American consumers are used to seeing products and services get higher. From coffee to automotive mileage to smartphones, it’s common for the things we devour to change into more attractive, efficient and easy to make use of over time.
But one area where that hasn’t happened is medical insurance. Every yr, we pay more for medical insurance, get more bills we don’t understand, and shoulder a greater burden of out-of-pocket expenses.
Statistics back up these findings. Over the past decade, Americans’ average medical insurance deductible has increased by 53%, in keeping with a recent JP Morgan reportMore than half of consumers said they have trouble paying for health care, with many juggling debt and delaying or forgoing treatment because of the cost.
This is not your typical “startups to the rescue” narrative
Having written many stories about startup trends, I make this a point in the article where I normally explain how startups are working to unravel all of the above problems. Then I find examples of entrepreneurs who hope to make our lives easier.
But the trends toward self-pay and high-deductible health care aren’t quite as straightforward. It’s true that many firms are getting funding around the topic of consumer-facing health care, in addition to providers of tools for employers to assist employees navigate their insurance options.
For example, last week Thatch AND WireTwo self-funded healthcare startups have raised recent funding. The largest round went to San Francisco-based Thatch, a platform where employers provide employees with money to purchase their very own medical insurance plans, which raised $38 million in Series A funding led by Index projects AND General Catalyst.
And just a few weeks earlier, PayZenprovider of payment plans for patients to pay medical bills, raised $32 million in equity along with $200 million in debt financing. It is promoting a “care card” that individuals can use at doctor visits and pay the cost over time without interest.
In total, seed, enterprise and growth investors have invested greater than $1.4 billion so far in a range of recently funded U.S. firms that are innovating in high-deductible health plans, self-pay and consumer-driven healthcare. Using Crunchbase dataWe have prepared a list of 23 such startups that have obtained financing since 2022.
The variety of funds has grown significantly since we last wrote about this investment space, just five months ago. The largest round since then went to Sidecar Healtha medical insurance platform where members pay doctors directly and then submit a bill for review for reimbursement. The company raised $165 million in a June Series D.
Many on the list, including Thatch, are developing deals around ICHRAs, or Individual Coverage Health Reimbursement Arrangements. That’s an acronym for deals from employers that, as a substitute of offering medical insurance plans, provide employees with money to pay for their very own policies or medical expenses out of pocket.
Consumers are not thrilled
It could possibly be argued that recent tools for managing consumer healthcare costs could make life easier for consumers who have to pay medical bills.
However, it has also been observed that American consumers dislike health plans with high deductibles and out-of-pocket care. Most would like private insurers or the government to cover the majority of our medical bills.
Among Democrats, the majority They supported one national government program that will provide medical insurance. And most adults, no matter political beliefs, consider that the federal government should provide all Americans have medical insurance.
In addition to being unpopular, the established order of health care in the U.S. is also expensive and inefficient. According to a research group Commonwealth FundUnited States spends more The country has the highest healthcare costs than any other high-income country, but still the lowest life expectancy at birth.
Plans with high deductibles do not allow you to achieve results. Instead, tests points out that this kind of coverage “may limit or delay needed care, ultimately leading to poorer access to care for participants with chronic health conditions.”
Wishful pondering, meet the current reality
But while consumers might want another person to handle our healthcare spending, market trends seem like moving in the other way. This has not escaped the attention of enterprise capitalists, including industry giants Andreessen Horowitzwhich has made consumer health one of its most important areas of focus.
The venerable VC firm is also aware that this space is not highly regarded. In explanatory fragment in his investment thesis, he wrote: “Why are we so bullish on consumer health? The current state of affairs is bleak. Patients are dissatisfied; providers are burned out.”
The firm’s investment strategy is based on the premise that as consumers face higher health care costs, they are becoming more discerning about their health care services and, as a result, “are likely to vote with their wallets.”
It’s hard to see how this approach works in all situations. When we have an illness or an accident that requires immediate attention, for example, few of us have the desire or ability to buy around for the most cost-effective test provider or visit an emergency room.
However, for more routine, pre-planned care and for chronic conditions, higher comparison of costs and payment options might be helpful.
That said, most of us are miserable enough with the hassle of scheduling and navigating our countless doctor visits. Adding comparison shopping to our to-do list won’t make us happier.