By Kim Bellard, September 24, 2015
Health insurance is getting some love from investors. A lot of that money is going to companies that make it easier to deal with health insurance, but some is going to start-ups -- like Oscar, Clover Health, and Zoom+ -- that actually hope to reinvent the nitty-gritty, often grimy business of providing health insurance.
Oscar, of course, has long been a media darling. Google just put in another $32 million that ups their valuation to $1.75b. All this for a company that only has 40,000 members, is offered only in New York/New Jersey (with plans to expand to California and Texas), and which in 2014 lost $28 million on $57 million in revenue. But never mind all that; they've got a nice website.
That's not really fair, of course. They've focused on using technology to improve the customer experience, are ahead of the industry curve on use of technology like fitness trackers and telehealth, and are working to use data to match patients with the best physicians for their conditions.
Clover Health, which just raised $100 million in a funding round through some impressive lead investors, has a somewhat different strategy. It focuses on the Medicare population, putting their primary emphasis on using data to improve patient outcomes.
Clover uses their algorithms to identify high-risk patients, sends nurse practitioners to their homes to develop personalized care plans, and continually loops in new data to update patient profiles. So far Clover (headquartered in San Francisco) is only available in six New Jersey counties, but they claim to have 50% fewer hospital admissions and 34% fewer readmissions than the average for Medicare patients in those counties. Most of their competitors would claim to have similar efforts for high-risk patients, so we'll have to see if their model scales.
Then there is Zoom+, or, rather, "Zoom+ Performance Health Insurance." It is the outgrowth of ZoomCare, a network of retail clinics in Portland (OR). Zoom+ claims to be "the nation’s first health insurance system built from the ground up to enhance human performance," and thinks of itself as "Kaiser 4.0."
Zoom+ has focused heavily on the user experience, wanting "health care to be more like visiting an Apple store," according to Fast Company Design's profile of them. Zoom+ features not just cool retail centers but also mobile capabilities, a Personal Performance Path, and a Zoom+ Guru, among other services. It is not your mother's health insurance, and right now can't be yours either unless you happen to live in Portland.
I'm all for reinventing health insurance. I'm all for making the customer experience much, much better in health insurance and in health care generally. But I do worry that some of these upstarts may be taking advantage -- perhaps inadvertently -- of one of the underlying problems with health insurance: risk selection beats execution.
Health insurers can market features that are more likely to appeal to younger, healthier customers, like snazzy websites, fitness trackers, or training advice. None of those are only of interest to "healthy" people, but, it doesn't take much of a shift in the risk profile to have noticeable impacts on costs.
Health insurance needs more consumer-focused technology, more effective use of data, and more focus on promoting health. However, I'm not getting too excited until I see a health insurer that does away with provider networks, refuses to be complicit in outlandish provider charges, and offers a plan of benefits that consumers can actually understand.