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Apple Enters Health Insurance Business

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Apple on Thursday announced that it's entering the health insurance business with a service called "iNsure." Once the service launches later this year, people will be able to purchase health insurance from the iPhone and iPad App stores and via iTunes.

"We have been thinking about this for years," said Apple CEO Steven Jobs, "but the new health care reform law makes it easier for us to enter this market."

The large installed base of iPhone and iPod Touch users plus the anticipated buyers of the iPad (which will be released this Saturday) provide Apple with a large enough pool of users to underwrite a health insurance program. According to insurance industry analyst, Gerard Ketokian, Apple can make a good profit on health insurance because of the demographics of its customers. "By restricting the policies to people who own their equipment, Apple is tapping into a generally young and healthy group of people who are likely to have fewer claims than the average American," he said.

A 2008 study by Rubicon found that about half of iPhone users to be under 30.
A 2009 Forrester Research study found that iPhone users are far more likely to be college educated which generally correlates with healthier lifestyles.

Must own Apple device to qualify

The application will allow users to purchase a policy directly from an iPhone, iPod touch or iPad. Users can also purchase it via from a PC or Mac via iTunes but must own a portable Apple device to qualify. Users will be required to enter their age and other data directly from the App and can pay for the insurance through their iTunes account. Apple will not ask about pre-existing conditions, according to a spokesperson. Apple said that iPhone users will get a 10% discount as long as they maintain their iPhone account with AT&T. There was no comment on whether the discount will be extended to Verizon customers. The Wall Street Journal on Monday had an unconfirmed report that Apple would release a Verizon version of the iPhone this summer.

Rather than going through a re-insurer, Apple is underwriting the program from its own cash reserves. The company had about $25 billion in reserve as of December. Apple has a market capitalization of nearly $214 billion with its stock selling at an all-time high.

In February, Jobs told shareholders that the company was hoarding cash for "something big and bold." This certainly qualifies.

Plan has bi-partisan support

The move got generally good support by politicians from both sides of the aisle.
"What I like about the Apple plan is that it's selling insurance across state lines, something Republicans have been demanding for years," said House Minority Leader, John Boehner (R-OH). House Speaker Nancy Pelosi (D-CA) said that she decided to support the idea after speaking with former Vice President and Apple board member Al Gore. "Al convinced me that this is good for the economy and for the environment," she said. "It's good for the economy because the plan is controlled by one of our nation's most entrepreneurial companies and it's good for the environment because it's completely paperless."

There will be no paper forms used in any part of the process, said an Apple spokesperson. The iNsure App will be used for all applications and policy documents. Policy holders won't even be issued a card for their wallet but will, instead, flash their credentials from their iPod, iPhone or iPad when they need service. At first it will be necessary for patients to show their credentials on the screen but the company is working on technology that will allow patient verification via Bluetooth or WiFi.

Software sends diagnosis to Apple

The company is also working with application developers on device-based diagnostic software. One app, called "FallResponse" uses the iPhone's accelerometer to determine is someone collapses. If so, it immediately summons aid (using the phone 's GPS) and sends insurance information directly to the provider. Another program takes advantage of the phone's previously undocumented breathalyzer. The device measures alcohol concentration every time someone speaks on the phone. If it finds repeated cases of intoxication, it warns the user and refers them to a treatment program. If the behavior persists, data about the alcohol use is transmitted to Apple's iNsure underwriting department to be used to calculate future premiums or as a basis to drop coverage. "We don't discriminate against pre-existing conditions," said Jobs, but there is no way we're going to support self-destructive personal habits." The company is said to be also working with developers on an app that will automatically measure users' body mass index so it can drop coverage for people who are gaining too much weight."

Happy April Fools Day!