Give Blue Cross the old heave-ho

June 21, 2007 6:59 AM

How could a person learn about and find resources for starting - yes, starting - a medical insurance company or friendly society involved in medical insurance?

I am really tired of the cost and consequences of a certain kind of specialist medical insurance and am thinking it's probably possible to find the financial backing and technical expertise to start a better kind of company.

Are there classes a person could take or an institute for people interested in starting or running medical insurance companies?

posted by parmanparman to grab bag (8 comments total)

Oh man. OK, this is just a horrible idea for someone whose first step is to ask about it here. But for the sake of intellectual exercises...

At a very basic level, medical (and all) insurance works like a giant bet. You're betting that those who are paying you a monthly fee will not, over a given period of time, incur expenses beyond that. If they don't, you keep the difference. If they do, you're SOL. There's a ton of statistical modeling that goes into calculating optimal premiums for various classes of people.

Then there's the actual process of collecting and paying. Collecting is easy, as billing agencies have existed for decades, but it's expensive. Paying is trickier. Large, established companies have direct relationships with doctors, and can often reimburse them directly without requiring their patient (your customer) to pay them and get reimbursed from you. You're stuck with the latter. So you need to hire claims folks, who make the decisions of whom to pay back and how much.

Then there's the regulatory stuff.

You're in over your head. If you're dead set on doing this, go work at an insurance company for a while. Like, a few decades.
posted by mkultra at 7:14 AM on June 21, 2007

The whole ball game is in contracting with providers. AskMeMedCo is going to have a hard time getting the 20% discounts the mediocre rent-a-networks get, let alone the 40% discounts the Blues get. There are a million TPAs each thinking they have some technical or management solution for the heathcare expense problem, and it's rare for even the best of them to be able to compete with the suckiest large insurer.
posted by MarkAnd at 7:32 AM on June 21, 2007

It was a totally intectual exercise! but thanks for the heads-up.
posted by parmanparman at 7:34 AM on June 21, 2007

If you're dead set on doing this, go work at an insurance company for a while. Like, a few decades.

Or, for 2 years, and then go to business school, then see where you stand - more informed, or still totally clueless; still hopeful, or totally disillusioned. This is a very, very complicated, high-stakes game you're trying to play, and I think the only way to do it is to go through the standard channels (industry experience plus MBA plus mad connections); I don't think it can be done as a casual outsider.
posted by rkent at 7:36 AM on June 21, 2007

Not insurance exactly, but the Christian healthcare collective Medi-Share is an imaginitive alternative to Blue Cross et al. It's something like the "friendly society involved in medical insurance" you mentioned. Not a member, not advocating, definitely don't want to derail this thread into LOLXTIANS. I just think the idea is interesting and relevant to your question.
posted by junkbox at 8:15 AM on June 21, 2007

Step one should be finding the website of your state insurance regulator and reading the relevant insurance laws for your state. You will find there are quite a lot of them. Don't forget that federal laws such as HIPAA apply to health insurance.

Once you are done with that (see you in a few months), it will be clear that step two is to start lobbying for insurance reform and/or true universal health (hint: the only presidential candidate whose platform includes it is unlikely to make it past the primaries).
posted by ilsa at 8:24 AM on June 21, 2007

That Medi-Share link is truly interesting. Ignoring the christian basis/bias, it's cool to see some creative thinking focused on making healthcare coverage affordable to families.
While it is, essentially, a form of catastrophic insurance, it would cut my monthly cost (for private family insurance) in half and my out-of-pocket costs would remain about the same.
Unfortunately, my wife is the believer between the two of us. I suppose I could fake it...
posted by Thorzdad at 9:33 AM on June 21, 2007

Thats pretty interesting.
posted by insuranceguy at 5:08 PM on June 22, 2007