It might work if there was a monopoly on treatment. If your choice was sit there and wait to die, or try an experimental treatment where you’ll pay $100,000 if you’re cured, sure, sounds great.

But there’s usually more than one doctor or hospital that can do a given treatment. And some of them will figure they’ll do better if they charge $10,000 up front instead. Would you still take the $100,000 option?

The only way I see it working is if the odds are very good. If there’s a 90% cure rate, paying a small premium for a cure in exchange for paying nothing if it fails makes decent sense. Any retailer with a generous return policy works this way, for example. This also helps the incentives to align: the loss from not handing out treatment will be much higher.

I think that this means the “I’ll pay you if I live” model is a great model for normal medical treatment. You get diagnosed with cancer that has a 50% cure rate? Set it up so you pay 2x if you’re cured and zero if you die, and you’ll help ensure you get the best treatment. You get diagnosed with a disease that will bear your name and your only hope is some crazy experimental treatment that has a 1% chance of saving your life? Going that route will just leave you stuck between death and bankruptcy.