The Sharing Economy & its Potential in Health Care

Airbnb, Uber, GoFundMe, Zaarly, Kabbage, Kickstarter, Task Rabbit. What do these companies have in common? They are all examples of what is referred to as the sharing economy.      

There are several powerful factors that have spawned the emergence of this alternative economic system:

    The creativity and ingenuity of entrepreneurs who recognized that things we take for granted such as our cars, homes, bicycles, appliances are usually sitting idle and, if shared during down time, can be turned into a new stream of revenue for their owners and a convenient resource for their users.

    Other entrepreneurs who understand that our connected, high tech lifestyles in an “always on” world have created the need for assistance with day-to-day tasks and chores.

    Disenchantment and a growing lack of trust in major institutions. Think banks, government, insurance, and car rental companies. In particular these conditions are driving crowd funding and peer-to-peer lending.

    Increasing levels of government regulation of “traditional” industries, making their products and services more costly, time consuming, or constrained.

    New technologies that provide vast capabilities to these new companies at a fraction of the cost of older technologies; and at speeds far faster than old-line industries’ legacy systems can duplicate.

    The emergence of social media as a means to easily use these new services and, as importantly, rate these services and share information with other users in real time.

And so, I wonder, has the time come for the sharing economy to find its way into healthcare? The need for new alternatives is undeniable. In fact there are currently alternatives to traditional health insurance that have been exempt from the Affordable Care Act (ACA) since its inception. Under the ACA any person who is a member of a medical cost sharing ministry that was established before the year 2000 is exempt from the requirement to own personal health insurance.

The first thing of note about this statement is that, yes, there are medical cost sharing ministries that have been around for at least sixteen years. These organizations, which are comprised of like-minded, spiritual, and most often Christian individuals are the perfect example of the sharing economy. Similar to cooperatives, members simply share in each other’s medical expenses. These ministries have several common characteristics:

    Participation is voluntary

    There are no owners or profit requirements

    They are not subject to the crushing expense of state and federal regulation that adds so much to the cost of insurance

    New members are welcomed throughout the year (no open enrollment periods)

    Members have a say in future changes to the structure of the plans

    Unhealthy habits such as tobacco use are discouraged so as to optimize health and minimize medical costs

    Certain morally objectionable (to members) services such as voluntary abortions are not shared expenses

Some of these organizations have negotiated rates with medical providers, much like insurance companies. Others place no limits on choices of doctors and hospitals but they do not guaranteed pre-negotiated rates. Regardless of the individual ministry’s structure every one of these plans is far less costly than individual and group health insurance, often only 40% to 50% of the cost of health insurance.

But, as I said, these are just the earliest examples of the sharing economy in health care. Maybe it’s time to expand this concept to groups other than individuals of faith. How about small businesses within the same industry or within the same geographical area? How about groups of individuals who are age 55 to 65? They have far different health care needs than young adults or new families. What about local and national trade associations?

As the nation continues to search for new, more affordable solutions for health care the timing could not be better for the sharing economy to make its way into this sector. The time is right for entrepreneurship and outside-the-box thinking. The technology, such as telemedicine and comparative pricing tools, that is available can make medical cost transparency a reality. Many of the layers of cost in our current system can be reduced or removed entirely.

Let the innovation begin. Thanks for reading.

Sincerely,

Alan Leafman, President

(800) 955-0418