How Startups Disrupt Health Insurance

Many health insurance startups are creating transparency, so transactions can resemble what we experience with other products and services.

It’s no secret that the healthcare system is a mess. When was the last time you went to the doctor and knew how much you would pay for your treatment? Probably never. It isn’t just a mess for patients. Employers, hospitals and brokers are all suffering from the same dilemma. So should we just keep accepting it? Unfortunately, there isn’t just one problem to fix. Even just identifying the underlying issues can be challenging, and this allows the chaos to continue. The Falling Benefits and Rising Costs Challenge While HR departments everywhere try to tackle the problem, it continues to reign. Here are some stats:
  • A 7% annual increase means costs double every 10 years.
  • A 15% annual increase means costs quadruple every 10 years.
This isn’t sustainable for any business. Employers are already contributing a huge percentage of spending on healthcare, and most won’t be able to sustain themselves with rapidly increasing costs. See also: Insurance: On the Cusp of Disruption   Fortunately, this is where startups are stepping in to help fix healthcare. Here’s how they are doing it. Providing More Transparency This is a top priority among many startups. Imagine if you could walk into your next doctor’s appointment already knowing what the price is going to be. What? That’s crazy! Well, there is actually a startup that does allow you to walk into your appointment knowing what the cost will be. How does this affect you? Now patients are able to better budget for their healthcare expenses. You no longer will be wondering what kinds of bills will come in the mail six months from now. This startup would also affect hospitals. When patients are able to accurately budget for medical costs, hospitals will have fewer accounts receivable. When a larger percentage of patients can pay their medical bills, this can result in lower prices and better care because there is a larger percentage of the population paying for their treatments. Fewer Interactions Between Provider and Payer One of the reasons transparency is very difficult to attain is the numerous third-party interactions that provide little to no value. Health insurance isn’t a typical transaction. In most other service industries, the payer selects a product or service and then pays a price directly to the provider that has been agreed on by the two parties. In health insurance, a web of people lie between the patient and provider who each get a cut. This increases costs dramatically and is responsible for a number of transparency issues. What many health insurance startups are doing is creating a transaction closer to what we experience with any other product or service. While there are times when a third is party necessary, communicating directly with the payer and provider drastically decreases costs. More Efficient Processes Another massive problem with the standard health insurance process is slow and inefficient processes. Fortunately, most startups are investing in modern technologies, like cloud computing and data sharing, that allow easier access to documents and drastically shorter processing times. Processes that used to take weeks can now be done in hours. This also helps employers because the onboarding process with most health insurance startups is drastically (sometimes up to 75%!) shorter. This allows for companies to move faster and implement savings faster. See also: Who Will Win: Startups or Carriers?   The fewer hours that HR has to spend on implementation, the more hours they can win back so they can do more important work for the company. The Future of Healthcare While we still have a long way to go, startups are finally beginning to unravel the mess of health insurance complexity. We see a future of healthcare where the patients and providers are back in control and better communication and transparency are a norm.

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