What the heck is insurtech?

The 100 years' war about US sick care insurance coverage reform continues unabated, particularly around election season. The new armaments are the public option, Medicare for all and tweaking or eliminating the Affordable Care Act and a single payer system. The latest proposal is Medicare coverage for home health care.

Nearly 100 years after the first proposal, Americans are still debating health care reform, the perils of “socialized medicine,” and the tensions between individual liberty and government aid. What have been the major developments in U.S. health policy over the past century? And what challenges lie ahead? The two critical issues are health insurance coverage and cost containment.

We already have a single payer system- we the taxpayers and employees who pay in taxes and forgone wages and benefits and layoffs. The sick care Machine then redistributes the $4.7 Trillion and takes their cut doing it.

Health insurance remains a relevant and politicized topic in the United States. The number of people with health insurance in the U.S. was over 300 million in 2022, about 92 percent of the population. The health system in the country is a mix of both public and private insurers, but private is the main form of health insurance coverage among the U.S. population. In 2022, over half of the people with health insurance received private insurance through their employer, while over 36 percent were covered under the public insurance programs Medicare and Medicaid. Because the U.S. does not have universal health insurance coverage, millions of people remain uninsured every year. Public opinion on a Medicare-for-all health plan remains divided, but there is marginally more support for a single-payer system.

Given inflation and other factors, it should come as no surprise that health insurance premiums and out of pocket costs are skyrocketing.

Enter "healthcare" Insurtech companies that are seizing the opportunities.

InsurTech, short for “insurance technology,” refers to the use of innovative technologies, such as artificial intelligence, big data analytics, blockchain, and machine learning, to improve and automate the traditional insurance industry. InsurTech companies aim to enhance customer experience, streamline operations, and create personalized insurance products through the application of cutting-edge digital solutions.

As noted by McKinsey, employee healthcare benefits are under threat in the United States. Inflation is boosting healthcare costs in general to as much as $370 billion higher in 2027 relative to pre-COVID-19 pandemic projections. Costs associated with endemic COVID-19 could add to this estimate. Providers are already feeling the effects of inflation but its impact on most employers and consumers is likely to come in the next few years. Healthcare costs for employers could rise by 9 to 10 percent through 2026.

Rising healthcare costs could reduce the profits of employers across industries. And if cost pressures are unmanaged, the most vulnerable employees could be spending three-quarters of their discretionary income on medical expenses. And pressure on health benefits will affect employer value propositions at a time of talent shortage.

That’s why this is the moment for employers to rethink how to administer their employee health benefits. Employers’ traditional approach to employee health benefits is to keep them stable with small changes year to year. They need to go beyond incremental changes in a system that is no longer delivering adequate health or financial security for their employees. To manage healthcare costs in this era requires a transformational approach in which innovation is key. Employers could pursue a combination of five measures to manage cost increases in the short- and long term:

1. Reimagine medical networks
2. Manage specialty drug expense
3. Increase the use of value-based care or risk-sharing models
4. Adopt high return-on-investment care management programs
5. Considering using value-based insurance plans. Here's how to deliver value based surgical care. Value based surgical care promises to deliver higher quality at the same cost or, preferably, higher quality at a lower cost. Delivering on that promise means that patient teams, surgical care teams and third-party intermediaries all have to execute on the 12Cs.

Understandably, patients and their doctors have low insurance IQs.

Patients interact with disparate elements of the sick care system at differing levels of intensity and motivation. A big business has grown around getting patients more involved in an effort to improve their health and insurance IQs that, theoretically, would lower costs, improve outcomes and enable and empower them to make better use of scarce resources.

Patients seem to evolve along a hierarchy of involvement. The steps are:

EDUCATION

They use the Internet to get information about their symptoms or condition before they get involved with the sick care system. They do the cost benefit and decide whether to see a doctor or other sick care professional based on the results. The goal is to improve their sick care and insurance IQ.

COMPLIANCE

Once they see a doctor, they are reactive in following instructions or complying with diagnostic and treatment recommendations. Examples include showing up for surgery, getting prescriptions filled and taking the medicine as prescribed and following postoperative instructions. The goal is to do what the doctor said to do.

FULFILLMENT

As part of a given episode of care, the patient gets more actively involved at a fulfillment level. They are proactive in following up to get promised information that was not delivered or mail order prescriptions that were not sent or received. They make the appointment with a consultant suggested by another doctor. Many of these activities fall under the category of "sick care tech support"?

ENGAGEMENT

Patients, at this level, take a proactive, not reactive, role in their care and involve themselves in disease prevention and wellness. They have high healthcare and insurance IQs and appropriately use resources.

In addition, when it comes to the costs of care to patients and insurers, doctors are caring but clueless.

Despite federal mandates, hospitals refuse to comply with price transparency and make it impossible to shop for care. Although hospitals are required by law to post their prices online, only about 36% of hospitals are fully complying.

Congress and now even employers and unions are demanding that changes.

Most employers have little idea what the pharmacy benefit managers they hire do with the money they exchange for the medications used by their employees, according to a KFF survey.

Facility fees are also in the crosshairs.

Moving from one level to the next is difficult and requires providing patients and healthcare professionals with the training, tools and motivation to succeed. Insurtech entrepreneurs are offering organizations, employers, patients and doctors the tools to move up the ladder of engagement to beat the insurance inflation beast and the players that feed it.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack