state is a product, not a platform. Until that dynamic changes, costs will remain associated.

    That said, I dig the idea and would really like to read about some further novel approaches to health care cost reduction.

    Thanks for stirring some thought here.

    Comment by utaustinsurvey -

  55. First of all, health care costs about 30,000 dollars for a family of four, most of that for the adults. It’s going up about 20% a year.

    I don’t get how anyone could afford it, and I don’t get how businesses can afford paying for it. I don’t really understand why businesses should pay for health insurance at all. Wasn’t it just a historic quirk that led to that?

    Isn’t what you’re talking about a tax? It sounds like that French law, the Cultural exception, where they take a percentage of every movie ticket you buy and it goes into a pool for funding French films. It’s a very good law for French film, but I can’t imagine something like that working in America.

    Walmart was looking into selling some sort of low cost health insurance, and they could probably do a good job with that.

    The only thing is, Walmart may have done well for itself in all its other businesses, but it’s put a lot of other businesses out of business. I’m not sure the economy really needs more consolidation right now. If Walmart is the only business left standing, what happens when it goes bankrupt?

    Comment by pangofilms -

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