6 startups using tech and data to challenge the health insurance industry status quo

The health insurance industry is among the most challenging businesses to break into--the sector is dominated by several large players that dwarf their competition's market share.

But the individual market created by the Affordable Care Act and the rise of consumerism have spawned a slew of startup companies trying to elbow their way into the health insurance space.

Some function as online brokers, using data to help consumers choose the right plan. Another tries to compete head-to-head with the industry's biggest names, offering an alternative to a young and  tech-savvy crowd. Still others blur the lines between provider and payer, seeking to turn healthcare's business model on its head.

However, what they have all in common is that they are changing the conversation about--and within--the health insurance industry. In the following slideshow, FierceHealthPayer highlights six of these startups.

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Two years after it burst onto the scene, Oscar Insurance has become one of the most recognizable healthcare startups, enjoying a flurry of media coverage.

The company, which started out offering plans in New York, largely targets young, tech-savvy customers. Oscar features a sleek, user-friendly and mobile-friendly website that includes a personalized search engine for members and allows members to track and manage their medical bills. The CEOs of Aetna and Anthem even cited Oscar as an example of successful new insurance market entrants in a recent congressional hearing about their impending merger.

In April 2015, the company announced it had raised $145 million, leaving it valued at $1.5 billion. This autumn, Oscar also will compete against big-name insurers on the California health exchange. And in September, the company got a significant boost when Google Capital invested $32.5 billion in it, raising its value to $1.75 billion.

But the company has had its struggles, too. High administrative costs and low enrollment led the insurer to lose $37 million last year. And Oscar still must build relationships with brokers in order to expand its provider network if it wants to sell plans to employers--not just on the individual market.

Clover Health

Clover Health is unique in the field of startups in that it's targeting lucrative Medicare beneficiaries. The company, which just raised $100 million in funding, bills itself as "a whole new kind of Medicare." Essentially, it functions as a payer with a focus on using data and technology to identify and fill gaps in care for older members.

The company uses software models to identify high-risk individuals, then its staff of social workers and nurse practitioners use clinical indicators to work with patients and help prevent unneccessary procedures and hospitalizations.

Clover Health also has an incentive to improve health outcomes, as beneficiary health factors into the premiums that Medicare pays the company to cover its members.


Zoom wants to be a healthcare payer and provider that offers an "insanely great experience" to its customers.

The company, which operates more than 28 walk-in clinics in the Portland, Oregon, area, has already expanded its services to include specialty and emergency procedures, dental care and mental health services. Zoom targets the young, mobile-connected demographic customers it calls "Sarah"--named after a young physician assistant.

The company also offers health coverage--Zoom+ Performance Health Insurance--which it bills as "the first health insurance system built from the ground up to improve your human performance."

Some of the plan's features include "+prime," which includes "food and movement as medicine" classes and "+kids," which offers free parenting classes and a parent partner hotline.

Though its provider and payer services are only currently available in the Pacific Northwest, it has plans to expand to other parts of the country.

Maine Community Health Options

The Affordable Care Act-created consumer operated and oriented plans (CO-OPs) have not fared well, experiencing disappointing enrollment numbers and financial struggles that forced some out of business.

But Maine Community Health Options (MCHO) far surpassed its 15,500 enrollment goal in 2014, its first full year of operation, by signing up more than 40,000 members. The plan has expanded to sell plans in New Hampshire.

MCHO says it owes its success, in part, to its adaptability. When it found it couldn't handle all the customer calls it was receiving, the CO-OP responded by designating employees to focus solely on outreach and education. It also has a member-led board of directors and by featuring a broad network that focuses on timely treatment for its members.

MCHO says it keeps its premiums in check with a lean administration and high-touch services, and has focused aggressively on enrollment outreach.


HoneyInsured is not a health plan, but rather a company that helps consumers find the right one. The startup company, created by two young Harvard University graduates, is an authorized insurance marketplace web broker, meaning it will make its money via commissions on plans that consumers purchase through its site.

What makes the site stand out among other brokers is its emphasis on using data analysis to guide its customers toward the right plan, says Grace Gee, the company's 21-year-old CEO. The site asks a simpler set of questions than government-run exchanges do, she adds, and HoneyInsured also allows its customers to search for plans both on and off the exchanges.

In addition, the site includes consumer-friendly features such as a drug-cost estimator. The company's founders plan to launch the site before the next open enrollment period in November.


As a "data-driven benefits platform," Lumity acts as a broker, helping employers and employees manage their health insurance plans.

Lumity got a boost when it received $14 million in Series A funding led by The Social+Capital Partnership with participation from True Ventures and Rock Health, the company announced in mid-September. The funding allows the company to expand its mission to help employers "create health plans that make sense for their business [and] their employees," Tariq Hilaly, Lumity's co-founder and CEO, said.

To do this, the company provides free software and support staff to help guide its customers' health plan decisions, making its money through commissions. Lumity uses risk models to provide employers with an assessment of their company's aggregate health, information the employer can use when deciding what type of plan to offer. It also provides customized health expense estimates for employees and companies through its proprietary health plan recommendation engine.