What MoviePass Can Teach Us About Healthcare

 

Diving into recent trends about nine months ago one company relaunched with just an offer which felt too good to be true. MoviePass which was set as kind of the dream deal. $10 a month and once a day for every single day of the month it could get people a ticket for a movie regardless of the theater. As long as basic rules are kept on types of seating, a paid for movie ticket every single day. Needless to say, this billion dollar experiment which reached millions is now on the verge of bankruptcy and feels like just any hour now it could go under. Yet looking at it from one glance, it’s tough to not make comparisons to other industries and one prime example is healthcare and more importantly, insurance.

 

Exploring MoviePass and comparing it to medicine, one important point is just the history. While MoviePass became more popular in the last twelve months, it actually has been around for a few years. MoviePass playing with a number of price points ranging from $30-50 and different packages eventually hit. Twelve months ago new management hit and $10 a month became the new pass. It took social media by storm and it ran with a strange logic. $10 a month and up to 30 free movies a month. A deal so good that if a person just saw one movie a month, they’d make a savings. That said, most consumers don’t watch 30 movies a month and the majority don’t even see a single movie a month. The average tends to be most people seeing just four movies a year. So the concept of making movie was relying on the average consumer to pay for the monthly movie goers and turn that into a profit. Only problem? It didn’t work. People who aren’t big into the movies didn’t buy. People who were big into the movies did and they got bigger into the movies. Viewers who went from the once or twice a month crowd turned into making going to see a movie something they’d do when bored or just seeing every movie they wanted. This made the model fail and fail very fast. And looking at all of that, we can only sit and remember one basic thing. Isn’t this sort of how healthcare works?

 

The first time in my life I noticed how health insurance operates a little weird, I was watching 20/20 with John Stossel. He did an hour long piece talking health policy and interviewed Whole Foods founder John Mackey. Mackey made headlines where he thought differently on how healthcare should work with Whole Foods. Instead of offering employees a healthcare plan, he offered them the money in a savings account. They could use it for health expenses how they pleased. Be it shopping for an insurance plan they wanted or holding funds to just pay for care from the account, they had that option. His line was comparing healthcare to grocery and working on the radical idea health insurance was making prices higher due to people buying more. His comparison was asking Stossel what would happen if grocery insurance was a thing? Instead of buying a burger, people would get a steak. Instead of buying a bottle of beer, they’d get a bottle of fine wine. This was how John Mackey viewed health insurance and basically saw it as similar to what MoviePass eventually offered. The only problem? John Mackey made sort of a silly comparison.

 

With the idea of grocery insurance or MoviePass, we can’t really compare it that much to healthcare. Everyone wants a free movie and everyone wants a free steak. If people are going to buy a plan for film, food or many things, it’s easy to guess people will try to get as much of it as they possibly can. Medicine however isn’t something people want though. People don’t buy insurance going “Gee! Can’t wait to break that leg so I can use this up!”. Getting sick or injured is awful and insurance doesn’t even cover a lot of the cost when factoring things such as not being able to work or changes to a home. Another example being a former Google employee who on his way to work saw businesses preparing to close, because a storm was coming in. He ended up thinking of the countless businesses impacted by weather and thought of the at the time foolish idea of weather insurance. Farms, restaurants, ski lodges and more can all buy an insurance and if an irregular weather condition hit, they’d get money. They loved it and it became the fastest company to ever hold a billion dollar valuation. This is good insurance and nothing like MoviePass.

 

The next thing to discuss is the ultimate alternative to healthcare which is more in line of what Mackey & Stossel advocated which is making it more similar to just going to the movies, cash. People go to a doctor, get a bill and simple as that, they pay it. This offers financial incentive to shop around for the best price on care and with examples where people use cash such as lasik, plastic surgery, dental and other forms of medicine where insurance doesn’t cover as often, prices drop often and with insurance covered medicine, they don’t. And for MoviePass, the same argument could have been made. If a third party did randomly just offer everyone unlimited tickets, there’s no reason theaters couldn’t have just raised prices and consumers wouldn’t care. The problem though is this. Not everyone saves and not everyone will be prepared. When someone joins an insurance plan, they could get sick the first year, first month or first day and be covered. If they just save, they’ll only have a little. This is why insurance becomes so compelling. Little incentive to ever use it, but every reason to need it.

 

So the question becomes simple. If MoviePass is so different and comparisons to it are clear, why did I write this?

 

The key in writing this was more of a comparison in a radical example. A more real example would be something such as Amazon Prime where people pay $100 a year for discounts on goods or AMC monthly memberships where they offer three films a month and discounts on things such as snacks. These services were set up and made innovations where MoviePass or other groups failed. This can show a more real example of how healthcare works, but a very important piece to it all and is innovation.

 

What if an insurance plan was offered which covered 100% of all catastrophic events, but say only 30% of more minor things?

What if health plans functions as a hybrid of insurance and health savings accounts?

What if how the structure of insurance and our wallets work hasn’t been thought of?

 

This is what we can learn from MoviePass and what we can realize about insurance. MoviePass as a model was too extreme, but proved a point on what happens when deals like that are offered. Insurance in model has a clear proof that out of pocket medicines are progressively getting cheaper over insurance medicines. This makes a clear case that while we don’t have the perfect solution, we need to open up markets to think of the right solution between insurance and healthcare. The same way the movie industry is trying to develop better payment models now.

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