U.S. Healthcare: No Simple Insurtech Fix

I hadn’t worried much about U.S. health insurance in years, eight to be exact. I was interested, but not worried, because while I was living abroad I didn’t need it. Furthermore, I had a health insurance plan that covered me wherever I lived in the world. When I returned to the U.S. this past July, I was faced with buying an individual health insurance plan, which was something I’d never done (all my previous work experience in the U.S. gave me insurance as part of a group plan). In August, I bought a policy with a carrier and used an agent. As this is Open Enrollment season and I just purchased my first policy in the post-ACA world, I thought it would be a apt to talk a bit about the U.S. healthcare system and how I think insurtech can help. I will focus on three areas. First is my experience with Open Enrollment this year (to, I hope, help some who are going through the same experience right now!). Second is areas that need to be considered when looking at U.S. health insurance. Third is a summary and ideas for insurtech startups. Healthcare, especially U.S. healthcare, is very, very complex.  Hence, I will only dive into a few areas, and as usual, my recommendations at the end will be fundamental and principle-based. While there are a lot of politics surrounding U.S. healthcare, I will endeavor to not touch on the political aspects (though through the reading you should understand my opinions on the current state of affairs). Open Enrollment – How Open Is It?   As of the writing of this article, I am in the final steps of selecting my plan for 2018.  If you are currently going through the Open Enrollment process yourself, I have included some links at the end of the article that are some great guides on the overall process (including one from Oscar for "solopreneurs"). What follows, is my experience of preparing for Open Enrollment. A few weeks ago, I received this in the mail: And about a day later, an email from my agent that said this: Well, neither one of these were very encouraging. I started with the Covered CA website and PolicyGenius to do my search to see what carriers/plans were available. As I went through both sites, I realized that I was going through a modified needs analysis (these questions were a combination of what I went through on both sites):

1. How much am I willing to spend a month?
2. How much of a deductible am I willing to have? (These two questions were followed by a lot of math playing between the variables of 1 and 2 on different scenarios.)
3. Do I want to be able to book my own specialist, or do I care if I have a referral. Plus, do I want to have the ability to go out of network or not? (HMO or PPO?)
4. Do I have any doctors whom I need to keep in my network? By the same token, which hospitals/doctors do I want in my network?

Regardless of the answers to 1, 2,  and 4, number 3 was the key: Do I want an HMO or PPO? Because I wanted a PPO, I had a whopping TWO carriers available to me. See also: High-Performance Healthcare Solutions   In addition to this, I think it’s worth it to mention that (I think) the US is the only developed country in the world that has a 2 month period of time in which one can purchase a health Insurance plan. So much for ‘Open’ Enrollment… As I was going through this process, I realized some of the biggest challenges with this whole thing Some of the points that I mention below may seem like old news to many that have been dealing with US health Insurance since ACA came into effect.  Though, since this is my first time going through it, that is the case. Hence, I will share what I think is wrong with US health Insurance and subsequently, how Insurtech may be able to help.   As mentioned earlier, this is not meant to be a political stance and I will focus on the fundamentals of Insurance as I go through this. These are the a few key things wrong with the the current US health Insurance:

1. It’s mandatory (if you’re not covered by a group plan)
2. If one buys an individual plan – they may not choose the specific coverage that’s right for them (other than premium and deductible)
3. There is no underwriting for it (it’s all guaranteed issuance)

While these things aren’t likely to change, it’s important to understand why these three pillars are here, because there are some guiding principles here which are meant to help individuals; namely 1) making it more affordable and 2) making it more accessible. There still may be some opportunities to shape US health Insurance within the current confines of the regulation, which will have to be adhered to as long as the current regulation is in form. Aside from cost and access, what else needs to be looked at? Some of the key areas to look at when it comes to health care are:

1. Participants/Users – how to interact with them?
2. Provider coverage – which doctors/hospitals will be ‘in network’/accessible to participants?
3. Claims process – how can this be made easier?
4. Treatment and monitoring – in addition to 2&3, how will ongoing monitoring be done?

