It's hard to be a startup in the healthcare industry, and the uncertainty surrounding Trumpcare may only make it harder.
Well-publicized scandals have highlighted that health sector startups experience the same dangers common to any organization. Zenefits, for instance, founded in 2014 to design benefits software for small businesses, had a meteoric rise until 2016, when recklessness and mismanagement led to investigations by insurance regulators, layoffs, labor law violations, and the abrupt resignation of its CEO.
If Zenefits is a cautionary tale of pressure for immediate success taking precedence over sustainability, other companies are illustrative of challenges unique to surviving at the intersection of health, insurance, and tech. Oscar Health, another insurance provider, was founded in 2012, shortly before the ACA took effect. Oscar was, at the time, the only startup approved to sell exchanges on the individual marketplaces established by Obamacare. The business hoped to offer plans that were less costly and complex to consumers. This proved easier said than done. The individual market was smaller than expected, and protections for customers with pre-existing conditions meant that Oscar could not decline coverage for expensive care.
Not every insurer experienced heavy losses on the individual market; indeed, some made a profit, primarily by offering tightly managed plans. But many, even those larger or more established than Oscar, endured turbulence. UnitedHealth Group Inc.
And while some big companies, such as Anthem
In spite of these obstacles, Oscar remains optimistic, and has recently made improvements: it is expanding into new markets and ventures, including a co-branded program with the Cleveland Clinic and a new service for small businesses. Oscar has every confidence that the insurance market will stabilize by 2018 (Oscar denies benefiting from any relationship between one of its founding members, Joshua Kushner, Jared Kushner's brother, and the White House).
Proposed Republican replacements may bode well for for-profit insurers big and small. Startup Healthsherpa, for instance, a web insurance broker created to be a more consumer-friendly HealthCare.gov, foresees a bright future for itself and companies like it under the Trump administration.
Some may not be so lucky. Healthify, a Medicaid-based company that uses technology to connect patients with services to improve overall quality of life, may need to adapt to survive, as both Trumpcare plans proposed by Senate and House Republicans would entail massive Medicaid cuts.
Investment in healthcare startups continues apace, however, particularly in those that skirt the insurance industry altogether. Forward, a startup offering care directly to individuals or their employers on a monthly membership basis, and Lemonaid Health, a company that offers physician consultations via app to consumers for a $15 flat fee, have both attracted significant funding on the premise that demand for affordable health care will exist with or without ACA.
- http://www.salon.com/2017/03/26/the-ahca-may-be-dead-but-big-insurance-adored-it-and-they-like-obamacare-too_partner/
- https://www.hioscar.com/news/looking-ahead-to-our-2018-map
- http://www.businessinsider.com/oscar-health-partners-with-cleveland-clinic-2017-6
- http://www.healthcaredive.com/news/how-a-new-class-of-health-insurance-startups-is-trying-to-transform-the-ind/428642/
- http://www.sfchronicle.com/business/article/Amid-uncertainty-investors-still-backing-health-11243541.php
