Tuesday, December 23, 2008

John has sent you an invitation to join his risk pool...

As Jay Parkinson mentions here, the social network E-Factor (for entrepreneurs and investors) is now offering health insurance to its premium members:

Fascinating concept…social networks becoming pools for health insurance. It sure is a whole new world of stickin’ it to the man...What if Facebook offered a whole slew of low cost insurance premiums to their members? Of course, premiums would be much lower because the average Facebook user is young and fairly healthy.

We (in the US) have employer-provided health insurance for a number of reasons, one being the fact that income from corporations in the form of subsidized health insurance isn't taxed (so it's cheaper for a corporation to buy health insurance for an individual than an individual for herself), and another being that a company's set of employees provides a rather convenient group of people from which to create a risk pool.

A change in the tax code to allow all expenditures on health insurance (whether by a corporation or an individual) to be tax-free would take care of the advantage of employer-provided insurance described in the first reason, and allowing risk pools to be created from online social networks would take care of the advantage described in the second reason.

Granted, a group of Facebook friends (or an extended network of friends' friends) may not provide a sufficient diversity of healthiness to allow for a practicable risk pool, but perhaps a network of LinkedIn connections would work. In any case, I'm sure there's some way that social networks (or meta networks) could be harnessed to generate risk pools. It's an intriguing idea, to be sure.

Image from here.

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