This relates back to the triangle I had a few weeks ago and how all 3 parties needs need to be looked at when looking at the overall Insurance value chain (regardless of line of business): Before I go into the summary, a quick note on Oscar. I took a serious look at Oscar a consideration for my health Insurance. Not only did I read through their policy and network coverages (as they were cheaper than every other network out there), but I did all the research on Oscar that I would do for any other start-up I would consider working with for my work outside of Daily Fintech. I started with the Coverager Companies tab (especially the News tab, where I like to see to see their past reporting of the company which usually outlines the good, bad and ugly of the company itself).  I also read the Oscar Health Strategy teardown from CB Insights.  I read consumer reviews and even asked my doctors and their receptionists about dealing with Oscar.  I did not do this much research for any other company I was considering (even though there were only 2 PPO providers from my initial search, I still took a quick look at all 6 providers in California…). Ultimately, I think they are really on to something and I salute them for going after such a big and complex area (both in terms of product line and geographic area of that line!).  I would encourage everyone to read the teardown above to see what some of their strategies are.  Tackling US health Insurance is no easy feat, and they did take a long term view as described below: While I do like them and some of the things they are doing, the reviews are not up to scratch yet.  My guess is that the long term view somewhat backfired on them, as customer expectation for a product that is so highly despised by many would have to have a real good experience very early on. I have had real good experience with my current carrier and they are the most well known/biggest in my state.  As such, I’ll likely need to stick with them.  Health Insurance is too important to try something new on in my opinion. I do think Oscar is very well positioned for the future, and they have outlined their strategy clearly above.  Building of an Insurance company takes time.  Health is a whole other animal.  Health in the US…well, that’s just going right for the gullet.  But, if done right, it can be a big prize (not only monetarily, but also for the sanity and health of US citizens!).  I’ll definitely be keeping en encouraging watchful eye on them. Summary: It’s Complicated… As I was preparing for this article, I read a few posts on Daily Fintech last year from Amy Radin, which I encourage you to read in conjunction with this post.  I have included them at the end for easy reference. In her first post, she mentions four lenses to look at when it comes to US health Insurance: ‘the health of the American people, marketplace trends, the role of regulation, and the players’. In her second post, she mentions that ‘Incumbent health insurers are pursuing legacy tactics to compete in the ACA world: M&A…; increasing premiums …; and reevaluating participation in the public exchanges… As well as ‘the root of user pain points can influence how plans are selected and health care is consumed’: # 1 People don’t see value because they don’t understand what they are buying. # 2 People are being held accountable for health decisions that they are not equipped to handle. # 3 People don’t always make rational decisions. Fast forwarding 15 months since her last posts, other than some slight changes announced earlier this year and the recent subsidy cuts, not much has changed in terms of health of Americans, incumbent tactics and pain points for users. See also: Healthcare: Need for Transparency   Currently, CVS and Aetna are working on a merger.  It is rumored that Amazon is trying to expand into pharmaceutical sales as well (not to mention it’s other Insurance aspirations).  It’s also no secret that Apple has been preparing itself for a run at health care too.  Are all of these in the name of helping out the customer or just trying to get a slice of a pie that is so huge that everyone in the tech industry can taste it? Recommendations for Insurtechs Given that current regulation is both stringent and has an unknown future, it can be challenging for Insurtech start-ups to know where to start.  However, here are a few areas where I think can help the US health Insurance value chain, irrespective of regulation:

• Education – I know this seems like something basic, but shopping for health Insurance was a nightmare.  Policy Genius was good, but it didn’t have it all.  Also, since health Insurance is so complex, there needs to be something that makes it really easy for people to understand.  Aside from how the subsidies work, which can be a challenge in it of itself, the specific clauses, terms and coverages for health Insurance is really complex and the majority of the population would likely not understand it.
• Blockchain – With such a wide variety of illnesses, coverages and benefits, blockchain make a ton of sense for health care.
• P2P – I wrote a couple weeks ago that I didn’t think P2P could be useful for health Insurance.  As I wrote this article, I do see some benefits, especially with a model like Inspeer, may be able to help.
• Ecosystems – I’ve been reading more about ecosystems lately as it relates to Insurance/Insurtech, specifically with some of the things being some in China. When it comes to health, look at Ping An and Good Doctor (see below for infographic too). Talk about user experience.  The value proposition (image) below says it all..the more this can be integrated for the user, the better.  Though it doesn’t come without it’s challenges:
  1. Wearables – how much will people trust Insurance companies with all of their ongoing health information?  This is a big debate when it comes to information asymmetry.  Those that are healthy and live healthy lifestyles will be happy to, and others, may not be.
  2. Integration with hospitals/doctors – This will enhance the customer experience greatly, both for ongoing monitoring of the health from their doctors as well as with the claims process.  I recently had a few check ups at various doctors, having to fill out loads of paperwork that asked the same questions, bringing my images with me wherever I went, and having to re-explain my history over and again was a bit cumbersome.  It would be nice if the paperwork process was easier, if all doctors in my network had all the information on me (not just the ones in the same hospital) and the claim processed could be seamless after treatment received.  Integrating all of this is not easy when the infrastructure is not there and legacy systems exist for all parties.

I know the motto of many entrepreneurs/founders out there revolves around solving challenging problems, so, despite my feelings at the moment about US health Insurance, I am confident about the future of it!! This article was originally published on Daily Fintech.