Startups, big data to break stigma of 'one-size-fits all' health plans
Now more than ever, venture capitalists rely on big data to improve the user experience in the health insurance industry by investing in startups that bring the market up to speed with what consumers want, reported CrunchBase.
The market is drenched in one-size-fits-all health plans that provide consumers with little information regarding the total cost of owning a plan, according to CrunchBase. Additionally, healthcare spending grew at a 5 percent annual rate in 2014, up from 3.6 percent in 2013, with fourth quarter spending up by 6.2 percent. This continued growth leaves insurers with few incentives to improve members' experiences when purchasing coverage.
However, by some measures healthcare spending growth is slowing down. That suggests that payers may need to consider new ways to add value to the market. So, too, does an increasing market shift toward individual health plans.
That's where the startups come into play. Last year, startups targeting the insurance market raised $308 million across 32 venture rounds, noted the article. That's a 250 percent increase from the $88 million raised in 2013 and a 556 percent increase from 2012's total. Among these disruptive firms is New York-based Oscar Health, which was founded by Internet entrepreneurs and $40 million of venture capital backing. Oscar reportedly is in talks to raise even more at a $1 billion valuation, noted CrunchBase.
The uptick in funding efforts mostly is thanks to policy requirements that mandate all federal agencies use machine-readable, open formats and data standards in an effort to make information resources easily accessible.
A prime example comes from New Enterprise Associates (NEA) which led Collective Health's $32 million Series B aimed to help employers weave through confusing healthcare data. Collective Health lets employers use employees' claims history to build customized health plans instead of purchasing cookie-cutter health plans from insurers.
Additionally, NEA invested $2.4 million in Stride Health, a personal insurance recommendation engine that informs consumers about where their money goes when they purchase a plan. Stride creates a care forecast and prices a consumer's personal care on every plan, along with the coverage price, so the end result reflects the care plus the coverage.
"The data that's out there now is making it easier for organizations to personalize and optimize healthcare, but it's also pushing more of these decisions downstream," Rick Yang at NEA told CrunchBase. "A lot of these higher deductible plans require consumers to take a lot more responsibility, and you really have to be able to understand the data behind it."
- here's the CrunchBase story
Blues plans invest in IT startups to expand business
Why insurers should approach product development like start-ups
HHS to developers: Data must be more useful
White House unveils new federal open data policy
Healthcare spending is on the rise again