An Ounce of Prevention, a Libra of Cure?

Just when you thought Facebook's ambitions couldn't get any broader, just when you thought it might have been chastened by some of its recent embarrassments (Russian bots?  Privacy scandals?), it ups the ante: now it's planning a global currency. 

Technically, it is a cryptocurrency.  It is going to be offered through Calibra, a new Facebook subsidiary, in conjunction with a couple dozen major partners, including Mastercard.  The project will be run by the Libra Association, "an independent, not-for-profit membership organization headquartered in Geneva,Switzerland." 

I don't know much about cryptocurrency, but my first thought was, hmm, maybe healthcare needs one. 

Most people think of bitcoin when they hear "cryptocurrency," which is not always a positive connotation, but Libra promises to be different.  There will not be a fixed amount of it, it will be tied to more conventional currencies such as the dollar and the Euro, and it will not be anonymous.  Facebook is hoping to avoid people using it to buy illegal drugs or to get ransomware payoffs. 

Still, many view this as a big deal:

• The Wall Street Journal called it "among the boldest efforts yet to bring digital currencies into the mainstream."   
• The Washington Post asked: "Is Facebook’s new Libra currency a play to become the world’s banker?"  It added that "Facebook says its ultimate goal is for Libra to become the native currency of the Internet."
• Vox called it "an attempt at the internet-age US dollar...The goal is for libra to become the first truly mainstream cryptocurrency."
• Business Insider thinks it could be as big for Facebook as Amazon Web Services has been for Amazon.
• David Marcus, Facebook's head of blockchain technology research, said:  "It feels like it is time for a better system.  This is something that could be a profound change for the entire world."
• Matt Stoller, a fellow at the Open Markets Institute, tweeted that "it's like a private global International Monetary Fund run by techbros."
• Professor Jennifer Grygiel, writing in The Conversation, speculated that Libra means that Mark Zuckerberg "wants Facebook to become a virtual nation, populated by users, powered by a self-contained economy."
• The Verge's Nick Statt charges that Calibra is a secret weapon behind "Facebook’s ambitions to create a quasi-nation state ruled by mostly corporate interests."

Excited yet...or concerned?

Early look at Calibra app.  Credit: Calibra

Facebook wants to make transferring money and making payments as easy as messaging, and if you think that is farfetched, you haven't been paying attention to China, where WeChat is already doing that.  One of Libra's first targets are the billions of unbanked around the world, who face lack of credit and/or high fees when trying to do transactions. 

Few think Facebook's ambitions end there; many see this as a new revenue source, reducing Facebook's dependence on advertising dollars, especially as privacy restrictions increase.   Mr. Statt says: "Think of it as the Bank of Facebook — an arm of the social network that hopes to do for loans, credit, money transfer, and commerce what its suite of apps has done for online communication."

Of course, whatever concerns one might already have about how Facebook handles privacy aren't going to get any easier when it starts handling financial transactions, although, not surprisingly, Facebook vows there will be absolute firewalls.  “Your financial data will never be used to target ads on Facebook,” said Kevin Weil, vice president of product for Calibra.

Libra isn't expected to go live until at least next year, and it faces a host regulatory challenges, from across the world.  As Governor Philip Lowe of the Reserve Bank of Austria said, “I think there’s a lot of water to flow under the bridge before Facebook’s proposal becomes something that we’re using all the time."

Initial Libra partners.  Credit: Libra

It is important to note that, although Calibra sees Facebook's WhatsApp and Messenger as "great homes for Libra," Libra is not exclusive to Facebook.  Calibra's Kevin Weil told Mr. Statt: "The real goal is to boost adoption to the point where Libra can have a vibrant financial services economy built on top of it, not just by Facebook but by any other company in the world."

Healthcare companies, are you listening?

There are probably others, but the only healthcare company I know trying to, in essence, use its own currency is Citizen Health.  It is using four types of blockchain-based "crypto assets," including Medits that can be earned through health activities and used as payments in health transactions.  Physicians can also "tokenize" their services.  Citizen plans that these crypto assets be used in Medoplex, their soon-to-come health marketplace.  

Facebook identified the issues that the unbanked have with financial transactions, but healthcare has plenty of its own issues with financial transactions.  Tens of millions of Americans lack insurance (many of whom may also fall into the "unbanked" category), and tens of millions more face large deductibles that mean they end up paying for much of their care.  No one -- patients, healthcare professionals, and health plans -- seems very happy with the processes that go from care to payment.  

If this isn't ripe for digital currency disruption, I don't know what is. 

A cryptocurrency won't, in itself, make healthcare more affordable.  Nor will it automatically ensure people have more money to pay for it.  But given the widespread inefficiencies in, and dissatisfaction with, current healthcare payment mechanisms, someone should be seriously exploring its use in healthcare.

Blue Cross Blue Shield Association might be big enough to make a cryptocurrency viable.  So might a United or an Aetna.  The Medicaid/Medicaid-eligible populations might make a natural target.  Or perhaps this could be the killer app Facebook itself uses to make it big in healthcare.

Many people are trying to figure out the role of cryptocurrency, and blockchain generally.  Healthcare is no exception.  Libra is an example that the world is moving forward, and healthcare should be figuring out how it might take advantage of it or similar approaches.