Comment by bpicolo | Hacker News Reader

Comment by bpicolo | Hacker News Reader

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This is something I've been thinking about for a while - what would insurance companies (and even other companies in every vertical) look like with some incentive other than profit? Paying good salaries is one thing, but doing it for the sake of external shareholders is a different case.

Newman's Own is one interesting (and successful) example I can think of that's an otherwise for-profit company acting effectively as a charity. Are there papers/books about how effective this would be in practice?

From ehealthinsurance.com: Kaiser Permanente is composed of Kaiser Foundation Health Plans (nonprofit, public-benefit corporations), Kaiser Foundation Hospitals (a nonprofit, public-benefit corporation), and the Permanente Medical Groups (for-profit professional organizations).

Our family have been members for over 20 years. I'd rate their health care as "good", but the real benefit is that we have NEVER had a billing dispute, because almost NOTHING is "out of network". On the rare occasions we've needed non-Kaiser health care (such as ER visits while traveling), we just give the bill to Kaiser, and they take it from there.

When the insurer owns the hospitals and contracts all the doctors, customer billing is almost friction-free.

Not only that, but Kaiser Permanente was formed for similar reasons. It was to provide healthcare for the employees of the Kaiser shipyards, a major industrial employer.

I would think the actual care would be the highest priority for most people. These companies are so closely watched that billing disputes are extremely rare.

See also five interesting UK examples:

Healthcare: https://en.wikipedia.org/wiki/Bupa

Media: https://en.wikipedia.org/wiki/Scott_Trust_Limited

Retail: https://en.wikipedia.org/wiki/John_Lewis_Partnership

Finance: https://en.wikipedia.org/wiki/Nationwide_Building_Society

Lots of stuff: https://en.wikipedia.org/wiki/The_Co-operative_Group

I'm at a cooperative nonprofit insurance company - https://en.wikipedia.org/wiki/Univ%C3%A9 - basically, it's cheaper and nicer.

Perhaps Vanguard is an example of a mass mutual company that owes part of its success through its formation due to its ability to pass cost savings back to its customers in the form of lower fund fees?

My personal (unproven) theory is that the non-profit model works well for ventures that require very little entrepreneurial judgment, but poorly otherwise. Vanguard basically follows that: they mainly sell index funds, which a well-trained monkey can run.

Similarly, it makes more sense to have a non-profit coffee-buying employee group to buy coffee (at places that don't provide it for free) rather than pay a vendor to bring it in. But that's not because profit-making is an inherent drain on efficiency, but because the "judgment" that those profits are "buying" ... doesn't add much value.

Vanguard took decades to gain any traction and it was managed well enough to ensure it didn't prematurely burn out, and not only that but Jack Bogle spent his entire life evangelizing low-cost in an environment where "cost is no object" was a common mantra.

Not only that but the healthcare industry has extraordinarily high financial and legal barriers to entry.

>extraordinarily high financial and legal barriers to entry.

If there is a company with enough muscle to force themselves into the business, it's Berkshire.

Considering their already extensive ground in insurance and JP Morgan's financial acuity, Amazon is in good hands. I know I'm hoping they encounter some success.

> Managed well enough

Unlike Amazon and Berkshire, two of the best managed companies humanity has ever created?

> Extraordinarily high financial and legal barriers to entry

Unlike financial companies?

There are extraordinarily high expectations in the finance industry but the only barriers are regulatory compliance (with regards to fiduciary duty) and convincing people to throw money at you.

USAA would be a classic example

Absolutely. So based on what I know their financial products and customer service is awesome but I doubt if it comes at a price which is lower than the market (even after considering what they give back to its members).

Their insurance risk pool is far more favorable - those in the military are generally more healthy than the general population, and they have pretty much guaranteed income.

I think you may be thinking about Effective Altruism conceptually but from a corporate rather than individual angle.

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