For a few years I’ve been fantasizing about what a healthcare insurance/ delivery mutual would look like. I’ve yet to see one but I like the idea a lot.
Here’s the idea behind a mutual: A mutual structure means that the company is owned by its clients or policyholders. Since a mutual’s customers are also its owners, they get to share in any surpluses though they are mostly reinvested in the business.
Wikipedia has a nice writeup on the fundamentals of mutuals:
A mutual exists with the purpose of raising funds from its membership or customers (collectively called its members), which can then be used to provide common services to all members of the organization or society. A mutual is therefore owned by, and run for the benefit of, its members – it has no external shareholders to pay in the form of dividends, and as such does not usually seek to maximize and make large profits or capital gains. Mutuals exist for the members to benefit from the services they provide and often do not pay income tax.
Mutual structures are most common in the banking (credit unions) and insurance industries. The main advantage to mutuals, as compared to public or privately held businesses is that they avoid the “principal-agent” problem (where the company’s desire to serve itself and the customer are at odds).
In a mutual, customer and owner are one.
Mutuals have been around for a few hundred years: “friendly societies” have been active in the UK and the US for a couple hundred years. Friendly Societies… were the original form of social network, where a group of people contributed to a mutual fund, to then receive benefits at a time of need.