Will Apple's rumored smartwatch be a steal at $1000? Source: Business Insider/Sourcebits

When noted Apple analyst Ming Chi Kuo broke the news that Apple (NASDAQ:AAPL) may be pricing their long-awaited smartwatch at $1000 or more, the Internet erupted with disbelief. How could Apple expect to compete in a market by pricing their product three times more than competing units? Many fans, myself included, worried Apple was more concerned with their margins than providing value to would-be customers. Here's why we all could be wrong and Apple's iWatch could be a steal at $1000.

Health care could be the diffentiator
Lost in the announcement was this gem:

Kuo believes the iWatch will ship during the end of the third quarter, offering biometric functionality, integration with the iPhone, iPad, and Mac, and a 'fashionable appearance.'

Following that up, analyst Timothy Arcuri of Cowen and Co. is now reporting that Apple may seek insurance subsidization for the iWatch.

If so, not only does this lower the out-of-pocket cost for Apple's iWatch, but it's possible that this product presents more value than competitors, despite its high cost.

Not a luxury, now a necessity
In developed countries, health care is an essential item; it can be thought of as a necessity rather than a luxury. Makes sense, when's the last time you've heard of a patient asking for 30% off of an angioplasty. Right now, it appears our health care system is in desperate need of better data and monitoring. Slow-developing, chronic diseases like diabetes, heart disease, and Alzheimer's are taking their toll on both insurers –that pass along the costs to the insured pool – and governments that pass along the costs to taxpayers.

The issue is many of these diseases are cheaper to treat if they are diagnosed earlier. Insurance companies are keenly aware of this. That's why they may be willing to defray some of the iWatch costs via a third-party payment agreement, much like Apple's current agreement with carriers financing their iPhones.

The power of third-party payer arrangements
Historically, goods in third-party payment markets have made for good investments. The economics are such that goods in those markets tend to outpace outflation, and that's what you are looking for in an equity investment. If you look at the costs of college, and, well, health care as examples, you can see the tremendous opportunity they provide.

Even if insurers don't agree to subsidize Apple's iWatch, if Apple is able to tap into the growing health care market it can be a true disruptor; this is something the other smartwatch manufacturers haven't been able to accomplish.

Final Foolish thoughts
It is important to remember that we're only dealing with rumors on Apple's iWatch. As such, things like price and functionality may be incorrect. But if Apple is able to tap into the growing field of health care, it gives this watch value the other manufacturers seem to lack currently and points to a steal – with or without subsidies.